Hops Malt And Beer Prices

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Hopfen und malz, Gott erhalt’s: “Hops and malt, God preserve them.” It’s an old German saying you’ll find decorating beer hall walls, one that seems particularly appropriate right now. Signs of a brewing apocalypse are in the air as prices for these two essential elements of beer climb higher and higher.

Small brewers won’t be able to buy hops and will close their doors, says one pint pundit. I’ve predicted some crazy stuff myself just to tweak the extreme-beer crowd: “No more double I.P.A.’s, boys. You’ll all be drinking dark milds and helles!” There has been earnest, nail-biting discussion of that very possibility among the more excitable beer geeks, who fear that their favorite tongue-scrapingly hoppy brand of boozy brain-wallop will disappear from the shelves.

The price crunch is real. Malt costs about 50 percent more than it did this time last year. Brewers who buy hops in small lots on the spot market tell me prices have tripled on some varieties, while others are not available at any price. “The situation is the worst I have seen it in over 19 years in the brewing industry,” says Leo Orlandini, brewmaster at the Lion Brewery in Wilkes-Barre, Pennsylvania, who has his hops needs safely contracted at pre-boom prices through next year.

Ralph Olson is the founding partner of Hopunion, a broker based in the heart of hops-growing country in Yakima, Washington. Olson confirmed that this year’s worldwide crop was smaller than anticipated due to a variety of reasons, mostly weather. “Prices are going into the stratosphere,” he said. Johann Barth & Sohn, a major German hops broker, reports in its Hop Market Telegram that the crop is not only smaller, but of lower quality: The level of crucial bittering components in the hops is significantly below average.

Hops are prone to sharp swings in price. The aromatic and bittering compounds stay fresh for less than two years, so a bumper crop of hops can’t be stored to hedge against future shortages. Olson predicts the shortage will likely last for a few years; it’s the result of many acres of hops having been pulled out around the world because of weak prices in the past decade-plus. New plantings will take at least three years to produce a significant amount of hops.

This kind of talk makes brewers downright twitchy, but what does it really mean to us, the folks who just drink the beer? Probably not much. Think about what beer’s made of: malt and sometimes other grains, hops, water, and yeast; maybe some more exotic stuff in specialty beers. But a breakdown of the price of a bottle of beer tells a different story.

Malt is by far the biggest component of beer. The U.S. Department of Agriculture says that in September, the price for a bushel of malting barley was $3.70, or about 8 cents a pound. Work that out for an average-strength bottle of all-malt beer—made with about 2.5 ounces of the stuff—and that’s less than a penny a bottle. Hops are a similarly small part of the cost. Samuel Adams Boston Lager, for instance, is a pretty hoppy beer; brewing it takes a pound of hops per barrel. Even at spot-market prices of $15 a pound, that’s a nickel a bottle.

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