2017 State of the Hop Industry

April 2017

Today, the hop industry enjoys a popularity the likes of which it has never before enjoyed. Hop varieties appear on beer labels. Brewers swarm to hop farms at harvest time to catch a glimpse of hop harvest. Nearly the entire crop is contracted. Craft brewers talk of sustainability of the hop industry. On the surface, it would seem that the state of the hop industry has never been better. The truth is quite different. The hop industry sits at a point of equilibrium, something many have idealized for decades. Equilibrium has not brought stability and balance to the industry as the word might suggest. Instead, it brings uncertainty and the continuous fear of shortage. The state of the hop industry is fragile. Just beneath the surface the seeds of a potential crisis are being sewn.


The Backstory

Many larger craft brewers contracted significant amounts of hops for sustained growth in the craft beer market, which did not materialize. Fueled by the ambitious goals of 20% of the American beer market by 2020, craft brewers and hop industry members fell victim to confirmation bias. The craft industry has grown beyond anybody’s wild imagination in just 10 short years. The possibility of craft reaching 20% of the domestic beer market by 2020 is dead. Brewers contracted hops for that growth. Growers expanded infrastructure based on that projected growth. The hops contracted to reach that goal are no longer necessary. A fully contracted oversupply exists. Most craft brewers continue to honor their contracts in 2017. Most are working closely with merchants and growers to renegotiate more favorable conditions for future years to lessen the impact of a potential future surplus. The problem exists today, but there is good reason to believe that in the coming years continued growth in the craft industry will alleviate the pressure.

For anybody involved with hops for less than 10 years, this might seem like something new. To those who have been around a while, it’s like watching an old familiar movie again. They know how it ends, but hope the ending will be different this time. Craft brewers say they are interested in the sustainability of the hop industry. That attitude alone may make a difference. When times are good, it’s easy to talk that way. When money gets tight, will they abandon those ideals? Several craft brewers and smaller merchants are already showing their disregarding for contracts. If the ugly side of human nature takes over and hops once again become just a commodity sold to the lowest bidder, the movie will, again, end the way it has so many times before. Something is different in 2017. 


Sit Rep

In the aroma hop market in 2017, supply and demand are tracking well save for the recent decline in the growth of craft beer. Although the corresponding adjustment needed in the hop world today is less than ideal, it is not so dire as in the past. The difference is the growth. The worldwide preference toward craft beer continues to grow bringing a disproportionate demand for American aroma hops. That growth provides the unprecedented opportunity for the hop market to navigate the current situation avoiding extreme surplus and shortage and the price fluctuations of the past. We are, however, in uncharted territory. Anything is possible, but there are no guarantees.

The hop and craft market today is more segmented than ever before. Although many brewers are long on hops, there is not a surplus of hops in general. Many brewers still need to buy hops. Then there is the alpha market, which is on the verge of deficit. For craft brewers who were proactive and already renegotiated contracts, future supply problems are largely resolved. For those who chose to kick the can down the road or were not flexible, the options remaining are greatly reduced. Excess inventories from the 2015 and 2016 crops linger, but brewers are slowly working it into their production. Others are quietly selling their surplus, careful not to dump prices so as not to harm the hop market or the value of the inventory they purchased. We’re all hop merchants now.


If there enough hops, why are farmers planting more?

The simple answer is because there are breweries that still need hops. The market is much more complicated than it appears on the surface. Some merchants will not allow breweries that over bought to renegotiate contracts. Rather than shuffling existing inventory between the “haves” and the “have nots”, they keep contracts in place. They sign new contracts with new customers. In theory, there is nothing wrong with this, except that it delays the problem of dealing with excess inventory until another day. On paper, this creates the perception that sales are growing. This looks great to investors and banks. Sustaining massive lines of credit to finance hop inventory for longer periods, now commonplace among hop merchants, is the likely reason.

Brewers are also throwing up roadblocks in the renegotiation process. It takes two to tango after all. Brewers must be willing to let go of current inventory. Many are not. They must be willing to extend contracts further into the future in exchange for relief of current obligations and think they can dictate the terms of their contracts now that they don’t need the hops. Many don’t want to seek a compromise that works for both sides. They fear they will not find the varieties they need again so easily in the future and want to completely abandon the hops they contracted believing they can just buy them on the spot market for less.  Every year, due to the hop industry producing at capacity, there are variety specific shortages and no way to predict from year to year which variety may be short as that depends largely on the weather. The certainty and stability of the supply of a variety is jeopardized while the market is so near the point of equilibrium, as it is today. When brewers move away from contracting, which is already happening, it leaves growers with no guide as to the varieties the market needs. 


The Catch-22

Prices for hops remain stable at a historically high level due to the cost of expanding infrastructure. Coincidentally, many breweries feel that pain too, having recently finished financing expansions of their own. The market for which they expanded, however, has not materialized meaning many will be laden with debt and producing below capacity. Revenue from beer sales has slowed in 2017 further restricting cash flow causing many brewers to withhold payment for hops until absolutely necessary.

Brewers’ lack of payment for contracted hops increases the costs and risks associated to carry each crop from the time it is produced until the time it is delivered. Despite the slowdown, growers still expect to be paid on time. Many brewers do not take this into consideration, or simply don’t care. If this additional expense continues, hop prices to brewers should increase. That is not likely to happen due to the competitiveness of the hop market. Prices, however, are also not likely to decrease anytime soon due to the additional expenses inherent in the industry today. 


When perception is not reality

To a Koi in a shallow pond the world is very simple. She doesn’t perceive the world on the other side of the water. She may not even realize she is swimming in a manmade pond. Similarly, many brewers believe they understand the hop market. They are convinced hop prices will plummet soon because they hear oversupply exists. After all, that is how the market behaved in the past. That perception is overly simplistic. They see the market in two dimensions, supply and demand. The hop market has at least a few more dimensions. Cost of producing a crop and the debt associated with it provides depth to the picture. How the market behaves over time adds breadth. The increased complexity introduced by the larger number of players growing, selling and buying hops increases the randomness of the path forward making the path forward less predictable. Sustained growth and a state of equilibrium has never existed in the hop industry before and it is proving to be a very precarious place. 2017 will be a pivotal year for the hop industry. Beyond 2017, the future of the hop industry is murky and unpredictable.






2016 State of the Hop Industry

Despite acreage increases worldwide don’t expect a surplus of hops this year, but that doesn’t mean there will be shortage either. On the surface, that sounds like great news. A closer look reveals massive imbalances and fragility. Barring a crop failure, there should be enough hops to go around, but variety specific shortages, similar to those we saw in 2015, will require that brewers be creative and consider substitutions. There are several reasons this year’s variety specific shortages will be more severe than normal.
  1. Stability of Randomness,
  2. The hop cartel, and
  3. Something we’ll call the X factor
We won’t discuss alternative financing, how it affects planting decisions and the varieties available to breweries, but there is a power play happening behind the scenes that is changing the varieties available. We’ll leave that for another time.
Stability of Randomness.
With farming, on the other hand, something unpredictable happens every year. In some years, it seems the crop can be threatened in ways not before thought possible. Randomness is the only constant. This year’s long-term weather forecast is for storms in the hop-growing regions of Central Europe this summer. Storms have already lowered yields in Australia and New Zealand in 2016. South America is experiencing a drought. At the time of this writing, hop growers in the Hallertau are concerned that the drought of 2015 is continuing into 2016, as there has been less than average rainfall. Next week, they could complain of flooding. That is the nature of agriculture, managed chaos.
Growers are accustomed to dealing with uncertainty. Brewers are accustomed to ordering the ingredients they need and brewing with them when they arrive. A great brewer friend of ours who has won many awards and earned plenty of well-deserved recognition within the industry recently told us, “when you can’t get the hops you want, a good brewer will brew with the hops he can get. If he’s really good, nobody will notice the difference.”
High demand for specific varieties at profitable prices has caused growers to stretch harvest beyond its natural limits and beyond their best judgment. Growers will admit that privately, but not often in the company of brewers touring their facilities. The world hop industry is at capacity until prices increase. Being at capacity is the equivalent of walking a tightrope with no safety net. Unfortunately, the randomness of nature doesn’t fit into the timelines and rigid schedules being forced upon it. Storms, drought and mildew, are just some threats to hops every year. Normally, there is a buffer capacity to allow for the randomness of nature. That buffer has disappeared a little bit with each passing year of growth of the craft beer market. Vulnerability to random events is higher now than ever before and the ability to react to avoid its consequences is at its lowest point. Growers say, “you don’t know what you’ve got until it’s in the bale”. That is a saying that will be very true in 2016. Variety shortages don’t mean producing less beer. They just require a different path to reach the goal.
The Hop Cartel.
Many believe today’s variety shortages are due to the effects of supply and demand or Mother Nature. They both affect the market. A deeper look reveals a much more captivating reason. A cartel operating behind the scenes, controls several proprietary varieties from end to end. If the thought of a cartel existing in the hop world sounds like fantasy to you, don’t overlook the fact that at today’s market prices the value of the market is well over $1 billion. Several families are vying to control that market.
The cartel believes they can “manage” the hop market. A market as open and complex as the hop market cannot be so easily managed. As brewers have long speculated in online forums, variety shortages may in fact be contrived to drive prices higher. They could also represent the cartel’s inability to properly read the market … but these are clever people. The result is clear. Squeezing the hop market in one area has ripple effects that are felt worldwide. They manifest themselves in the shortages that persist in nearly every hop variety today.
Let’s take a closer look at how the cartel operates. A few individuals own the cartel’s varieties. Varieties are available only to handpicked individuals. They retain ownership of the plants even when they are produced on other growers’ farms. They tell farmers when to harvest. They dictate how much will be produced and to which companies it will be sold. They set the prices paid to growers and the sales price to brewers. The cartel’s members convene privately to determine these things. By imposing draconian controls over every step of the process, they restrict access to their product under the façade of insuring higher quality. Their quality, however, is not higher or lower than other varieties on the market as most growers pride themselves on producing a very high quality product. Their strategy, part of which reportedly includes “keeping supply at about 90% of demand” has created frustration for brewers and great wealth for themselves. Tens of millions of dollars are paid by growers each year on royalties alone.
“Money doesn’t change men, it merely unmasks them.”
Henry Ford
You won’t see the cartel with a booth at the CBC or at Brau. They prefer to operate behind the scenes and will likely continue to do so for the foreseeable future. If you’re thinking this sounds like fantasy and could not possibly be true, ask yourself who exactly is responsible for policing the industry. The answer is the hop industry is small relative to other industries so there really is nobody looking. Without an insider’s perspective, how would anybody know which stones to turn over and which questions to ask? Not to fear though … Karma has a way of prevailing and the market is fixing the situation. Frustration with variety shortages year after year is quickly driving business toward more widely available open source substitute varieties.  We expect that trend to continue this year.
5 Trends We See Coming in 2016:
There are other trends we see emerging as well, but these five, we believe, will have the most significant effects on the average brewer.
  1. Variety specific shortages
  2. Mainstream acceptance of newer varieties
  3. Resurgence of legacy varieties
  4. Strengthening of hop prices
  5. Developing alpha crisis
The X Factor.
Demand for craft beer is part of a much larger trend we are witnessing in the 21st century that is transforming the way people spend their money. Perceived value, the quality of products and the means by which they are produced is affecting buying habits more than just price alone. For decades Americans in particular embraced globalism in a quest for lower prices. If low prices meant low quality, that was acceptable. That now seems to be changing to the dismay of the multinational companies that have made billions producing for that market. The mantra “Corporate Beer Sucks” espoused by Stone Brewing is a great metaphor that sums up how that trend manifests itself in the beer industry. It can’t be taken literally, as Stone, of course, is a corporation, and they make great beer.
The millennial generation in and of itself is not the cause of the disruption we see in the market today despite the flood of articles on the Interwebs to the contrary. New relationships and a dissemination of power are causing the disruption. Today a guy sitting in his pajamas in Bliss, Idaho with 15 followers on Twitter can call out a global company like Heineken or Apple if he thinks they are using unethical practices in their business. His message can be heard around the world overnight and can bring that company to their knees. Successful brands recognize this. They work hard to interact with their customers and carefully curate their image on social media, but you can’t just put lipstick on a pig and take it home to meet your parents.
People seem to have become aware about the voting power of their money. More and more, they want to spend their money on brands that behave ethically and deliver a quality product. More people like the idea of keeping their money local or support a brand that does. It’s a trend that is just beginning but it’s happening with the food we eat, the beer we drink and the products we buy and people are sharing their experiences. The Internet and smart phones have given consumers a voice, and a broadcasting network all in their pockets. That is causing the change we see today. The millennial generation is leading the charge because they have a more intimate relationship with technology.
As they say, “it’s an ill bird that fouls its own nest”. The openness brought about by more interconnectedness and the relative ease of travel has expanded the size of our nests from the neighborhood in which we live. The world is our neighborhood now. With that is developing a moral consciousness and the understanding that the way one person spends their money can make a difference.
The millennial generation is emerging as a generation that has decided to forego working countless hours to save money to buy things that traditionally have represented stability. Those seemingly stable things were shown by the crisis of 07-08 to be tools through which banks manipulated markets to generate profits for themselves. The system was rigged against the individual … hence the phrase “Corporate Beer Sucks”. The result is a generation of people who are more interested in spending money on affordable luxuries, like craft beer and Starbucks, where they know they are getting what they pay for. That thing that created the change in priorities away from low price and toward high quality is what we’re calling the X Factor.
We believe the X Factor stems from frustration with corrupt government and financial systems. It is fed by frustration from large corporations making billions each quarter while the people who produce their products work in inhumane conditions struggling to survive in third world countries around the globe. Will Donald Trump or Hillary Clinton fix that in four, or even eight, years? Not likely. That leads millennials to spend time and money on things that have inherent value and deliver a benefit immediately. Inadvertently, in doing so they’ve discovered the voting power of their dollars. So long as people continue to perceive value in high quality, locally produced goods, we will see the trend toward craft beer continue. We believe that is a shift in the thinking of an entire generation, which is why we believe craft beer, and the many other products like it in the market today, are here to stay. Drinking craft beer is not just about the beer in the bottle, it’s a way to be the change you wish to see in the world.
Unfortunately, it is not the American way to be content with a bird in your hand when you think you could have two. Ironically, large craft brewers have grown so large they resemble the corporations against which people are rebelling in the first place. We believe growth of the larger breweries will continue albeit at a slower pace. Based on what we see in the market, the next big trend will be at the smaller end of the scale. The neighborhood pub and local Nano brewery will grow in popularity as people continue to crave local community and see the effect of the dollars they spend. Kickstarter and Indiegogo demonstrate that people like being involved in the creation of projects even if they do not have an ownership. That is an exciting trend! In this new world, it will not be easy for large companies interested in minimizing transactional costs to exploit consumers. There will be an evolution in the way that hops are produced and sold, one that is emerging now. The times are changing and we are excited for the changes ahead.







2015 State of the Hop Industry

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The 2015 crop year will be the last year of a normal hop market before things get out of control. Just like a duck, the current hop market may seem calm on the surface. Underneath the surface, there’s a lot of activity. The trend of changing varieties and new plantings continues at a feverish pace in hop yards around the world. 47Hops expects an additional 6,000 acres of hops in the U.S. (3,500+/- acres in Washington alone). All of that new acreage is toward aroma varieties and away from alpha hops, which will be the cause for some additional stress in the future, but we’re not focused on that today. Is the additional 2015 acreage a troubling sign? Yes it is … but not for the reasons you might expect! What’s troubling is that Washington growers are ONLY planting an extra 3,500 acres. Before we dive deeper into that, let’s take a look at Germany.


47Hops expects approximately 650 hectares (~1600 acres) of new hops in Germany. Significant acreage conversion continues to aroma varieties led not only by the 3 new popular Open Source varieties, Mandarina Bavaria, Hüll Melon and Hallertau Blanc, but also by old trusted names like Perle, Tradition and Hersbrucker. The trend away from the Magnum variety to the more efficient alpha producer, Herkules, continues fueled by an exchange rate making Germany a cheaper source for alpha, which at the end of the day is just a commodity. Remember, outside of Washington and Idaho none of the new acres planted this year will be available for the 2015 crop. Our sources estimate that there is only another 500-1000 hectares (1,235 – 2,470 acres) of picking capacity remaining in Germany after 2015. Further investment in infrastructure is highly unlikely in Germany due to: 1) Extremely high land costs, 2) Alternative crop opportunities due to the goal Munich has set to be powered by 100% renewable energy by 2025, and, 3) Skepticism about the market and the low return on investment available for new hops due to the lack of economies of scale. Furthermore, due to the burgeoning hop industry in states outside the Pacific Northwest of the U.S., exports of used German Wolf picking machine exports may soon surpass BMW. Ok, tiny exaggeration there. Not really. Seriously though, we have one friend alone who has sold over 40 machines to the US! While that may open doors for small American hop farmers, it closes the doors to low-cost small-scale expansion for the German hop industry. We estimate Germany will reach Peak Hop capacity next year.

In the past, Washington State’s ability to plant a crop in the spring and harvest in the fall has been a curse and a blessing. In 2008, Washington growers planted 8,000 acres in a very enthusiastic response to the high market prices at the time. Idle acreage and picking capacity were everywhere at the time! Everybody wanted a piece of the action! By 2009, you couldn’t give hops away. These cycles have happened in the hop industry as long as there has been a hop industry. Fast-forward to 2015 … Demand for more hops is high. Prices are strong. Are growers showing restraint because of the lessons learned in 08/09? No, that’s not it. Everybody wants a piece of the action … again. Yet, all Washington growers could do in 2015 was to expand by 3,500 acres helped along by +/- 1,200 acres in Idaho. With an average crop, that 47 hundred acres could produce 6.5M pounds of hops in 2015. That’s a lot of hops, but we estimate demand for hops to increase by 8-9M pounds this year based on roughly 22M barrels at approximately 2 pounds of hops per barrel and 18% growth and the trend toward dry hopping. Growers worldwide are pushing every bit of picking capacity and kiln space to do this. American hop farms are at capacity. Without a bumper crop and even with last year’s baby crops maturing, the hop industry will just keep pace with demand. Remember what the hop market has been like for the past 12 months with variety shortages? Expect more of that. The varieties that are short may change, but the shortages will be very real.


Slowing growers’ expansion is money … surprise! Growers can’t finance the expansions quickly enough with the current market prices. In exchange for lower prices from growers, some merchants have stepped in to finance growers where banks would not. We have heard of ten growers receiving “alternate” financing. While that is keeping the market relatively calm and prices reasonable for 2015, it’s a troubling sign for future growth. While merchant financing solves one problem, it introduces even more risk into an already risky industry. These are temporary solutions to an ongoing problem. The American hop industry has never been more at risk than it is today.

Some new farms are going in, yes, but you can count them on one hand. Brewery partnerships are discussed more openly, but only a few have developed. If the craft industry continues to grow at 18-20% for another year, another 6,000 – 8,000 acres will be necessary in 2016. No grower knows today how that will happen. Ask one. Land is there if the price is right. That price is approaching $12,000 per acre. Picking capacity is the bottleneck. Dauenhauer Manufacturing, which produces picking machines in the US, is at capacity for a couple years. Prices in today’s market, many of which are $12,000 – $14,000 per acre return to the grower, finance some additional picking capacity, but don’t pay for new farms. Remember … one new farm costs about $20M+ and only produces about $1M pounds of hops per year. Some growers say that prices will need to reach $20,000 – $25,000 per acre before they support new farms.

So, what does all this mean? It means the hop industry reach will PEAK HOP production in 12 months. Does that mean there won’t be any more hops in 2016? Of course not! It just means the low-hanging fruit will be gone. Very soon, as they say, shit’s gonna get real. Merchants will step up to the plate to finance growers where they can. To keep the market calm, brewers must also step up to the plate to help finance the hop industry in ways other than just by purchasing hops. Without more of a vertically integrated partnership between grower, merchant and brewer, prices will skyrocket if demand continues to grow In that world, big brewers will likely be favored over small brewers more than they are today. Well-financed breweries will edge out competitors.

If you’re a budding young wannabe hop grower in Podunk, Arkansas, don’t start to think it’s time to plant the back 40 into hops based on what you read here. Brewers big and small will likely switch to using alpha acid and isomerized products to combat the shortages coming from Peak Hop. Creative strategies don’t have to be for only the breweries with deep pockets. Small brewers who develop relationships with their hop suppliers and use their craftiness first will be the ones to make it through the coming peak relatively unscathed. When shit gets real in the hop industry, business becomes very cutthroat. When prices are going through the roof is when close relationships will matter most. Long-term contracts and a relationship with a supplier you can trust to take care of you are as valuable as the hops themselves.


Originally published prior to the 2014 CBC in April of this year, the 2014 State of the US Hop Industry Report becomes more relevant with each passing day.
The state of the U.S. hop industry is strong today, but turbulent times lurk just around the corner. The industry is experiencing a period of sustained increasing demand and struggling to keep pace. The capacity to produce a continually increasing supply will not exist without significant investment, which, in short, means increasing hop prices. Traditionally, the hop market is either in surplus or deficit. It is not stable when it is in balance and it has never experienced such balance as the aroma market sees today.
Prices are on the rise, in part because of limited production capacity and rapidly increasing demand. In part, memories of an industry history filled with boom and bust cycles are still fresh. Empowered by good returns on aroma hops American growers will say NO to low prices now because they can. It’s important to understand the way growers think. If you do, you can understand what will happen in the hop market next. Growers look at their farms and measure their return per acre of hops by variety. Naturally, they want to maximize that number. In a market like we have today, that causes something we can call Growerthink. If you like economics, opportunity costs are the official name for one of the causes of what we are calling Growerthink.

Law of Growerthink – In a short or balanced hop market, the return per acre generated by the most expensive variety dictates the return per acre of all varieties. Varieties returning less per acre will not be produced.

In good times and bad, the price of hops is not strongly related to the cost of production. The return per acre in a surplus market is determined by the price per pound the grower receives. In a slightly short or balanced hop market, the price per pound is determined by the desired return per acre of the grower. At the time of this writing, a grower can earn $10,000 – $12,000 per acre growing one of the industry’s more popular varieties. If a buyer wants another variety picked during the very limited “prime time” for picking aroma varieties, September 1 – 21, the grower will expect the same high return per acre. This makes sense since he could plant the higher revenue generating variety instead. The buyer must, therefore, match the same high return per acre, or out the lower returning variety goes. Varieties that yield more pounds per acre are cheaper. As price increases for the most expensive variety, so will prices for all other varieties picked during the same picking window. Resistance to high prices will push demand to the fringe picking times and into alternative varieties, creating demand there too. Hops are hops though and soon it is not the prime time picking window that drives the price, but picking hops at all. The high return of the prime time varieties extends beyond that highly competitive picking window to ALL varieties, regardless of when they are picked. Today, the industry is not quite to that point, but it soon will be … again. We believe prices to brewers will likely be over $10 per pound for every aroma variety by year’s end.
There will be no shortage of aroma varieties that higher prices cannot fix. Articles you may have read claiming the sky is falling and there will not be aroma hops in the future are not true. Temporary shortages by variety already exist, but they will only last until the price increases to the point where new production capacity can be introduced to increase production. In some early cases, that will mean new hop yards, more kilns or a new picking machine. Later, it will mean entirely new farms. All are very expensive options. Without additional capacity, however, additional hops cannot be produced and real shortages will result. The solution is a question of money, not of ability to produce. Today’s grower can produce more hops if they can pay for the necessary infrastructure. Once prices rise for varieties produced on new acreage though, Growerthink insures they will rise for all varieties.
If you own or work for a brewery, the best thing you can do now to protect yourself is sign a five-year contract while prices are still reasonable. Consider asking for seven-year contracts at volumes you know you will need if you want to secure them. Contracting forward for an amount of hops you are certain you will need is an insurance policy against the challenging times to come, not as a liability. Some may still remember the high prices of 2007-08. That was caused by the cyclical nature of the surpluses and deficits of the alpha hop market. The effect the alpha market has on hop prices dwarfs anything happening today in the aroma market. Today many large brewers, the top 40 of which control 85% of the world’s beer production, are not in the market for alpha hops. Meanwhile, acreage of alpha hops continues to disappear. Those breweries will likely return to the market in the next 18 months or so shopping for their alpha needs. The production capacity necessary to respond quickly to those additional demands will not exist. An event horizon is approaching. Prices for alpha hops can quickly rise beyond the highest current aroma market prices. These brewers, unlike their craft brewer brethren, make billions in profits each quarter. Growerthink again will rear its head. This time, it will be alpha hops setting the high water mark. Aroma acreage that has not been contracted must match the alpha acreage returns or it will be removed to plant alpha hops. Only contracted hops are protected from this threat.
Brewers large and small have been accustomed to buying hops when they need them, like you buy flour at the store when you make a cake. The store always has flour so you don’t buy your flour for next month’s cake today. Those days may return to the hop industry someday. For the rest of the decade, however, it seems they are gone. It is already necessary to anticipate needs for the next five years and contract forward for those needs now. The landscape of the next five years will be drastically different than it is today. Five-year contracts will become the norm rather than the exception. Large brewers will consider purchasing interests in new farms to secure their hop needs. Brewers will use hop backs, variety substitution and other creative brewing methods to make limited quantities of scarce varieties stretch further before paying prices that could be double what they are today. If brewers don’t contract forward, they won’t get whatever they need. They’ll need whatever they can get. Challenging times are ahead, but we believe the solution is simple. Contract your hops today!