Is the Pint Glass Half Empty or Half Full?

Worldwide Hop and Barley Shortages Put the Pinch on Brewers

By David Nolt, 11-16-07

Half empty or half full?

Since humans began making beer nearly 6,000 years ago, few things have stood between them and the beloved beverage. Here in the U.S., Virginia Colonists first brewed ale from corn in 1587, and any given beer commercial today is proof beer still hasn’t gone out of style. Even though taps went dry by decree during Prohibition, it did not last long (easy for us to say).

Today Americans are just as in love with suds as ever, and their pallets are becoming more and more discerning too. Craft brewers are cranking out many different flavorful beers, and Americans are thirsty for them. According to the Brewer’s Association, the craft beer industry’s sales have grown 31.5 percent over the last three years.

The bad news is, craft beers take a lot of hops to make, and a worldwide shortage of the ingredient is killing the buzz of craft beer brewers and drinkers everywhere.

Malted barley is the main component in beer, but the use of bittering and floral hops in craft beers give the libations their specialized and varied flavors. Here in Bozeman and Montana--and indeed across the West--strong support for craft beers and microbreweries keeps a healthy amount of brewers in business. With the productive Yakima hop-producing region close (70 percent of the domestic crop), creative brewers in the West come up with a wide variety of concoctions to sate drinkers’ thirsts. From IPAs to porters and Oktobers, it is not hard to find specialty beers here. However, brewers are finding it harder to find the high volumes of hops it takes to create craft beers.

Beer is basically the only thing hops are used for, but a 15 percent shortage in worldwide hops is taking its toll on brewers and will continue to do so for at least the next few years according Ralph Woodall of the Yakima Valley’s Hopunion.

“The main thing is to get what you can when you can right now in the hop world,” Woodall says.

The shortage is due to a few main factors: development encroaching on farm land, more land being used to produce corn for ethanol, fewer family farms staying in business as well as the high cost of land, equipment and labor to grow, harvest and distribute hops. Fungus and fire have also hurt Yakima Valley crops recently. Worldwide hop acreage dropped almost 50 percent in the last ten years, and barley production is hurting too with two straight years of failed crops in Europe and persistent drought in Australia. Pharmaceutical companies are also beginning to find more uses for hops, which would surely prove to be a tough competition for craft brewers. Rising costs of energy and stainless steel are also affecting brewers.

To compound the problem, a weak dollar is making it more expensive for American brewers to buy European hops and European brewers are subsequently better able to buy up more American hops.

The shortage is affecting all breweries worldwide, and Woodall says craft brewers are more vulnerable because they have less buying power in the market than the big boys.

“Craft is a real small total, a small boat in the ocean,” Woodall explains, “and is more susceptible to waves.”

The price of hops per pound quadrupled in the Yakima Valley this year, but Hopunion was still unable to keep up with the demand and recently brought their sales to a hault, which Woodall describes as “pretty insane.” Hopunion is trying to accomodate their customers the best they can with sales projections and especially with contracts, which lock a brewer into a certain amount of available hops throughout the year.

Like virtually all craft brewers in the state, Todd Scott, owner and brewmaster at Bozone Brewing in Bozeman, buys his hops from Hopunion. Scott says when Woodall mentioned contracting hops to him last year, the brewer took notice.

“If he’s telling me that, he’s not just trying to sell hops,” Scott recalls.

Contracting gives brewers security in the short-term, but does nothing to solve the long-term problems and trends associated with hop and barley shortages. In this lean time, some brewers are beginning to band together and trade hops.

“We’re not in a position to help anybody out, but we’re seeing other brewers do it,” Scott says. “It’s like charitable giving. That’s a beautiful thing, and nobody’s having to wipe out their hop supply to help out.”

A seemingly simple solution to the problem is to just grow more hops, but experts say it is not so simple. Hops are only harvested once a year and require specialized equipment for harvest, storage and distribution. Scott used locally grown hops for a special Bozone Terroir brew this year, and though he hopes to plant hop rhizomes next year and distribute them to customers for free, it will not put a dent in the problem.

So what does it mean? Are we headed--gasp--toward a world with no beer? Hardly, but brewers will likely have to begin changing their recipes and brewing habits. Many craft brewers will probably have to scale back brewing the hoppier brews like IPAs, and as hop prices go up so too will the price of beer.

Steve Nordahl of the brand new Lone Peak Brewing company in Big Sky predicts farmers will react to high hop prices by putting more hops in the ground. Nordahl describes himself as cautiously optimistic when asked if the pint glass is half full or half empty.

“Half full,” Nordahl says. “I can’t see breweries withering on the vine and disappearing in the wake of this. Supply and demand will still hold true.”

Todd Scott says, although a few lean years lie ahead, his pint glass is fuller than half full.

“It’s always full, never half of anything,” Scott argues. “I can see it getting worse before it gets better, but I don’t really view that as the glass being half empty. It’s a challenge, but brewing is a challenge every day.”

Paul Gatza, Director of the Brewers Association, is also looking at a healthy pint.

“It’s more than half full,” Gatza says. “People are turning toward the more flavorful beers, and they’ll still be able to get them.”

As for Ralph Woodall in the Yakima Valley: “At this point in time it’s basically half empty and a hard one to call,”Woodall says. “It’s going to get worse before it gets better.”

So what is a beer drinker to do?

“Consumers should take heart and try to work through this period with the brewers,” Woodall concludes.

A Jack Handy quote comes to mind: “Sometimes when I reflect back on all the beer I drink I feel ashamed. Then I look into the glass and think about the workers in the brewery and all of their hopes and dreams. If I didn’t drink this beer, they might be out of work and their dreams would be shattered. Then I say to myself, ‘It is better that I drink this beer and let their dreams come true than be selfish and worry about my liver.’”

So go on, get out there and take one for the team.

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