Two Decades Ago, Boston Beer Saved Craft Brewers From a Catastrophic Hop Shortage

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With craft beer’s market share this year accounting for $26.8 billion of the $100 billion beer market in the United States, and with hop-heavy IPAs taking the world by storm, it’s difficult to imagine a time when craft beer was struggling to survive. But in 2007, with a global hop shortage stunting brewer’s production capabilities, that was exactly the case. Despite craft brewing’s rocking start in the new millennium — from 2004 to 2007 sales at small breweries increased by 58 percent — the great hop shortage of 2007 threatened the livelihood of these breweries that had, up until that point, been doing extremely well.

While the impacts of the hop shortage weren’t felt until 2007, the origins of the supply chain issue actually trace back to the early 1990s when hops were growing almost uncontrollably. The start of the ‘90s marked bumper crop yields, which quickly led to a worldwide surplus of one of beer’s most essential ingredients. As such, hop prices plummeted — so much so that it was no longer profitable for many hop producers to continue growing.

Instead, many suppliers sold their land or transitioned away from hops in favor of crops for other agricultural uses. From 1991 to 2006, the number of hop growers around the globe sliced in half, laying the foundation for a perfect storm to cripple supplies. In 2006, following a number of years with above-average hop yields, extreme inclement weather across the European continent, a fungus outbreak in Washington’s Yakima Valley, and a warehouse fire were the three horsemen that decimated the global supply of hops.

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Hail storms in the Czech Republic, tornadoes in Slovenia, and extreme flooding in England — three of Europe’s largest hop-growing nations — prevented any meaningful exports. At the time, Europe accounted for nearly 60 percent of hops used worldwide. Further, in Yakima Valley, which produces approximately 70 percent of the U.S.’s hops, a fungus outbreak resulted in a poor-quality yield. The remaining hops from Yakima valley that were not impacted were destroyed in a warehouse fire.

Soon enough, hop reserves around the world were drying up fast and producers, whose numbers had dwindled significantly, found themselves unable to meet demand. As a result, most widely grown hop varieties increased in price by over 20 percent, with rare hops costs up nearly 80 percent.

While the hop shortage impacted breweries far and wide, many larger brewers, like Anheuser-Busch, Miller Light, and the Boston Beer Company, which all had pre-existing contracts with hop producers, remained relatively insulated. Their contracts guaranteed a certain quantity of hops at a certain price for a given period of time. As such, those hardest hit by supply chain issues were small, local microbreweries. Coincidentally, these small producers, which were without contracts binding them to hops suppliers, likely needed them the most in order to stay afloat.

Recognizing the massive issue that was crippling the craft beer community, the Boston Beer Company — most famous for brewing Sam Adams — stepped in to alleviate some of the pressure placed on small brewers. That year, founder Jim Koch announced that the brewery would sell and distribute approximately 20,000 pounds of hops to breweries that would have otherwise been unable to get their hands on any. As a bonus, the hops were all sold at their cost value of just $5.72 per pound, making them incredibly affordable in comparison to hops priced at the then-market value of approximately $20 per pound.

“For a couple of months now, we’ve all been facing the unprecedented hops shortage and it’s affected all craft brewers,” Koch said in a statement. “So we looked at our own hops supplies at Boston Beer and decided we could share some of our hops with other craft brewers who are struggling to get hops this year.”

Koch went on to explain that the hop-sharing program was designed to benefit those who desperately need the hops, asking that those who weren’t in dire need refrain from requesting a supply.

Brewers were able to request, at minimum, one box of hops — about 44 pounds — and at maximum six boxes in order to distribute supply as evenly as possible. In all, the beer company received around 400 requests, which was roughly three times the amount it was able to supply. To get around this issue, 132 craft breweries were selected at random to receive a package of hops from Boston Beer. Recipients hailed from all over the United States, from Bar Harbor, Maine, all the way to Ukiah, Calif. All things told, it’s estimated that Boston’s shared supply helped produce nearly 10 million pints, providing a safety net for craft brewers until the hop market stabilized in 2009.