By Emiko Terazono in London
A cool craft beer has become part of the uniform for self-respecting hipsters from Brooklyn in New York to London’s Hackney. Now the thirst for microbrews made by small independent brewers has led to a scramble for hops, used to add flavour and bitterness.
In the US, where the craze was born, the $14bn craft beer industry has seen annual double-digit production growth over the past few years. This has doubled the price of the specialist aroma and flavour hops favoured by craft brewers to about $7 to $10 a pound over the past five years – the highest since 2007-08, when the market was hit by a severe drought.
“I’ve been buying hops for 30 years. It’s more challenging now than just about any time in my career,” said Steve Dresler, brewmaster at California-based Sierra Nevada, a craft brewer started by home brewers in the late 1970s.
Appetite for new beers pushed the number of US craft breweries to 2,768 last year, a 15 per cent rise on 2012. Their brews account for almost 8 per cent of the US beer market. The popularity of their beers has spread to Europe and Japan, as well as emerging markets, and there is increasingly intense competition for hop crops.
Alex Barth, of the German-based hop trader the Barth-Haas Group, likened craft brewing to a “pandemic”. “Even China has 1,000 craft brewers,” he said.
The high growth rates of the craft brewing industry and the large amounts of hops needed mean hop growers have hardly managed to produce enough to meet demand. Sean McGree, hops manager at BSG CraftBrewing, a US supplier of beer ingredients, said: “It’s been a struggle for the hop industry to keep up with the new demand.”
Surging demand for craft beers stands to hurt microbrewers the most. Low levels of hop inventories make it difficult for small participants to procure extra crops because they lack forward contracts with growers. If a brewer’s new beer was a sudden hit, it would find it almost impossible to cover its unexpected hop needs, industry executives said.
Mr Dresler said that when Sierra Nevada launched its Torpedo Extra IPA in 2009, sales rose by an annual rate of 50-60 per cent, leading to a scramble for hops.