Hop Prices Affect Home Brewing Costs

“We are, in my opinion, in trouble.” Hop Union, November 2007

The cost of raw materials to brew beer is affected by agricultural output and prevailing market conditions. The beer brewing community came to learn of this volatility during the hop crises of the past few years.

The core ingredients to brew beer are water, grains, hops, and yeast. Assuming the cost of water is negligible, and most yeast is grown in a lab with reliable inventory, the cost of goods at play then falls upon grains and hops.

Near the end of 2007, the worldwide palette was becoming more accustomed to hoppy beers with complex flavors and beer brewers were buying up more of the hops necessary to achieve aromatic bitterness in their brew. Hops were relatively cheap and brewing life was good. On the supply side of things, however, growers were scaling back their hop planting due to the low market cost their crop brought AND adverse weather in  Europe seriously depleted annual yield.

Common hops were up around 20% in price and specialty hops, like those Noble Hops so named for their supremacy in the hops world, were up 80%. The larger breweries were somewhat insulated from this crisis since they typically buy up their annual hops supply at a set rate, but craft breweries had to scramble to find the ingredients they needed. Some of the larger craft brewers fortunate enough to have set pricing, such as Sam Adams and Sierra Nevada, helped out the craft brewing industry by offering to sell some of their excess inventory at a reasonable rate.

The numbers alone, according to a Hop Union statement in November 2007, tell the story of how difficult the situation was:

World acreage:

• 1986: 215,600
• 1992: 236,000
• 2006: 123,000

Most importantly, at least according to DrinkHomeBrew.com, was the impact on the common home brewer. Your average John Homebrew couldn’t get his hands on Cascade hops for that awesome Pale Ale he was whipping up, or the Amarillo hops for that summer IPA. Dark days indeed, friends.

AND NOW THE GOOD NEWS! The hop crop yield for 2010 was back on track and price inflation is starting to ease up. Home brewers and craft brewers alike have access again to decently priced hops and the great brew continues. Lesson learned – home brewing is part of a giant global supply chain that can bring down the hammer when it needs to.