How Boston Beer Company Helped Alleviate a Hops Shortage

This article was originally published on Gourmet.com in 2008.

When brewer Dave Holmes tried recently to place an order for hops, the aromatic flowers that flavor beer, the response was heartbreaking.

“My supplier laughed at me,” says Holmes, owner of Fort Wayne, Indiana’s Warbird Brewing Company. “I said, ‘I’m hearing rumors about not getting hops. She said, ‘That’s right, you’re not getting hops.’ We didn’t know whether we’d be able to stay in business.”

Basically, beer contains four simple ingredients: water, barley malt, yeast, and hops. No hops? No beer (at least, no beer as most of us, know it). The shortage was caused by a perfect storm of misfortune: A fire destroyed a Yakima, Washington, hops warehouse, while drought and disease decimated crops in the U.S. and Europe.

Mega-brewers like Anheuser-Busch, who hold long-term hops contracts with farmers, are largely unaffected. Small microbreweries like Warbird, however, don’t typically hold contracts. They purchase the flowers as needed in the spot market (a commodities market in which goods are bought and sold for cash), meaning that microbreweries are vulnerable to fluctuations in availability.

“Hops that once cost $3 a pound now cost $30, but this isn’t about cost,” says Jim Koch, owner of Boston Beer Company, the makers of Samuel Adams. Since Koch’s contracts with farmers guaranteed his supply of hops, he helped alleviate short-term shortages by setting aside 20,000 pounds of aromatic East Kent Goldings and Tettnang Tettnanger hops for microbrewers to purchase at cost—$5.72 and $5.42 a pound respectively (plus $.75 a pound for shipping).

“I saw craft brewers who couldn’t make their beers, or couldn’t make the beers they wanted to. We felt like we needed to share,” says Koch, recalling his company’s beginnings as a microbrewery. The hops were raffled off in a lottery, with breweries allotted up to 528 pounds of hops apiece, in 88-pound batches. “We asked brewers not to request hops because they’d save money; buy them because you need them.” More than 350 microbreweries applied—nearly one-fourth of all microbreweries in the U.S. “I knew there would be demand, but I didn’t realize that level of need,” Koch says.

Thanks to Koch’s largesse, and a lucky draw, Holmes can continue crafting his popular Shanty Irish ale and shelve last-resort tactics: “We started researching how ancient Sumerians brewed beer with bark,” Holmes says, laughing.

To avoid future shortages, farmers are planting new hops vines (which take three years to mature). For the immediate future, brewers are crossing their fingers for a bountiful harvest. “I hope the hops on the vine are enjoying a very happy growing season,” Koch says.