Cluster Hops – Spotlight

Cluster is THE O.G. American hop variety. It is a public variety, not proprietary. People didn’t own hop varieties back when this variety came along like they do today. Cluster dates back to the late 19th and early 20th century (and probably even before that) when all beer was craft and local because there wasn’t any alternative. Some speculate the variety traveled over with Dutch or English settlers from Europe yadda yadda yadda … We care more about the future of the Cluster variety than its past. If you want a detailed history of any hop variety, you can probably find it on the Interwebs.

We want to focus on what to expect when you use Cluster hops. Depending on when you use them in the brewing process, it offers flavors ranging from black currant to pineapple melon and citrus. In short, Cluster can provide a combination of earthiness and fruitiness while it brings a clean bitterness to the table.

OK … Let’s address the dark side of Clusters, cattiness. If you’ve never ever heard the term before, it’s not referring to that nice warm kitty purring on your lap as you sit by the fire. It means a cat pee flavor or smell. Yes, you read that right! Some claim that they can smell or taste a litter box / cat pee aroma from Cluster hops. Some people claim the same about other varieties too. Others say they have never experienced cattiness. Cluster is present in plenty of beers that don’t exhibit cattiness. You shouldn’t write off the variety on that rumor alone. Double Mountain Brewery in Hood River, Oregon, successfully brewed their Clusterf#ck single hop IPA with … guess which variety. Here’s a link to  their experience.

If that wasn’t enough, here’s a great blog post from Beervana from a few years ago that mentions some Cluster history. It also offers very colorful and favorable review of the Cluster variety in the Clusterf#ck IPA mentioned above.  

Today, new varieties are all the rage. Legacy varieties aren’t sexy in today’s market. Today everybody wants something new, just for its newness alone. For that reason, Cluster, which once dominated American hop variety, is now counterculture. Allow your creative juices to flow. Challenge yourself as a brewer. Don’t follow the herd. Give Clusters a try. You might be surprised what you’ll find there … Or, you can go ahead and brew another Citra® IPA like everybody else and their dog.

Starting tomorrow, February 16, 2017, for a limited time, we are featuring Cluster in our #throwbackthursday sale on our web site store. Save on this American Legacy Variety while supplies last. 

Jarrylo® Hops – Spotlight

The American Dwarf Hop Association (ADHA) created Jarrylo® a few years back originally as an aroma hop variety. We have quite a few customers who have purchased Jarrylo® during the past several years. Many of them shared their thoughts with us. Jarrylo® is an interesting hop, but it’s not easy to work with. A brewer has to know how to really craft a beer to use this variety. You can’t just phone in this variety or expect to cruise on autopilot and make a great beer. Other varieties are easier to work with. If you try that with this variety, it will leave you underwhelmed. For that reason, we have seen customers who have loved it and others who have left it, not willing to figure out how to properly use it.


Watch the Brew Dudes as they explore the Jarrylo® variety in a SMaSH beer:


Another interesting blog that highlighted the Jarrylo® variety:



In short, if you chose not to follow any of the links above, I’ll tell you that the Jarrylo® variety can deliver a wide variety of flavors. Some say orange peel, citrus, banana and even blackberry are all possible. That makes it sound like an amazing flavor hop. Honestly, more often than not we hear that it is not a variety to be used for its flavor alone. Its flavors are subtle and need a craftsman who can bring them out properly. True, it has amazing flavors. They require a master to release them. Many people, therefore, find the flavors to be somewhat underwhelming. The result is that they give up on the variety before they discover its potential.

If nothing else Jarrylo® can be a good bittering variety. It has an alpha acid value greater than your average Columbus. With that in mind, it can be a nice gentle way to achieve bittering. Furthermore, given its subtle flavor undertones it is very forgiving if you are looking for additional bitterness by adding it later in the brewing process. Many of our brewery customers, and the above two blogs, agree that the Jarrylo® variety would be best combined with another variety than as a stand-alone. That, I suppose, is part of the complexity of the variety. Are you up for the challenge Jarrylo® offers?


Starting tomorrow, February 3, 2017, for a limited time, we will offer Jarrylo® at a very low price on our web site store. The reason … We want everybody to have a chance to experiment with this variety.


Innovation lacking in the hop industry

Innovation is something the hop industry really hasn’t figured out yet. Sure, there are new varieties coming out of every orifice of the hop industry these days. There are so many that it’s becoming difficult for growers to manage them all. The mind-numbing flow of new varieties continues. Once you start the variety-producing machine it’s difficult to stop. All that innovation doesn’t really change the way things are done. It creates more selection for brewers on the “shelf” of varieties from which to choose when brewers go shopping. Today, brewers can choose hops with citrusy flavors described in fifteen different creative ways. That’s confusing! Back in the stone age of craft brewing, 10-15 years ago, there were only a couple varieties with citrusy flavor. Somehow those guys made a lot of great beer. It’s starting to be like the cereal section at the grocery store.

All the extra choice in the hop industry isn’t raising the bar. It’s just crowding the field. Sometimes less is more. There is some bad beer out there today that sells because it has the name of the variety and “IPA” after it on the bottle. Have you ever been pissed off when you pick up a beer anticipating how it might taste … and it’s terrible. Breweries use hop varieties today as a marketing gimmick to sell beer. When did they stop using them to create interesting flavors? It’s great that people care so much about hops. If some brewers are using hop hype as a means to an end, our wonderful hop trend might turn into a fad rather than a culture.True innovation in the hop industry would be pouring dollars into research that expands the hop beyond the brewing industry.

Imagine a hop industry whose fate cannot be manipulated and controlled by the actions of a few large breweries. More money should go towards Xanthohumol research as a potential cure for cancer. Articles about that Xanthohumol have littered journals for over 10 years. It is always something “on the horizon”. Here are some more ideas you can have. Hop plants have as much or more cellulosic fiber than hemp! It has high tensile strength and long sisal fibers. I’ve tested the vines right after harvest and again 6 months later. Everybody knows how useful hemp is. Hop paper, hop clothing, hop twine, hop labels on beer bottles are all potential products. Hops are legal to grow everywhere without the government oversight of cannabis or hemp. Cellulosic ethanol production is a thing these days. Imagine … hop fuel.

I looked into all of those things. I believe there are viable business opportunities in each of those ideas. It will take somebody with passion to develop a business around those ideas. The ideas are there … somebody please take them and run with them. To be fair, not everybody is a slouch.  There are a couple companies out there looking into very cool things. Beta acids are a possible solution for preservatives and saving the world’s bee population. Kudos to the companies working on those projects! The hop industry needs more of that sort of innovation, not more hop varieties.

The real reason behind all the new proprietary hop varieties

A good friend of ours, who happened to win one of the “Brewer of the Year” awards at the Great American Beer Festival told us a good brewer can use one hop variety and, depending on how he uses it, get the flavors he wants. He then, over the course of the next year, proved it to us by brewing half a dozen popular craft beers with the same legacy variety probably considered boring by today’s standards. I’m sure his statement was a bit of an exaggeration … maybe the world needs more than one hop variety … but you get the point.

Last summer during harvest, we had a steady stream of brewers stopping by to visit the 47Hops complex. Something one brewer from a very large craft brewery said stuck with me. He said they never had to think about mixing different varieties or getting creative to reach a certain flavor profile because all the hop merchants always give them everything they want. You could see his eyes light up at the challenge of having to mix certain varieties to achieve a specific flavor profile.

Yet another brewer friend of ours from overseas told us that some new popular proprietary varieties are simply popular because they are very forgiving during the brewing process. We asked him to elaborate. He continued, “It just doesn’t take so much skill to brew with them. It’s not possible to make so many mistakes. That kind of takes the challenge out of it.” Maybe he was exaggerating a bit too. The friend who said that is a very talented, but very humble, brewer.

All of these comments make me wonder if all the flavors and variety development in the hop industry are there to give brewers more options … or is it to further divide growers and merchants and give them something else to fight over. I would bet on the latter. What if the purpose of proprietary varieties has very little to do with brewing in the first place? What if creating new proprietary varieties is just a means to an end? What if an unintended consequence of all the new hop varieties on the market is that they actually take away from the creativity craft brewing represents in the first place? Wouldn’t that be ironic?

More new hop varieties! Why now?

It’s fun to see so much excitement and passion around new hop varieties! 47Hops sells open source proprietary varieties, like Pekko™ and Azacca® for example, but we haven’t created any ourselves yet. A new variety, in and of itself, is a great thing. With all the interest in and passion for hop aroma, we live in an amazing time to be involved in the hop industry. It seems though that we’re at a point where a selection of amazing varieties is not what the industry is lacking.

Recently, a few of the guys who own the proprietary varieties that are constantly in short supply recently announced they’re coming out with NEW varieties! That’s great news, isn’t it!?! … wait … WTF?!! … Hang on a minute. How do they have the acreage and resources to produce something that nobody knows if anybody wants when they can’t even manage to grow the stuff everybody is screaming for? Does anybody else here see a bit of irony in this situation?

One of the reasons prices are so high for some popular proprietary varieties is because the company that owns and controls them supposedly just can’t keep up with demand … at least that has been the story the past few years. They keep tight control over the varieties from production to sales in the interest of keeping “quality” high. I’m sure you’ve heard the claims. That’s a well-designed story with a good plausible deniability … because, after all, it’s agriculture we are talking about. Somehow, magically, it is now possible to introduce new varieties. Wait a minute … Doesn’t that take land, resources and all the other things those guys claimed they didn’t have a minute ago for the varieties brewers want? This is where things start to get a little fishy IMHO.
When a company is unable to supply customers with popular products already in their portfolio, they’ve got a problem. The solution to that problem, if a company values its customers, is not offering a wider variety of products. Business 101. Kudos to the German hop industry for figuring this out. They reportedly had developed Callista and Ariana a couple years ago but sat on them to give Mandarina Bavaria, Hull Melon and Hallertau Blanc time to develop in the market and on farms around Germany. Smart play!  
Pro Tip: A hop company claiming it is unable to satisfy demand for proprietary varieties only it controls should not continue to introduce new proprietary varieties to the market unless the resulting shortage is the ultimate goal.
Maybe, in a very primal way, they think that if they have a bigger list of varieties than their competitors, it makes them better … Or maybe they’re overcompensating for something else? When a variety is short, prices skyrocket. That’s just Hops 101. You know the varieties that have been consistently short for a while now. What if those varieties are being purposely shorted to drive up prices? What if a few people are manipulating the hop market and making millions at the expense of craft brewers? The principle of Occam’s razor says that the simplest and most obvious explanation for something also tends to be the most accurate.  Or, in simpler terms:  If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.  Quack!

Harvest Half-Time Report

We’re nearing the half-way point in this year’s harvest. The hop vines are coming down all across the valley, and so are the yields. This year’s hop harvest is a good reminder that agriculture is not predictable and only somewhat controllable. Despite the way they look, hop farms aren’t factories that can produce more hops by flicking a switch. It’s a long expensive process that relies on plenty of skill, a little luck, and Mother Nature.
Most growers are experiencing yields that are down between 5-40% from five-year averages. That, combined with an already highly sold market due to demand by the craft beer industry, has caused prices for varieties already harvested to shoot up, over $10 per pound for raw hops to the grower. Many growers speculate the extreme heat during the month of July is responsible. Harvest in the US has now moved into Cascades. The results so far are difficult to interpret because that variety is not finished being picked, but already it is clear that Cascades are falling prey to the trend that has prevailed this harvest. At the moment it seems yields are only 5-10% lower than 5-year average yields. For Cascades though, that’s a pretty big number! Baby yards have been hit the hardest. Some Cascade baby yards are significantly lower than expected. Since typically a baby yard can deliver a relatively high yield in the State of Washington, growers often sell the majority of expected production on those acres too. That is further complicating the supply problem and exacerbating the variety shortages that are popping up with each passing day.
Early estimates are that proprietary varieties are also coming in a bit short. We don’t have any variety specific information to report. It seems most of the popular proprietary varieties are yielding below five-year averages. According to our sources some merchants oversold those varieties prior to harvest and therefore will not be able to deliver in full on their contracts this year. We can only speculate as to when their brewer customers will learn of this, but it won’t be good when they do. If I were a brewer, particularly not one of the 50 largest craft brewers in the country, I would try to get written confirmation that my contract will be delivered in full or get a written estimate how much I will be shorted.  With force majeure in all the contracts and a low-yielding crop coming in, there’s no recourse to being shorted, but the advance notice would give me time to find alternatives so I could keep the taps flowing.

Brewers with contracts at 47Hops will ALL receive 100% of their contracted hops despite the crop situation this year. We contracted keeping in mind that we’re working with agriculture and that there needs to be a reserve in case of shortages like the ones we’re seeing right now. 
The short crop of 2014 comes at a most inopportune time, a time when demand is extremely high, farms are already at or near capacity, and the price of hops has not yet increased to a level to finance new infrastructure developments. This year will be the one where brewers might not get what they contracted for, but they should contract what they can get. 
Some Q & A:
Q:  What will be the impact of this year’s harvest results? 
A:  Prices have already increased. Hops from crop 2015 are almost all sold now.
Q:  What should I do to protect myself against things like this in the future?
A:  Don’t contract forward with a merchant that doesn’t take good care of you. There are other options … like 47Hops. We have plenty of hops available.
Q:  How will this short crop change things in the future?
A:  Given the uncertainty going forward, contracts for 5-years or more will become common as brewers seek to secure their supply chains.
A:  Once variety specific shortages become more widely understood, brewers will alter recipes and contract for hops that are available rather than what they would prefer to buy.

A:  Prices will begin to rise, not as in 2008, but to levels that can support infrastructure development.

Letter to a Potential Hop Grower

In the various roles in which I’ve served in the hop industry, I often received messages from people who want to get into the biz.  I love the hop industry.  It’s a fun and challenging place to be, but the advice I give always seems to be roughly the same, it’s not an easy game and there are lots of barriers to entry.  Below is a reply to a DM I received earlier this week from a guy in Georgia, where craft beer is booming now.  If you’re also contemplating growing hops, I hope this will help.  The advice might seem discouraging.  That’s certainly not my intention.  It’s also not intended to be an all-inclusive list of what you’ll need to do or even of all the potential pitfalls.  The message just hits the highlights, but it’s a start.

“Problems you may run into trying to grow hops in Georgia would be short day length in the summer, humidity causing both downy and powdery mildew and some pests that may not be prevalent in the Pacific Northwest.  None of those are insurmountable obstacles, but they are all challenges to be aware of.  You should consider buying a Wolf picking machine from Europe.  The one you’ll need depends on how many acres you plan to harvest.  You’ll also need a dryer, also likely from Europe unless you build your own kiln there, which is very doable.  If you have access to natural gas, it’ll be more efficient.  If not, propane would be the way to go. You don’t want to use diesel. Some say it leaves an off taste in the hops.  You’ll need a baler or pellet mill to put them into a form that is more easily stored and delivered.  You’ll also need some cold storage for what you produce.  We’re building those now.  They’re not cheap.  If you have a pellet mill, cold storage will be easy to find.  If you’re baling your hops, the insurance will be a bit more expensive.  For all of that together, not including the land, for a small scale operation, if you’re crafty (no pun intended) you can probably get by at around a half million dollars.  You can delay some of the expenses until production gets closer.  Regarding production, you won’t get a crop you can bank on to sell until your 3rd year.  Then, if you’re going to sell them to brewers, you’ll need a sales team, some inventory tracking software and somebody to keep your books straight so you don’t short any of your customers ever. 

I’m not trying to frighten you off or anything like that.  There is definitely a need for more hops and hops from Georgia would be nice for Georgia’s brewers.  You’d definitely satisfy a niche market for which you could probably get a little more money.  It’s just good for you to know the whole picture going into this instead of just looking at the prices and thinking you can make that work.  I’m not suggesting you’re doing that, but I’ve spoken with plenty of people who did see high prices and thought they could make a killing only to realize 3-5 years down the road it was lot more work than they originally thought and the money doesn’t really pay for it unless you’re at scale.  All that said, passion is a powerful motivator.  If you’re really wanting to do it, go for it.  Please let me know if I can be of any help along the way.”  

I obviously didn’t get into any of the economics of the business, but the farm would most likely be small and even with higher prices for fresh and local product would not break-even for several years after the first crop due to the high costs to get started.  There’s definitely a market for local hops and for fresh hops, which command a much higher price due to the complexity of delivering a very perishable product. That would remove the need for a pellet mill and maybe for cold storage, but it complicates things in many other ways.  Growing hops is definitely a labor of love and the people who do it deserve to be well compensated … you won’t hear many hop merchants say that openly.  It’s true though.  Hoppin’ ain’t easy.  

I’d love to hear your thoughts in the comments below if you’re considering becoming a hop grower in the near future.  

How to Avoid High Hop Prices

Back in 2003, it was simple to get more hops whenever you needed them. You could just call up the merchant and ask for what you wanted. Chances are they had it sitting around, just like a bottle of Pepsi at the grocery store. Plus, brewers could get them for $2.00 a pound. A good friend of mine once told me, “the best thing about the good old days is that they’re gone.” It’s easy to go nostalgic to a time when we were all younger, but I think he was right. People weren’t drinking so much craft back in the good old days and hops available for $2.00 a pound hasn’t paid the bills since the 70’s!  

While times have changed, one thing has stayed the same … how long it takes to produce hops. It seems a lot of brewers don’t understand when they should contract for or buy their hops. You can’t blame them. They’re brewers, not farmers. When a brewer thinks of a year, it’s the calendar year. When a grower thinks of a year, it’s harvest to harvest. If you’re a brewer and you want the best selection, there are some things you should know. You want hops for 2015?  That means 2014 crop until October or November of 2015. If you want those 2015 hops, you should have ordered them already. Here’s why:
Washington and Idaho are the only places on Earth where hops can produce a full crop in the first year of production. The rest of the world needs 3 years before they expect a full crop. Even in Washington and Idaho the grower doesn’t always get a full crop the first year, particularly with aroma varieties, but it’s possible. Even with that incredible advantage, it’s not so simple for a grower to get a yard into production. He needs to have an empty yard just sitting around, something we don’t see too much of these days, and money, let’s not forget money. It takes lots of money.
If a brewer wants hops from Washington and Idaho for the 2015 crop, they should already be contracted, or they may not be there when he needs them. Why?  The grower needs land and poles. Land is everywhere you say?  True, but it’s not all for sale, especially the land within harvesting distance from picking machines. Also, the ground that is for sale is getting more expensive with each passing month it seems. Back in 2008 an acre of land cost $6000. That was considered a crazy price. Today, that price is $10,000!  Supply and demand!  After figuring out financing, land and poles are the first two things that need to be done … assuming the grower has enough picking capacity to pick the hops the brewer wants. If not, things get a whole lot more complicated. Let’s assume for now the grower can pick the hops needed. Ideally, those poles need to get to the farm so there is time to treat them before they are put into the ground. Treated poles can last 20-25 years. Untreated poles will rot out in 5 years. Hop yards are not usually a short-term investment. Growers are pretty busy with harvest this time of year. Those poles should have already arrived back in June or July to be treated, or they should arrive sometime during harvest so they can be treated right after harvest while the crew is still around.
Growers want to put up a yard in the spring before planting the roots, which ideally happens in March or April. The roots will need to be dug during the winter of 14/15 once the hops have gone to sleep. Of course, the grower needs to find the roots if he doesn’t have them himself. Roots aren’t available to all growers equally and the quality of some roots can really suck if there is a lot of demand. Some growers don’t like to sell roots to other growers, so growers are limited to buying roots from their grower friends. Yes, it is like high school. Most proprietary variety roots aren’t available for the grower to buy at all at any price because the owners own them ALL. Those are probably the same people who, as kids, wouldn’t let you play with their toys. If all goes well and the weather cooperates, a Washington or Idaho grower will have his trellis up and hops planted by April or May. They can go in later, but the results usually aren’t so great.
All together, including drip irrigation and all the other expenses that go into a hop yard, growers will tell you it costs somewhere between $9,000 and $10,000 per acre just to establish a new acre. There are lots of ways to shave off costs from that number, but that’s the number people are using today, so let’s go with it. Don’t forget that acre of land also cost about $10,000 in today’s market. So that’s roughly $20K already out the door and we don’t have a crop yet. Growers today estimate that cost is around $9,000 – $12,000 per acre depending upon the variety. From that acre, they’ll get somewhere between 1,000 and 2,000 pounds of hops for most aroma hop varieties.
Question: So when do you order your hops if those hops come from Washington or Idaho for the best price? 
Answer: In the summer OF THE YEAR BEFORE the hops will be harvested.
“WTF … a whole YEAR in advance” … you may say. “That’s impossible. I don’t know what I’m brewing next week!” We hear that a lot. Brewers call up in the spring or even in the summer needing hops from that year’s harvest. That’s not impossible, but it has consequences. It causes the market to get tighter. Why?  Growers always plant a little extra to be sure they don’t short their contracts. The merchant may buy a little extra for the same reason. That reserve gets smaller and smaller as more people come in to buy hops during the 9 months before harvest as everybody tries to accommodate the brewers’ needs. If the crop is not average or better, you had better have a good relationship with your merchant because things can get pretty tight. When that happens prices shoot up. That’s what’s happening right now! 
That doesn’t seem so bad though. “If I have to, I can plan out a year in advance,” you say. I’m sure my European hop grower friends are reading this now and thinking how lucky those growers in Washington and Idaho are. The rest of the world is not so lucky. They can expect to get 10-20% yield in year 1, 50-70% yield in year 2 and 100% yield in year 3 if Mother Nature cooperates every step of the way. Usually growers in the rest of the world don’t count on the 1st year’s production because it isn’t guaranteed. Year 2 can be a little more reliable. So … Growers in the rest of the world have to invest in 2014 for hops they can’t realistically see a return from until 2016!  They can delay the trellis expenses until 2016 if they don’t have the money, but that can hurt production so it’s not such a great idea.
Mother Nature is responsible for slowing European growers’ responses to market signals, which is why acreage expands and contracts more slowly in other parts of the world than in Washington or Idaho. That would seem to be an advantage for the Washington and Idaho guys, but, more often than not, it has a curse rather than a blessing. Their eagerness to take advantage of a market leads to overproduction, which causes the crazy swings in prices with which we’re all familiar. No bueno.
Question: So when do you order your hops if those hops come from anywhere other than Washington or Idaho for the best price? 

Answer: Up to THREE YEARS BEFORE the hops are harvested! 
Yep!  I did just say that!  Now you’re really thinking WTF!!  That’s not going to fit in well with Craft Brewers who like to switch things up, keep it fresh and try something new. That also won’t fit in well with a craft brewer who exchanges 5 or 6 emails back and forth, a phone call or two and maybe even a personal visit with a merchant and then disappears for three or four months before reestablishing contact to try to make his purchase (honestly, we see that all the time). In this market, those hops will disappear, sold to somebody else who understood the risks of waiting and who acted quickly. That goes for brewers big and small … there is somebody else out there who will buy the hops you want if you don’t contract for them quickly.

Somebody has to take the first step to get the new acreage in the ground. If it’s the grower or the merchant, the prices will be much higher as there is more risk involved. If it’s the brewer, prices can be lower. Since all the acreage is full now, regardless of who takes that first step, we’re talking about building new trellis. To justify that, growers need contracts that are 5 years or more so they can repay the enormous loans they’ll be taking out to get hops to the market that we mentioned in our previous article “Why Your Hops May Cost $1 Billion More by 2020”. Under the current market conditions, the spot market is the worst place to buy hops. You will pay the highest prices on the spot market right now. There’s a lot that goes into the hop growing process. Unfortunately, you can’t just flip a switch somewhere and make more hops. So what does that all mean for you if you need hops?
Contract Early, Long and Often to Avoid Paying Higher Prices!

Why Hop Prices are Really Rising? Opening the Kimono.

We touched briefly on this in our previous post, Greedy Growers & Dirty Dealers  However, recently an interesting article by Eric Connor in USATODAY has been making the rounds among hopheads the past days on the Twittersphere.  It claims the rise in the cost of hops is responsible for the high prices of craft beer. The article touches on the surface of a very real problem within the industry, but doesn’t explore the deeper question of WHY prices are increasing. Although the title is a bit sensational and gives a little too much credit to hops for affecting beer prices, it’s a great excuse to dig in a little deeper into one of the most serious problems the industry today and ask WHY. 
In the article, Eric states, “In many cases, farmers don’t know how or what to plant in an uncertain market…”  That’s just not true! My guess is that Eric didn’t have the opportunity to talk to many farmers before writing the hop piece. Farmers are pretty good at responding to market signals by planting hops when prices are good, and to a lesser extent, removing hops when prices are bad. Growers are great at figuring out ways to produce more hops per acre when no restrictions are placed on them. Eric Connor probably did not … or more likely was not able … to look into the economics of hop or beer production. Perhaps he was not privy to what insiders know about the system. That’s not hard to believe. The industry is very closed to outsiders. It’s hard to find somebody who will answer the question WHY. Eric … Drop me an email. I’d be happy to share what I can with you. Just like in the Wizard of Oz, there is a man behind the curtain. There may be some smoke and mirrors too. 
Most proprietary varieties, although grown by many growers, are strictly controlled on both the production and sales sides. Sure, you may be able to get your favorite proprietary aroma variety through several merchants, but that’s all part of the illusion of a free and open supply chain. Like sand through an hourglass, most of those proprietary varieties, regardless of where they start and where they ultimately are sold, flow through one central control point. That is the most likely reason you can’t get your favorite variety today, or if you do, why it’s costing so much. It’s not because growers are demanding a fortune for them. According to several growers with whom I’ve spoken, they are actually not being offered enough to grow them in greater quantities. That’s strange with the market in its current state. Of course, those who sit in the center of control want to maintain the status quo. They’ll argue that everything is peachy. They won’t acknowledge publicly the waiting lists for hundreds of thousands of pounds they won’t be able to fill this year or next. That would mean their system isn’t working. They’re focused on retaining control so tightly that they don’t see the consequences. The problem with blaming a shortage of land or picking capacity is that money at the grower level, fixes all those problems. Land and machines can all be bought if money is available.
There is, of course, temptation to control something you’ve created. A monkey will get his hand caught in a trap because he won’t let go of the banana he wants. He is a victim of his own circumstance. As with the monkey, the solution to the problem of supply of proprietary hop varieties is simple. Of course, if you create a hop variety it’s your baby, but just like when your baby rides their bike for the first time without training wheels, at some point you have to let go and see if they can ride on their own. In this case, there’s not just a skinned knee at stake. That makes it even harder to let the banana go. Letting go though does not mean letting go of the returns on a well-developed breeding program. In fact, letting go means reducing the cynicism developing among brewers about new varieties, who currently think they don’t stand a chance of getting the existing varieties, not to mention any new varieties that may come unless they are somebody’s favorite brewer. Letting go means removing some very negative vibes circulating out there right now. Letting go also means increasing market share for the varieties while there is still demand.  Eeek eeek!
Those in control of managing the most popular aroma varieties seem to not be reading the tea leaves correctly. Perhaps, they are reluctant to believe that craft is a trend, not a fad!  Those who own the proprietary varieties and have done a great job at bringing them to market while they were in their infancy won’t shift gears now that the varieties have gained popularity. They don’t have a second play in their playbook. Now that that has happened, the next move should be to allow growers to buy the hop roots and pay royalties on strictly monitored production with heavy fines for non-reporting. That would allow growers to plant more and would quickly unlock the vast potential of those varieties, which, ironically, would very likely earn them even more money. 
Power is the great aphrodisiac 
– Henry A. Kissinger
Continued deficits in very popular and very unavailable, proprietary varieties lead brewers to conclude they must want the hops they can get instead of getting the hops they want. I’ve had conversations and signed contracts with brewers frustrated about this very topic. They’ll find the flavors some other way, like by adding actual citrus fruit to a brew or something even more off the wall. Craft brewers are a pretty creative bunch. Instead, the almighty Oz has chosen the path that any world dictator would admire and respect, one of tight central planning and control, but that doesn’t usually work out very well, as we’re seeing now. That’s why you have hops selling at prices up to $20 per pound right now … supply and demand are out of balance. The market doesn’t have to be that way.
The free market can control everything if allowed to and sends signals to those who can read them which way to move. Right now, the market is screaming, “give us some more of those damn proprietary aroma hops”. Although there have been acreage increases, they’re hardly what the market demanded. Somebody is not listening, or are they choosing not to listen? Hopefully that’s not the case. Maybe the ones in control use a cloudy crystal ball or a broken Quija board to figure out how many acres of those varieties to plant. It doesn’t seem they’re responding to market signals, which are clearly saying via extremely high prices on the secondary markets that there is a shortage of certain varieties. That inefficient structure could ultimately cause more harm than good to the industry, but hop growers seldom act in unison. They are more accustomed to building fences than bridges. 
What is a great variety worth if you can’t get it?  Nothing!  The ones who suffer most are the small or start-up craft brewers who are not the darlings of most of the long-established hop merchants. They prefer the bigger brewers because of the large volumes and easy deals they represent. The problem in the industry now is not a lack of great varieties. There are plenty of those. The problem in the industry now is being able to produce more of the great varieties we already have. All the while, breeding programs continue to efficiently churn out new amazing varieties every year further exacerbating the problem.
Nothing is ever black and white in this world. To be fair, the higher prices we’re seeing today are not exclusively the fault of one man behind the curtain. Although, just looking at the surface, it would be easy to say that’s the case, that’s giving him too much credit. Prices are increasing also because they’ve been kept too low for too long during times of surplus. Those $3 Cascades you hear about so often and may even remember were a result of big breweries strong-arming growers and merchants to sell for less during times of oversupply. When a hop merchant can sell Cascades at $3 per pound, nobody wins except the big brewer. Some merchants seem to enjoy doing that to get a customer for bragging rights … I still don’t get that, but to each his own. The grower loses money at those prices. An industry is not sustainable when price spikes every 10 years keep the industry alive and 8 years out of 10 prices are below the cost of production. That’s not good business. Since the early 90’s, NO grower has been able to grow Cascades at a price that allows the merchant to sell them for $3 per pound. The fact that they’ve regularly sold at that price until just recently proves how heavily things were stacked against the grower most of the time. Every pound of hops that sold for $3 was farmer and merchant equity going out the door. Prices are correcting to where they need to be now to maintain current acreage and finance necessary growth. While the hops may be even more expensive soon, that’s not a bad thing if hoppy beers are what you crave. Is it wrong for a business to want to survive? 
We’re not in Kansas anymore!  Growers, finally empowered by reasonable craft brewers who are willing to pay a sustainable price for their hops, have the courage to say NO to the terrible prices below the cost of production offered by the big brewers and, in turn, by some of the big hop dealers too. Craft brewers are expanding as quickly as possible to keep up with their demand by investing in new brewery equipment and everything else that comes along with growing a business. Every so often we read of millions borrowed or invested by one of the large craft brewers to expand. They deserve kudos for being able to figure out ways to expand in a growing market and keep up with cash flow. Hop growers are trying to do the same, but all we read are articles explaining how higher hop prices are bad for craft beer. Why the double standard?
Don’t get me wrong … I’m not an apologist for hop growers. Just like anywhere, there are some good ones, some bad ones and some ugly ones. People are people after all … as the song goes. Regardless, good, bad and ugly alike deserve to make enough of a profit to be able to keep up with the increasing demands for the crop they grow. That means they need to calculate for expansion, and … God forbid … profit. That’s sustainable … and it’s the right thing to do. If 47 Hops was an old school hop merchant, higher prices would actually be the last thing I should be calling for. For a merchant company, higher prices mean more money out of pocket to buy hops from growers, which means more risk. Your old school merchant might buy long on the grower side and sell on the spot market in an up market increasing his prices every year because that’s where the most profit could be made. Some guys are using that strategy right now. Higher prices are what is necessary and they are what is right in today’s market. The grower has to make enough to sustain his business and so does the merchant. For the record, 47Hops has bought on long-term contracts from the growers before it became the obvious thing to do and we sell on long-term contracts to the brewers. We’re interested in stability and getting our brewers through the even rougher times we foresee ahead instead of exploiting the weaknesses in the system. We used to get a lot of push back from brewers on 5-year contracts. We’ve been accused of trying to strong-arm people into contracts. When that happened, we shared with them our philosophy and what’s going on in the industry and then they understood WHY. There’s much less resistance to the idea today. 
Hop growers should be compensated for their hard work. Without them, there is no beer!  Do you really want to drink a beer knowing that with each sip you’re bringing a farm closer to bankruptcy?  That’s the pillar on which the multinational brewers have built their fortunes. They strived to get the lowest possible prices for ingredients so they can make more money for themselves and for their shareholders. Their empires were formed on the backs of broken farmers. They used their great power to get what they wanted. It doesn’t seem to be the mantra of most craft brewers now and hopefully it never will be. They have changed the dynamic of the hop market. In today’s market, that lowest possible price will be sustainable and it will include some profit for the grower and the merchant. 


The 2014 harvest is only a few weeks away.  Already we know that there will not be enough of some the most popular proprietary hop varieties … again. The problem is not that more of them can’t be grown. The problem is also not that growers don’t want to grow more. Prices aren’t an issue because some of the most popular aroma varieties can command a very healthy price and brewers seem willing to pay those prices, no questions asked.  Production of the most popular proprietary aroma varieties is limited intentionally by the people who own the rights to those varieties.  It’s not limited with the intention of driving up price.  It’s limited because they don’t want to make those varieties available to the industry at large and they can’t handle all the production necessary.  Instead they try to tightly control production and/or sales through specific companies.  Public varieties, which are available to anybody who wants to grow and/or sell them, don’t have this problem. Unless the situation with availability to freely grow proprietary varieties changes, the availability of those proprietary varieties to brewers is not likely to improve. Why would somebody commit such a heinous crime you may ask? The interests of the brewing or hops industries as a whole are not among the reasons.
The hop industry is small and a lot of the players are closely related.  There are old families that have been in the industry 100 years … think Godfather without the olive oil.  There are also groups of growers who cooperate together and against other groups to try to advance their own agenda … again, think Godfather, but without the fancy suits and machine guns.  Some families’ arms reach far and wide and their fingers are in a lot of pies.  
I mention this because usually there aren’t too many degrees of separation between the grower, the breeder and the merchant company selling the hops. In some cases, they’re one in the same. That can be good and bad.  When supply is kept lower than demand though … that’s bad.  This is done by merchants to try to lure brewers into the web of a merchant company so they can lock in customers they may not otherwise be able to get or keep.  I guess that’s their competitive advantage … and, as they say, business is business.  Fair enough.  That’s a pretty douchey move, and risky in an age when social media enables people to share their thoughts so easily.  It’s a move that has played well during the previous 10 years, but it won’t play well during the next 10.  The demand for those varieties won’t last forever as more new varieties are created every year by many different players diluting the popularity for any one in particular.  Brewers will be drawn toward new and different attainable varieties when they can’t get the varieties they want.  We’ve seen that happen first hand.  To use an agricultural analogy … “you have to make hay while the sun is shining”.  The owners of some proprietary varieties are missing the chance to maximize sales, and therefore revenue, by limiting production and sales outlets.  To put all your eggs in one hop basket and assume that will keep working indefinitely, is short sided to say the least.
Unfortunately, the same companies in control of the most elusive proprietary varieties don’t seem to understand or can’t handle the growth currently happening in the industry and definitely don’t understand the scope of the demand for the great varieties they have created. That is why those varieties are in short supply today.  You can imagine the varieties I’m talking about and you probably can guess the companies involved so I won’t mention them here. If the people in question believed in a free market, where any growers could buy and produce proprietary varieties for a royalty fee and sell them to whomever they choose, instead of trying to hoard sales for themselves and control it, we would not be seeing variety shortages today. To be fair there are a couple companies selling proprietary varieties in the way we’ve suggested.  It works and there are no shortages of those varieties.  The variety shortages we have today are evidence of a very top down strategy, something that might fit nicely in North Korea.  After the fall of the Communism in the Soviet Union, however, I think most people understand that central planning doesn’t work very well.
The creators of proprietary varieties should be well compensated and praised for all their hard work to create such amazing varieties for the market.  It’s an expensive, time consuming and risky job with no promise of any return on the initial investment.  Ironically the creators of the most popular varieties should be criticized, however, for their management of bringing those varieties to market.  They are not allowing the demand for the amazing hop varieties they have created to be filled.  Maybe they’re afraid to share the benefits of their creations with anybody else.  Maybe they really just don’t care about shorting the market.  That could all be fixed by allowing any growers who wants to grow proprietary varieties to buy the roots and pay a royalty fee for the variety in question, which, ironically, would make them more money.  They could easily pass along the cost of a reasonable royalty to their customers, whether they are grower direct sales, or through other merchants.
I’m sure if enough of you would like to see more proprietary varieties on the market we can make a difference!!  Do you think proprietary varieties should be more widely available for anybody?  I’d love it if you’d share your thoughts and comments on twitter and add #freethehops so we can all participate … or share the link to this blog article to spread the word. 
Stay tuned for another post with a crop report by the end of the month.