Malted barley and hops are the two most expensive ingredients in Northwest craft beers, and they're becoming more expensive: Oregon- and Washington-grown hops that sold for $2 a pound last year now fetch as much as $18 a pound on the spot market -- if they can be had at all -- and barley is up about 75 percent....It's not actually new info, just further evidence--as if you needed it--that this crisis is real. There were, however, some scattered facts about which you may be ignorant:
Call it a quadruple whammy: Hops and barley acreage has been declining -- hops because of a 10-year glut and barley because many farmers are planting corn for ethanol instead. Ethanol has also diverted corn from the feed market, often making it more lucrative to sell barley for feed instead of to the malting houses that supply brewers.
But wait, there's more: Two years of failed hop crops in Europe, a 2006 warehouse fire in Yakima that destroyed 4 percent of the U.S. crop and two years of disastrous barley harvests in Europe, Australia and Ukraine. Factor in a weak dollar that has the world clamoring for our hops and barley and you have the makings of a uniquely bad patch for brewers and consumers.
- BridgePort uses 55 tons of hops a year (!); they managed to secure contracts through 2010, so their flagship IPA should still taste the same.
- Small brewers try to keep a 30% margin on kegs, which means that tap prices are likely to rise $.25-.50.
- Prices are predicted to hit $9 a sixer, and $5 a pint--in pubs where they're not already that steep.