CINCINNATI -- Brewers buy them, trade them, and, these days, even try to imitate them. When it comes to hops, beer wouldn't be beer without them.
But given the number of craft breweries around today and the growth in the industry that is expected, some say the specialty crop could soon be in short supply.
Larger-scale craft beer makers, such as Cincinnati's MadTree, often have to contract with hop growers years in advance to ensure their signature brews are always on tap, while newcomers, such as Pleasant Ridge's brewpub Nine Giant, must rely on spot or secondary markets, which can be significantly more expensive.
A shortage, caused in part by drought conditions in recent years, could mean recipe changes or higher prices at the tap for consumers and could hamper growth in the industry at large.
"It's not a constant worry, but it's definitely out there," said Mike Albarella, brewer and co-founder of Nine Giant, which opened on Montgomery Road in June. "It's an imperfect system that seems to be working right now, but what happens to craft beer in the next five years?"
Nine Giant brewed 220 barrels in its first six months in business. A good result, but it also means the brewpub needs to buy hops only a few cases at a time. MadTree, conversely, purchases them by the pallet.
The growth of craft beer has been well documented. The Brewers Association says there are more than 4,600 specialty breweries now operating in the United States, and the industry is growing. Although those beer makers command roughly 12 percent of the market share, they use 90 percent of the hop weight to flavor their wares, said Matt Rowe, director of brewing operations for MadTree.
Citra, Simcoe, Mosaic and Amarillo are among the most popular varieties, while new breeds are constantly in the works. Thousands of new acres are being planted, but it can take a couple of years to realize a full yield, and some experimentals flop.
"Everybody tends to be in an arms race," Rowe said. "Getting your hands on X, Y, Z experimental hop and finding something that hasn't been discovered yet is the constant battle. And some are horrible; they just don't work out the way you want. That's always the risk you take. But it's fun because you always want to try new things."
On harder-to-get varieties, MadTree has contracts through 2021. But the brewery was lucky; it started in 2013, on the brink of the craft beer explosion.
"We were ahead of the game in contracting varieties that we thought were cool and unique and get a lot of use today," Rowe said. "But a lot of the smaller players or newer guys in the game, they don't have the relationships or don't know about hop contracting to secure the volume of hops they want."
That means breweries like Nine Giant must rely on the spot market, a system for purchasing surplus or hops not contracted for, from farmers, suppliers and even other breweries themselves.
"The pricing can be really, really steep," Rowe said.
Albarella said he sometimes can find hops at a "halfway decent value." It can also be a case of extreme profiteering -- brewers trying to make a profit when they have an excess of hops in an order.
"On one (web)site, you could always find super-expensive hops, but they're, like, $28 a pound. Contract price is $11-$12," he said. "On a typical batch of beer, not that big of a deal, and for something small like ours (sales largely through a taproom), it works. But that's unsustainable if you're distributing. That's your profit margin just burning up.
"A few months before we opened, I really started freaking out about hops and jumped on a bunch of stuff through a home brew shop in Wisconsin that I've used before," Albarella said. "I effectively paid what the high spot price was at the time but thought, 'All right, at least I'll get something.' But they were whole hops, which turned into a huge nightmare with our brew system because no brew systems are really made to deal with whole hops. (They use pellets). We just chalked that up to inexperience."
That's one problem with being a small fry. Albarella said Nine Giant brewed 220 barrels in its first six months in business. A good result, but it also means the brewpub needs to buy hops only a few cases at a time. MadTree, conversely, purchases them by the pallet. Rowe said MadTree used 70,000 pounds dry weight in 2016.
Brew systems are made to deal with pellets from hops, not whole hops themselves.
That number will increase with last month's opening of MadTree 2.0, its new facility in Oakley. The brewery plans to increase production to 30,000-35,000 barrels a year, and there's capacity for 180,000 barrels in house.
"I don't have the same needs that a MadTree has," Albarella said. "I have to keep my ear to the ground. Most of the larger hop suppliers don't even want to deal with you unless you're spending like $5,000 per variety. I've probably spent that (across all our hops combined). It's a significant chunk."
Although MadTree has inked contracts, that doesn't mean it's also not seeing a price crunch. The price on the hop Centennial, which is among its most-used, has gone up almost 50 percent since 2013, Rowe said. Others are averaging 10 percent to 15 percent increases per year over the last three or four years.
"It's a pretty common trend you see across the board," he said.
Want Galaxy High year-round? That's also unlikely. The Australian-raised hop used to make that imperial IPA is "notoriously hard both to purchase and contract," Rowe said.
Similarly, the recipe for Sol Drifter, a seasonal strawberry blonde, had to be modified from its original release because MadTree could not further secure Motueka, a hop grown in New Zealand. Now, it uses a more common variety to create a similar flavor profile.
"Some people did (notice) … If they said it tasted different, you could slowly guide it and blame it on a change in the season, but the reality is we had to (adjust the recipe)," Rowe said. "There was just no way around it."
Some outfits are experimenting with hopless beers. Other alternatives, like hop extracts, are also growing quickly, Rowe said, "again, as a way to encourage folks to come up with new and create ways to get more efficient with their use of hops."
Overall, though, he said he thinks concerns of a hop shortage are a little exaggerated. Still, concerns linger.
"I do worry that we're going to start to see some price creep," Albarella said.
"I think (the concern) is caused by irresponsible contracting on the breweries' part more than anything," Rowe said. "Some of the growers are also getting over-exuberant and planting more and more acreage, but they seem to be responding to contracting in most cases. Obviously, when it comes to proprietary varieties, those can be more difficult to source than public ones, but again, it seems like the hops supply is catching up with demand."
Technology to the rescue
To ensure MadTree is getting the most bang for the buck, Rowe said it's investing in a new recirculation system, which will help extract more aromatics from the hops and increase efficiency. He said the brewery is spending roughly $40,000-$50,000 on that technology, which should save the brewery money down the line.
"It's not a massive cost, but that's essentially the cost of an entire fermenter for us, so it's a pretty significant investment," he said. "It can make a big difference for us down the road. That's definitely a storyline you see pushed. Being more efficient in our hop usage is obviously going to be more financially intelligent for us, and it's more responsible, too."
