Beer costs on the rise
Shortage of hops has local craft brewers raising prices
Tony Magee, the owner of Lagunitas Brewing Co. in Petaluma, looks into one of the tanks in his new state-of-the-art automated brewhouse which will allow 24-hour brewing and 3 times the production.
JOHN BURGESS/The Press DemocratPublished: Friday, May 23, 2008 at 3:26 a.m.
Last Modified: Friday, May 23, 2008 at 4:49 p.m.
The price of gasoline skyrockets. Fine.
The cost of food goes up. OK.
But raise the price of our beer? No way!
Just as Americans enter the summer months -- when beer consumption soars -- the cost of a pint is bubbling up.
Unfortunately for the refined tastes of Sonoma County, the hardest hit beers will be the popular India Pale Ales and other micro brews that use extra hops for more flavor.
The problem stems from a shortage of hops -- especially among the rare varietals loved by craft brewers. The shortage is forcing local breweries to raise their prices and change their recipes.
"It's brutal," said Brian Hunt, owner and brewmaster of Santa Rosa's Moonlight Brewery. "And the worst is yet to come."
Hunt simply can't find some hop varietals. And those he can find will cost about 300 percent more than last year.
The pressure to raise prices comes at a bad time for craft brewers. Last week, Miller Brewing Co. reported cash-strapped drinkers have already started to trade down from higher-priced, premium beers to economy beers such as Miller High Life.
"We think it's primarily driven by decline of disposable income and pocket money that American consumers are feeling right now," said Tom Long, CEO of the Milwaukee-based brewer.
Hunt expects production costs for his acclaimed Death & Taxes and other beers will jump 15 percent from hops alone.
Tony Magee, owner of Lagunitas Brewing Co. in Petaluma, said the $350,000 he spent on hops last year will skyrocket to $1.2 million this year.
Last year, he paid $5 to $7 a pound for special variety hops.
"This year, the $5 hops will cost me $20 to $25 a pound. And the $7 hops I'll be lucky to buy at any price," Magee said.
Hops are grown almost exclusively to brew beer. About 75 percent of hops harvested in the United States come from Washington, with the rest grown in Oregon and Idaho.
Those three states account for about 25 percent of worldwide production, according to the Hop Growers of America.
Hops are cone-shaped flowers that grow on vines. Since the 11th century, brewers have used hops for bitterness. The bitterness offsets the sweetness of malted barley, which helps provide the alcohol and color of a beer.
With some hops no longer available, brewmasters are taking many popular beers back to the drawing board.
"It's been a significant problem for brewers. Some have had to work new brands into the market, to replace old brands for which they can no longer get the same hops," said Paul Gatza, director of the Boulder, Colo.-based Brewers Association, which represents craft brewers.
Moonlight Brewery recently released a delicious brew, Working for Tips Ale, that doesn't use hops. Instead, Hunt gathered the new-growth tips from redwood trees on his land near the outskirts of Santa Rosa.
"It turned out wonderfully," Hunt said.
Hunt doesn't bottle his beer, and it's only available on tap -- mostly at local restaurants and bars.
The hops shortage is the result of some increasingly usual suspects:
Demand has increased in developing countries such as India and China.
Biofuels are rapidly re-shaping the agriculture business. As more farmers grow corn for ethanol fuel, ranchers look for alternative feed such as barley, and hops growers start demanding prices on par with other farmers.
A weak dollar means Europeans can buy more U.S. hops and are less interested in exporting their own.
Finally, a slew of nasty weather, including tornados in the Czech Republic and severe hail in Slovenia, resulted in some crop failures.
Unique to the hops shortage is a trend by farmers away from growing numerous varietals, and instead focusing on the highly bitter hops demanded by large brewers such as Coors and Anheuser-Busch.
These mass-production brewers care about getting the most bitterness for their buck to mask the sweetness of the barley, Gatza said.
Many hop farmers have begun tearing out more flavorful varietals such as Simcoe -- a favorite for brewers of India Pale Ale -- and replacing it with hops that deliver more bitterness per pound, Gatza said.
Magee, who just spent $3 million expanding his brewery, said he has already increased his prices 12 percent.
"We don't operate on big, fat margins," he said. "All we're doing is passing along the costs."
To brewmasters, having to charge more for the thing they love isn't easy.
"Food, beer, and gasoline are pretty much things you can't do without," Hunt said. "It is very sad for me to see the price of a pint go up."
How will the public take it?
"I don't think there is going to be rioting in the streets," Gatza said. "But it certainly is a good time to support your local brewery."
You can reach Staff Writer Nathan Halverson at 521-5494 or nathan.halverson@pressdemocrat.com.
All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
Comments are currently unavailable on this article