HAWAII ON TAP
One hopping market
The high cost of hops forces Hawaii brewers to alter recipes so they need less of the crop that gives beer its bitterness and aroma
Keith Kinsey pats a handful of bags stacked against the side of a large cooler, used primarily as a temporary home for about a hundred full stainless steel kegs.
"A couple of years ago, this bag would have cost $200," he said.
Today, dwindling acreage and rising demand have pushed the price of a 44-pound bag of hops to $1,000 (about $22.70 a pound). A pound of hops cost as little as $5 a year ago, said Kinsey, president of Keoki Brewing Co. in Lihue. His most recent price was $50.
With only one of Hawaii's eight brewery operations -- Kona Brewing Co. -- breaking into the top 50 largest in the country in terms of sales, isle craft breweries are forced to compete on a global scale against bigger companies for a limited supply of hops, a key ingredient that gives beer its bitterness and aroma.
That means the majority of local brewers have either changed recipes or altered their selection to favor less hoppy beers. Dave Curry, brewer at Kauai's Waimea Brewing Co., said the variety of hops has dropped to about 5 percent of what it used to be, resulting in fewer batches of his India Pale Ale, locally dubbed Captain Cook's IPA.
"For the small brewer, it's definitely affected us," he said. "I've had to think about increasing prices of the pint. Hopefully you can be creative and keep the beers from getting bland."
Years of poor pricing forced hops farmers out of the business, said Ralph Olson, owner of Hopunion CBS LLC in Yakima, Wash., one of the largest hops distributors in the U.S. Excess inventory helped suppress prices after supply dipped below demand about four years ago, he said, but when the excess disappeared, there was little acreage left.
"You had worldwide panic by major brewers who were stupidly going in and buying a lot of spot hops thinking there was going to be supply and there wasn't," he said. "The farmers that are left are in power, but there's not many of them left because the infrastructure fell apart."
In 1995 there were 234,000 acres of hops worldwide, falling by half to 118,000 acres last year, said Olson, who has worked in the industry for 30 years. Although crops are being replanted, he said the market will remain tight for another two years.
About 8,000 acres of hops are being planted this year, Olson said, adding to an existing U.S. crop of 33,000 acres, most located in Yakima, which accounts for 70 percent of total domestic hops farming. While established crops look strong for the August harvest, new growth is slow following a prolonged winter in much of the Pacific Northwest, he said.
"I've been buying hops constantly -- anything is in demand right now," he said. "I've been buying some bizarre stuff I've never even heard of before. If I don't buy them right now -- I will make deals that are huge -- some other brewery around the world will take them instantly."
The average price for aroma hops, which most craft brewers use, ranges from $18 to $24 a pound, he said, with high alpha hops selling for around $45 a pound. Other factors, such as an October 2006 Yakima hops warehouse fire, and the use of land for crops driven by the biodiesel market, have also contributed to higher prices, local brewers say.
Meanwhile, sales by U.S. craft brewers have increased 58 percent since 2004, according to the Brewers Association, a Boulder Colo.-based nonprofit trade group.
Garrett Marrero, owner of Maui Brewing Co. in Lahaina, said he has planted small batches of more than a half-dozen different hops, including cascade, centennial, crystal, liberty and sterling, in Kapalua.
"They've been in the ground for just a couple months, so next year is the earliest, most likely two years to get useable amounts." he said. "They are just starting to grow but look very promising."
