Whether you realize it or not, that Alberta pint of beer you’re drinking is a global event. This fall’s worldwide hop shortage, compounded by a sharp rise in the price of malted barley and rising energy costs, could hamper growth of Alberta’s craft beer market.
Twelfth century German brewers first used the green flower cones of the female hop plant in beer-making to offset the sweet flavour of malted barley. Depending on the type, hops can deliver a variety of aromas and tastes, from flowery to fruity, citrusy, spicy, earthy and herbal. Besides being a major contributor to a beer's distinctive taste and aroma, hops act as a natural preservative, and help a finished beer retain a foamy, dense head.
The current hop shortage may jeopardize the gains that microbreweries and brewpubs have been making in the Alberta market. Craft beer producers generally use far more hops than the big national brands. Brands like Canadian or Alexander Keith’s typically use an eighth of a pound of hops per 58.6 litres. Some of the über-hopped beers that are available in Calgary, like Alberta’s own Alley Kat’s Olde Deuteronomy, Rogue’s IPA2 and Hebrew’s Lenny RIPA, pile in as much as three-plus pounds of hops per keg.
Panic among smaller brewers in North America was heightened when a major supplier, Hopunion of Washington State, suspended sales for two weeks this fall. This hop crisis is caused by a series of global events: last year, Australia endured its worst drought on record; hail storms this past summer in Europe damaged crops in Slovenia and the Czech Republic, losing what some estimate as half of their crops; and extreme heat in the western U.S. hurt both yields and the quality of this year’s hops. If this wasn’t enough to make a beer drinker cry, devastating warehouse fires at two hop-drying kilns earlier this year in the Yakima Valley ruined three per cent of worldwide production. Available hops is less bitter than normal, so brewers will have to use more of these poorer quality hops that are already in short supply to obtain the same desired bitterness in their brews.
In the last decade global production of hops has dwindled by 52 per cent. Thirty years ago, there were more than 220 producers in the Pacific Northwest; today, sadly, there are only 50 left. A glut of excess production over the past decade brought all hop prices down. For example, Cascade, a hop popularly used in Alberta beers, sold for $1.70 per pound; lower than the cost of production. It now costs $15 a pound — that is, if you can find it.
Fortunately, most of our Alberta breweries had the foresight to buy on contract. Using this system, breweries forecast the amount of hops they plan on using and pre-purchase it at a locked-in price, in some cases for years in advance. Brewer Brian Smith of Wildwood Grill & Brewing Company heard about the crisis a couple months ago and was able to purchase some of his hops in this way. “In brewpubs the beer selection can be quite fluid. Repeat customers come to Wildwood for a consistent, high-quality product and expect some variety.” Brian fears that his most hop-heavy product, his American style pale ale, “may be scaled back to make it more of an English-style ale.” His signature Pilsner recipe will change because the Saaz hop used in the recipe is completely sold out. However, he was able to source out a new-school hop — German Select is rarely used and has this writer excited at the prospect of change.
Brew Brothers has enough of the hops it uses for its beers to get it through to late January. The brewer placed hop orders this past week but expects substitutions will be made. Brewer John Kufeldt expects prices to rise this winter but is noncommittal as to how much, “Recipes will be reformulated to stretch supplies as current hop prices are crazy. Contracted hops prices have put us in a cash-flow crunch. We contracted this month for the first time, and anyone who hasn't is up the creek."
Big Rock Brewery has reserved its hops supply to 2010. “Larger breweries are less likely to raise prices because they buy in bulk with long-term contracts in both barley and hops,” says president Ken Barbet. “Craft brewers don't have the finances to hedge against rising prices like their industrial rivals.”
Although the current situation in craft beer seems dire, we are in for an interesting period of beer evolution. Where hop-heavy beers are now the norm, balance and use of newer varieties may become commonplace. Industry insiders expect the situation to be back to normal in 2010, if Mother Nature helps out.