In my last post that dealt with the cost of beer, I mentioned the impact of grains. My expatiation was plenty for many of you. And since “brevity is the soul of wit, brief let me be.” Hops are important on various levels for making a beer. There was a time in history when they were not a major part of beers, but that time is long gone. Why? I think partly because hops were found to be ideal for the various parts of beer production. This includes everything from fermentation to shelf-life. Yet many people don’t understand that different beers use different amounts of hops.
As a crop, hops have only really been widely used in beer for a few hundred years. Some will point to their incipient and early uses, but they are a recent phenomenon in brewing. Be that as it may, they are certainly now the premiere crop for giving beer aroma, bitterness, fermentation health and life span. Since they are now one of the basic building blocks of beer, let’s see what role they play in the cost of a beer.
The first thing to remember is that hops only grow well in certain climate types. Since that is the case, land space for hop vs. other crops is somewhat competitive. It may interest the reader to know that the U.S. and Germany together account for about 70% of the hop production worldwide. They are roughly 50/50 on amounts (although the U.S. is massively larger than Germany). The remaining 30% of the world hops are split among other nations with no country accounting for even 10% of world production. (Essentially, the market is cornered between Germany and the US.) While this might mean cheaper prices for U.S. or German brewers (even though this is not always that case), it also means that a bad year of hops crops, like the most recent two years in Germany, can be very detrimental to world hops levels. Thus, prices can sky rocket in a hurry, even limiting the amount that brewers can utilize. Simple economics dictate that supply and demand have correlative effects. Less hops equals higher prices. So, the field itself can dictate cost.
Unfortunately, some larger breweries are in the position to demand and dictate their own hop levels and squeeze out some of the smaller guys, who may not be able to obtain any of a hop variety they want or may even have to pay more for what they get. Even in good years, hops can be costly if you are one of the smaller guys. Why?
There are various ways to utilize hops. I think it goes without saying that larger quantities can reduce the purchasing price of most items. Hops are not immune to this principle. Who is in the position to buy tons and tons of hops? Not small brewers. So from an immediate purchasing power stand point, smaller brewers are at the disadvantage of having to pay more on the dollar per hop price. So, let’s assume that they use the same amount of hops per barrel than do larger breweries; their cost is immediately higher.
But craft and micro brewers don’t use the same amount of hops that the big guys do. In fact, they are making beers that have more hop aroma and bitterness. Why? Because they believe that the character added by using more hops is imperative to making good beer. IPAs, pale ales, and even small brewery lagers utilize much higher hop levels than macro beer makers. Not only do they use more hops, but some even use hops in a different way.
Hops can be added into a beer as a liquid extract, powder, pelletized form or whole flowers. Some of these are cheaper than others. (Guess which one the big guys use.) To be honest, even most craft and micro brewers use hop pellets because of the shelf-life. Yet, when special aroma types or beer are brewed, they might switch to whole flowers because their delicate aromas are often lost when they are pelletized. Of course, the pellets still work for the job, and this is actually a matter of conviction.
Another point of conviction that many craft brewers hold and the big guys don’t is that idea that it matters which hops one uses for bitterness. Some brewers simply use the highest Alpha Acid hops (highest bittering capabilities). The more bittering capability of a hop, the further it stretches and the cheaper it is. This is not good enough for some brewers. Even if the hop is only for bitterness, they are convinced that it does add overall quality and character to their beer (this is not true of all brewers). As a result, they might use a lower Alpha Acid hop in lieu of a higher one, causing them to use more hops. More hops equal more money.
But hops aren’t only for bitterness. Beers like IPAs require a significant amount of aroma hops. The big guys may or may not make IPAs. When they don’t, they don’t have that cost figured into their brewing costs. Where they do, they use much less aroma hops than craft and micro guys. Think about it. A macro brewery lager has some bittering hops and might have a minimal amount of aroma hops (even though some “triple hop”…give me a break). A micro brewery bitters their beer with their more expensive hops, using more with which to bitter. Then they take their more expensive hops and add a plentiful amount for the aroma of their beer. Who in their right mind would say that this wouldn’t affect (sometimes drastically) the price of a beer?
I hope this is starting to paint a picture as to why craft beer costs more.