The Price of Beer

Here is a great article from Jim Zebora that tries to explain the dramatically increasing price of beer. From the hop Shortage to the petroleum crunch its all there... A perfect storm of economics that does not bode well for craft brewing.


If barley is the heart of beer, hops are its soul. They contribute flavor, aroma, bitterness, body and so much more to a brew.
But these days they also contribute to beer's increased cost.
It may not be the worst of the world's crises, but the rising price of hops, delicate flowers that grow on a tall vine, certainly adds to the pain in the wallet caused by $4 gas and $5 milk.
Try finding a quality craft brew on a package store shelf for less than $8.99; it's almost impossible. Even budget beers that were selling for $12 per 30-pack a few months ago are three or four bucks higher today, though not all of that increase can be blamed on hop prices.
The reasons for hop inflation are myriad, but all pretty much within the bounds of an Economics 101 class. After several years of oversupply, when growers often had to sell their hop crop below cost, the opposite is now true.
Hops have had a couple of lousy years in the field, with crop yields well below normal. In addition, many hop farmers curtailed production rather than sell below cost and did not ramp up their growing as prices increased.
In some cases, they devoted their fields to more profitable crops and have not gone back to the Fuggles, Cascades, Saaz, Goldings and Northern Brewer varieties that make beer so fine to drink.
The result is that hop prices have at least doubled, and at the extreme hops can cost five or six times what they did a few years ago.
Big commercial brewers have been somewhat
insulated from the rise in hop prices. Companies such as Anheuser-Busch Inc. get a big percentage of the hops they use from their own farms in the Pacific Northwest and so are not competing on the open market for limited hop supplies.
The big brewers also tend to use fewer hops per barrel than smaller brewers, for recipe and scientific reasons, so their cost per barrel is less affected by hop prices. Budweiser hasn't seen the same percentage price increase at retail as have microbrews, for example.
The real casualties are microbrewers specializing in very hoppy beers - those with names such as Hop Devil, Hop Trip, Big Hop Harvest Ale, Hop Heaven, etc. - who can use three or four times the amount of hops per barrel as the big kids.
This is partly because they are seeking to give their customers the hoppiest experience they can, and partly because hop utilization - a measure of the alpha acids and other components they release into the brew as it is boiled - increases with the size of the batch.
Large breweries make beer in vats roughly the size of small oil tankers, but I've seen one very tiny micro whose brewing vat was barely bigger than a turkey fryer.
As a homebrewer, I quickly learned that hops varied in price depending on the variety, the preparation and the packaging. Noble hops such as Kent Goldings (used in pale ales) and Saaz (used in pilsners) could cost twice as much as varieties with more bitterness but less aroma and flavor.
The hop flowers are sometimes used in original form, but processing them into pellets gives greater yield, and also makes them easier to ship and store.
Back in the years of plenty, I could sometimes buy a pound of bittering hops for $8, and noble hops could be as low as $1 per ounce. Today, homebrewers are seeing three- and fourfold price increases in this essential ingredient.
Of course, hops aren't the only reason that beer is costing more. Cereal grain prices are also rising due to the diversion of much corn production to ethanol, and energy prices for brewing, conditioning and delivery are also boosting the bill.
Like oil, gasoline, bread and so many other staples of modern life, beer is simply getting more expensive. And we beer lovers just have to suck it up while we're guzzling it down.
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Jim Zebora, managing editor of Greenwich Time, is a dedicated homebrewer and a contributor to Zymurgy, the magazine of the American Homebrewers Association. His column appears once a month. His e-mail address is jim.zebora@scni.com.