Max and James of Structures Brewing
Boundary Bay’s Director of Quality, Bryan Krueger, told me he has a deal with Alexander to use some of his remaining SA hops and Boundary will have a beer brewed with them later this year.
Great Notion Brewing out of Portland, OR is one of the hottest breweries in the Northwest. They were also one of the first breweries to be vocal about AB InBev’s buyout, posting to Facebook “Great… Anheuser-Busch InBev just swooped in and bought all of the exciting new South African hops we thought we had coming to us this summer.”
Co-owner Paul Reiter told me they were excited to use South African hops in some upcoming beers, but now will never have the chance. They weren’t sure what beers they would put them in, but wanted them on hand to experiment with.
It was complete assholery to buy the entire market and not leave any for other breweries…you can quote me on that. – Paul Reiter, Great Notion Brewing
Reiter had emails of intent, or what he called “verbal contracts”, but they never had signed contracts to get the hops. Their hope was to buy about 1,000 – 1,500 pounds of SA hops, or about an acre. South African hops cost about $10 per pound, so Great Notion was planning on a $10,000 to $15,000 buy. This doesn’t impact future beers because they didn’t have any planned beers for those hops.
The Hop Growers of America is a trade organization with a primary focus on grower support, statistics, trade promotion and education. Jackie Brophy, Communication Director of Hop Growers of America, said they don’t have an official position on the acquisition because the details and fallout are still in motion. She did mention that there are many hop varieties available to breweries, right here in the Northwest. They have heard merchants (breweries) that were upset about no longer having access to SA hops, but she says this is likely because they were trying to purchase them on the “spot market” and didn’t have a standing contract.
Because annual hop quantities can’t be fully known, due to unpredictable growing conditions, and breweries need a set amount to meet beer production, hop contracts are necessary between breweries and farmers. To get their hops in the ground, breweries need to pay the hop farmer upfront. But most small breweries need a bank loan to pay the hop farmer because they are paying for something that has yet to be produced. If a farmer grows more than the contracted amount, they can offer them up on the “spot market.”
If there’s a shortage in a variety of hop, that price can increase significantly. In 2016, there was a 40% decline in hop crops and European hops increased in cost by 50%. Some varietals increased by 5 times as much, or just weren’t available. A brewery’s ability to even operate is highly dependent on good planning, relationships and a big of gambling. This is why losing access to even an expected crop creates issues.
But how bad is it, really?
The industry seems less concerned with day-to-day implications for their business and more around broken expectations, with a wary eye for what AB InBev’s intentions might be.
Even though ABI purchased the entire SA market they have haven’t immediately cut off supply to the US. In fact, it’s business as usual. Brophy says,
From our understanding even though AB took over the ownership, they’re still fulfilling contracts. If you have a contract it should be fulfilled.
If you don’t have an SA contract, the sheer number of hops and hop growing programs available to breweries in the Northwest should be comforting. Reiter told me Great Notion will be using innovative hops from around the Northwest to stay ahead of the curve. They recently used experimental hop 331 in their Grassroots IPA. 331 is developed by Oregon State University’s Aroma Breeding Program. Crux Fermentation recently released Experimental 331 IPA using the same varietal.
He says they are also looking abroad for hops, such as the UK for Jester and Slovenia for Styrian Wolf varietals. Reiter also says hot new markets in Australia and New Zealand are intriguing, but the cost is quite high at around $20 a pound. In comparison, hops in the Northwest average about $5-$6 per pound. It’s also possible that the South African market will become available again. ABI told Draft Mag that if they have overages they might sell them on the spot market.
Kuehl, agrees that our backyard is the best option, regardless of the SA buyout and the acquisition doesn’t impact any future Wander brews, or how they do business.
If I am not mistaken Washington State passed Germany for being the top hop producing region in the world. AND, there is currently a hop SURPLUS. We have all that we need. – Kuehl
In 2015 and 2016 Yakima produced more hops than anywhere in the world, surpassing Germany. With 30% of the world’s hop crop – 75% of the nation’s – and a growing and numerous experimental hops in our backyard, the argument could be made that buying local will be the fallout and this can only be a good thing. Boundary’s Krueger told me that most Bellingham breweries buy a higher proportion of local ingredients due to their availability anyway.
This isn’t all bad- NW brewers need to band together and work ceaselessly on low-tech quality improvements, as well as focusing on coaxing new and novel flavors from LOCAL ingredients. To support one another on this path is to extol the unique (and priceless) value of the Northwest and beers made here. – Krueger
The US now produces over 50 varieties of hops and that doesn’t include the growing experimental hop market. South Africa has about 7-10 main varieties and a number of experimental ones. The US has more than enough hop varieties to meet demand. For those like Great Notion in Oregon, they are lucky to have Oregon State University’s Hop Breeding program that is bringing new varietals and experimentals to the market.
AB InBev’s buyout of the South African hop market is a disturbing thought for many in the industry. Is it a harbinger of future moves to corner the craft beer supply chain and distribution? We’ll have to wait and see, but there is an endless supply of new hops to excite the imaginations of brewers and the palates of craft beer drinkers, right in our back yard.