It’s a trend that could leave you crying in your beer.
That is, if you lean toward the speciality beers and ales brewed locally in microbreweries.
A hike in the price of hops — close to 400 percent in some cases — likely will hit microbreweries and their customers the hardest, experts say.
It is hops and barley malts — two key ingredients in the making of beers and ales — that are in short supply, raising the cost tremendously for many brewers.
Ultimately, consumers who enjoy the speciality beers produced by craft and microbreweries, including those in the Quad-Cities, will be picking up the tab.
“Prices of hops have tripled and quadrupled over a year ago,” said Dave Loete, general manager of Bent River Brewing Co., a tavern and brewery in downtown Moline.
“I was paying $4.27 a pound in February, and my last purchase in October was $12.96 a pound. They come in 44-pound boxes.”
The brewing industry faces mounting costs on nearly every front. Fuel, aluminum and glass prices have been going up over the last several years, those in the business say. On Thursday, the chief financial officer of Anheuser-Busch Cos. told analysts that the nation’s biggest brewer expects more price increases to counter a rise in the cost of ingredients.
In addition to hops, barley and wheat prices also have jumped as more farmers forego those crops to plant corn to meet increasing demand for ethanol. Meanwhile, other farmers are planting feed crops to replace acres lost to corn.
An oversupply of hops that forced farmers to abandon the crop about 10 years ago is depleted and harvests were down this year, experts say. In the United States, where one-fourth of the world’s hops are grown, acreage fell 30 percent between 1995 and 2006.
Big brewers can hedge against rising prices for raw ingredients and can negotiate better, longer-term contracts for ingredients. Smaller brewers generally get whatever is left.
Big brewers have another edge that the smaller guys don’t, according to Matt Stern, president of Stern Beverage of Milan, Ill., an Anheuser-Busch distributor for Rock Island, Henry and Mercer counties.
“They have their own hops farm, which insures the quality of the hops. The quality of beer makes sure that every beer tastes the same.” He also said Anheuser-Busch has forward contracts for hops to make sure expenses are stabilized.
To respond to the worldwide shortage of hops, some small brewers are looking to tweak their recipes or are experimenting less with new brews.
Bent River’s Loete fully understands all that.
He said most hops are grown in the Yakima, Wash., area. “There were 206 growers in 2003; now, 46,” he said.
His business brews 15 barrels at a time. Each barrel is 15 gallons. Bent River makes four basic and seasonal flavored beers and ales. Loete also has done home brewing for 15 years, which is where he learned the trade.
Bent River already has increased customer prices slightly to offset what he expected to be rising costs. “We saw it coming last summer,” Loete said. “We raised prices six months ago. We do not anticipate price increases for awhile.”
Bent River prices went from $3.50 a pint to $3.75. The price of a mug of beer rose from $5 to $5.25.
Dan Cleaveland, co-owner and brewmaster at Blue Cat Brew Pub in Rock Island, not only is concerned about the price of hops, but also availability of the key ingredient.
“Hops are pretty much gone for the year,” he said. “This is the first time we will go to a contract, where you agree to pay so much for hops over the next year. The price on that is pretty much being negotiated. One guy is selling for $22 to $25 per pound.”
Blue Cat has not raised prices yet, because “we still are working off what we had before,” he said, referring to product on hand. “But by this time next year, everything is going to change.”
Normally, Cleaveland does not have to order a lot of hops, and he had the flexibility to order when needed. Now, though, he must lock in a specific price and amount of pounds through futures contracts.
And for now, he must work with the hops and malts he has in stock.
A popular hop called Cascade was selling for $1 to $1.06 per pound about two years ago. He said at that point, it was costing more for farmers to produce hops than what they were getting back in price.
“That is why we lost so many farmers,” Cleaveland said. “I don’t expect it to go away for the next two to three years. And I think some small breweries will close down.”
Dan Kelly, owner of Kelly’s Irish Pub and Eatery in Davenport, agrees that microbreweries will be most affected.
“Usually, beer prices go up in January anyway,” he said. “Our beer comes off the truck, so it doesn’t affect us as much. I assume prices will go up the first of January. … Over the last three years, the price of a bottle of beer has gone up roughly a penny a year.”
Bill Olson, president of the Associated Beer Distributors of Illinois, a consortium of 70 distributors throughout the state, said he has not heard of any price increases related to increases in production costs.
“It may or may not happen,” he said. “… It’s hard to say. It is very premature trying to project how things are going to be.”
(The Associated Press contributed to this report.)
What are hops?
The hops used in the brewery industry are the dried female flower clusters (cones) of the common hop, a long-lived perennial with rough twining stems. Hops impart a mellow bitterness and delicate aroma to brewed beverages and aid in their preservation.