Craft beer prices to rise on hop shortage

Craft beers will soon be much more expensive after the price of one of their key ingredients, hops, soared on the back of low harvests and stretched supplies.

Craft beer styles such as the IPA use a much higher proportion of hops in production than typical lagers (Photo: Wiki)

Hop-heavy craft beers tend to come from smaller brewers with lower margins that are less able absorb supply price changes.

It means the costs of more expensive ingredients, such as the vital hop flowers used to give many craft beers their distinctive dryness and tang, will have to be passed on to the consumer.

The price of some of the most popular hops has gone up as much as 50%, while other varieties have seen a five-fold increase.

“There has been a considerable tightening of supplies on the European hop market after the major reduction in the 2015 harvest with a sharp increase in prices,” said Stephan Barth from the Germany-based global hop merchant the Barth Haas Group.

“Europe will need at least an average harvest in 2016 otherwise we could see serious supply shortages,” he added.

Big buyouts of craft brewers may also make the problem worse. The buying power of the likes of Budweiser brewer AB InBev and Heineken, which have been buying craft brands the world over, could price out smaller brewers from the hop market altogether.

Bigger brewers are also more likely to have fixed contracts with hop growers, guaranteeing supply even in low harvests.

However, smaller brewers tend to be more flexible in their supplies, shopping around year-by-year for hops to help ensure quality and value for money.

Bill Manley of Californian craft brewer Sierra Nevada said: “It’s tough for brewers, especially brewers that don’t have hop contracts or who were a little late to the contracting game”.

The rising prices will be good news for hop growers, the majority of which are in Germany, northwest United States, the UK and eastern Europe.

Evin O’Riordain, founder of Kernel Brewery in London, said that while the shortages were a “worry”, the rising hop prices could encourage and enable growers to produce better quality produce.