Microbrewers hop to secure beer's 'spice'

By: BRADLEY J. FIKES - Staff Writer | Saturday, December 15, 2007 7:55 PM PST ∞

NORTH COUNTY ---- For those who savor microbrewed or "craft" beer to escape the mass-produced liquids advertised during the Super Bowl, the escape is about to get more expensive.

Brewers in North San Diego County and Southwest Riverside County say hops ---- the ingredient that gives beer its biting zing and heady aroma ---- is in short supply. Across the world, breweries are scrambling to secure supplies. In some cases, they're coming up short.

While one local microbrewer says fear of a shortage has created a self-fulfilling prophecy, all who talked to the North County Times admitted difficulty in getting their orders filled.

Prices are also rising for malt, an even more essential beer ingredient. However, the rise in hops prices is much greater, and the shortage more troublesome, brewers say.

Local craft and microbrewers, such as Stone Brewing Co. and San Marcos Brewing Co., say they will raise their prices next year. And in some cases, special edition beers will be altered to a hop-lite formulation.

(The term "microbrewers" applies to those who make up to 15,000 barrels a year. Craft brewers are independent brewers who use traditional methods and make less than 2 million barrels a year.)

"The impact is dramatic," said Greg Koch, chief executive of craft brewer Stone Brewing, based in Escondido. "It's going to affect pricing. It affects our ability to do special projects and other things that we had in mind," said Koch (pronounced "Cook").

Stone will raise its beer prices next year by an average of 25 percent early in the first quarter of 2008, Koch said. "And we question whether that can cover everything."

This summer, Stone nailed down most of its hops needs for 2008 but will purchase the remainder at a stiff premium.

"We contracted about 85 percent of our hops at about $5 per pound," said Mitch Steele, Stone's head brewer, via e-mail. "The remaining 15 percent on the open market is about $25 per pound."

Supply reduced
A warehouse fire in Yakima, Wash., a prime hops growing area, destroyed 2 million pounds of hops in October 2006 ---- an estimated 4 percent of the country's hops production, according to newspaper reports.

At the same time, a stored global surplus of hops was being exhausted, Koch said. The double punch knocked supply and demand out of balance, he said.

Stone Brewing has strong reason among local micro- and craft brewers to worry about a hops shortage. Stone is North County's largest beer producer, brewing an estimated 67,000 barrels this year, Koch said. Also, Stone is known for its ultra-hoppy beers, such as its cheekily named Arrogant Bastard Ale and Stone Ruination I.P.A.

Aficionados of those beers needn't panic ---- they'll still be available. But some hoppy beers planned for special release will be replaced by less hops-intensive beers, Koch said.

"The Stone 08-08-08 Vertical Epic Ale will not be a hoppy beer," Koch said. "The Stone 12th Anniversary Ale, coming out next year, will not be a hoppy beer."

Unpleasant surprise
"It came to me as kind of a shock," said David Nutley, owner of San Marcos Brewery & Grill. "It hit me last month when I ordered and (suppliers) indicated there was a very, very short supply, and what was available was going to be a lot more expensive."

Hoppy beers at San Marcos Brewery are its pale ale, extra special bitter (E.S.B.) and a Belgian-style beer, Nutley said. The brewery/restaurant will produce a little less than 500 barrels this year.

Nutley said he was finally able to locate enough hops to last him "for a period of time," perhaps until mid-2008.

"I'm going to have to do some formula changing," Nutley said. "I had to take what I could get, and some of it was a product that I hadn't used before."

As a result of the scramble, San Marcos Brewery will raise its beer prices next year, Nutley said.

"At this point, we're still calculating," he said.

Spicing it up
Hops is a relatively small ingredient in beer, Koch said, likening it to a "spice." And just as a little spice can make a big difference in foods, so it is with hops in beer.

"It's a relatively small volume, but they are an expensive item all the same," Koch said. "We use more than industry averages by a significant amount. ... When you have a very hoppy beer and when hops goes up that amount, it hits the bottom line, unquestionably."

Hops has a bitter tang that counterbalances the sweetness of malted barley or wheat, the main grain used in beer. Made from the hops flower, hops comes in several varieties. It acts as a preservative and antibiotic.

"Hops are the age-old seasoning of the beer, the liquid gargoyles who ward-off spoilage from wild bacteria and bringers of balance to sweet malts," according to the Web page of Beer Advocate, a major beer-lovers publication. "They also lend a hand in head retention, help to clear beer (acting as a natural filter) and please the palate by imparting their unique characters and flavors. Basically, hops put the 'bitter' in beer."

The price of malt is also going up, but less dramatically. The average price of malt has risen from 21 cents to 36 cents per pound over the last year, Steele said.

Nutley said the rising price of barley malt will also figure into his calculations.

A brewer dissents
However, one local microbrewer said the hops shortage is more psychological than real. Brewers who feared a shortage due to the fire and other events placed unusually large orders early to assure themselves of a supply, said Jim Crute, founder and head brewer of Poway-based Lightning Brewery.

"As far as I can determine, there's no hops shortage," Crute said.

Lightning doesn't need a lot of hops; its microbrewery will make about 750 to 800 barrels this year, Crute said, up from 500 barrels last year. The beers are available online at http://www.lightningbrewery.com. Its Web site lists places where it's served, such as the Solana Beach and Carlsbad Pizza Port locations.

In August, Crute said, he tried to place an order for hops from one of his suppliers for next year, only to be told they were sold out. The supplier gave him no warning, and as a result that supplier is now an ex-suppplier, Crute said.

Crute then called around to other sources to determine what had happened. They told him this year's harvest was normal, he said.

But whatever the cause, Crute still wound up without any hops contracts for 2008. He says he's going to wait, expecting that brewers who ordered more hops than they can use will sell the surplus.

"It's a little nerve-racking," Crute said. "I'm hoping things will shake out, with European imports coming in during the next week or two."

Crute said he called another of his suppliers and got some good news.

"He said one of their large accounts is actually selling them back a whole boatload of hops, because they're pretty sure they don't need 'em for the current year."

However, Johnna McNamara, co-owner of Murrieta Pizza & Brewing Co., which makes fewer than 10,000 barrels a year, said her suppliers told her the hops shortage is real, at least for now.

"They're saying that come January that they should have a supply back in of what we need, so we'll be OK," McNamara said.

As a restaurant/pub, Murrieta Pizza is being hit with rising prices for food as well as beer, McNamara said.

"It's not just hops," McNamara said. "We're a pizza company, so it's cheese. It's the bread, because of the flour. It's the grain that goes into the beer. It's everything. We're getting hit hard from everywhere."

Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com.