The Hop Situation

Is the shortage over, or is it rolling over?

That's a nice picture isn't it? The world, dog-piled by hops... Yeah. A bit optimistic maybe, but the other day I stuck my head into a 3 pound bag of organic Hallertau, and felt as if I had struck land after being lost at sea for ten months.

This must be the third time that I've re-written this article in as many weeks. Every time I think I've got a handle on where the hop market has landed, something bizarre happens. This shortage was a lot easier to figure out almost a year ago when I wrote an article in which I gave a few suggestions as to how a Homebrewer might Survive the Hop Shortage. I tried to lighten the mood by cracking a joke about ancient Bullion being scavenged out of the deepest depths of the warehouse, but I wasn't laughing a couple months later when I came face to face with a bag of 2006 Bullion PELLETS, and considered myself lucky.

Despite the all wet style humor, the article was fairly well received. Everyone wants to know about apocalypse survival. After all, that was what we were facing. Not just in the modern sense of the word, but in the old. Everything came to an end, and it was a divine revelation for me that maybe we shouldn't be using aroma hops to bitter IPAs.

I acknowledge that this is a bit of an exaggerated, dead horse, so I'll beat it later in a more relevant article. Now that the 2008 crop is coming in, the question on every one's mind is: what IS the situation?

Are we back to normal?

Or, are things better, worse, or just different?

One would think that this should be clear cut. We didn't have enough hops last season, so prices went up-- DUH! Now we have hops again, so prices have... done strange things.

I first noticed this strangeness back in September, and briefly touched on it in an article I wrote for the fall addition of Hopscotch News. I cringe to think of the typos, and spelling mistakes that are now immortalized in print. Oh well, it was all very last minute. (not minuette)

Anyway, when I was fact checking for the article, what I noticed about the price lists that the brokers were putting out was not so much that hops were still pretty expensive at $25 to $30 a pound, it was WHAT hops were available. A lot of whole hops. 2007 whole hops. How did that happen?

It's possible that a lot of breweries released inventory back to the brokers after the hording turned out not to be necessary. I've heard conflicting views on the quality of the 2008 crop, but evidently it was at least good enough to represent an improvement.

The fear was that 2008 would just be 2007 Part Two, or the Return, Revenge, Son of, or Night of The Living Dead 2007. All horrible prospects, but thankfully the worst case scenario didn't materialize.

Now, this old inventory was listed at near shortage prices, but the differences in price from hop to hop were generally small. Cascade hit $60 a pound at one point, and that's a lot worse compared to $25, as opposed to $30.

Naturally, I'm just speculation here-- not pointing any fingers... but one, or more of the brokers might have been worried that with 2008 hops coming in, inventory they bought back, or gave credit for at shortage prices might not clear the shelves. After all, why buy year old hops for $30 a pound when you can buy fresh hops for less? So, how do you sell old expensive hops without taking a hit?

You don't, even if you try really hard to.

I'm not blaming anyone here, they gotta do what they gotta do, however it was a perplexing and alarming roller coaster to experience. Assuming my explanation for the price fluctuations is correct, what would you do as a hop broker to try and move old stock without loosing much money? Well the first thing you might try is to unify the prices a little. This is to say that you would increase the prices of the cheaper hops a little, and lower the prices of the expensive hops a little. This way the cheap hops sort of-- subsidise the value of the expensive hops, while also making the expensive hops more attractive to buyers.

That appears to be what happened.

What if that doesn't quite do the trick though? Well you can lower the prices over all, depending on how much stock you have to clear, and how much it cost you. A little adjustment here, another one there. That happened too. Then it happened again.

This is just hearsay, but in some instances, the pricing has gone as far as to be unified all the way across the board, with only a few exceptions. Virtually all the same prices, for new, and old hops alike. Depending on when, and how buyers are making there orders, different buyers might be getting different deals, but the longer the old stock remains on the shelf, the more the differences in the prices themselves will attenuate... so to speak.

Let me put it this way... You might see the average price for hops at your local Homebrewing supplier's to drop as much as 30% in the next few weeks.

It's difficult enough for me to do basic math, so take this with a grain of salt, but the mass-popularity of Homebrewing in the US might work a bit against American Homebrewers, even in the best of times. With all the retail outlets servicing the hobby, there is a greater number of intermediate distributors, and so the mark up could be double in some cases, along with the potential for a longer lag time for price reductions, as some distributors might be looking to make back whatever brutality they suffered during the shortage.

By mid January, the prices might re-diverge as the over all picture of the 2008 crop, clarifies. On the other hand, by mid January the economy might be so bad that even shortage level prices will look like a drop in the bucket compared with the alternative, being that walk of shame we all hate... A trip to the liquor store.

Even if all this speculation of mine is just a half baked, fanciful product of over analyzing while over drinking, any way you look at it, the picture looks pretty good.

It's also heartening to see one good thing emerging from the shortage as it draws to a close. More Homebrewers than ever before, are growing hops of there own. These days, it seems like every second person a meet, has a vine in there back yard. The dark cloud of the shortage is finally dissipating, but the silver lining will remains for years to come.

Cheers.