Thursday, February 28, 2008

Cash, flow

We’ve kept some distance from weighing in on the hop shortage (bad harvest, less acreage in production) and that sharp spike in malt prices (farmers growing corn for ethanol).

No one likes wallowing in bad news. Maybe we were just hoping the whole thing would go away or sort itself out before too long.

Wishful thinking.

And then this item tumbled into the inbox last week, throwing us more of a scare than higher beer prices we’ve seen lately: Krogh’s brewpub in Sparta, in New Jersey’s northwest, announced that the hop shortage was forcing it to suspend sales of beer to go.

Ah crap. Now we're witnessing hop shortage affecting beer availability (albeit beyond the pub’s pints at the bar), not just higher prices.

But then, thankfully, this happened: No sooner than they iced growler and keg sales, Krogh’s did an about-face, saying they could oblige folks coming in with their half-gallon jugs.

“After a few changes to brewing schedules, and acquisition of an additional supply of these key ingredients, we are happy to announce we are once again able to accommodate "To Go" sales of beer …” Krogh’s said in the follow-up announcement.


But half-barrels and sixtels are still unavailable, Krogh’s says in its emails, adding that the situation could last up to a year before things return to normal.

After that, we started checking around a little bit to see if any other Jersey brewers were looking at workarounds to manage availability.

Happily no, or at least among the clutch of brewpubs we surveyed. Just some higher prices (25 to 50 cents her per pint).

The Ship Inn (Milford) is still putting its Brit style ales to go in their signature boxes (kinda like wine in a box) and doing growlers. (Their pint price went up from $3.95 to $4.25, by the way.)

Meanwhile at J.J. Bitting (Woodbridge), Mike Cerami says the higher price at his brewpub (from $4 to $4.50) is only the second hike in 11 years. Mike credits his brewer, August Lightfoot, with aggressively working to make sure the pub’s hop supply was safe and sound so it could keep offering the range of beers patrons have come to expect. (J.J.’s has its O’Halloran’s Irish Red, a 4.7% ABV session ale, on for St. Paddy’s Day; also look for their Barley Legal barleywine and an IPA.)

Tim Kelly at the Tun Tavern in Atlantic City says pints went up to $4.50. Our advice, join the VIP club there and save a buck per pint. (Last we check, all you had to do was sign up.)

Something else we found: Despite the double whammy with hops and malt, the bigger beer styles, like IPAs and strong ales, weren’t being sacrificed because of the extra malt or hops they require. Case in point: Harvest Moon has a Belgian strong ale (8-8.5% ABV) coming on tap (if it’s not already), and another big Belgian beer in the works. Brewer Matt McCord says patrons have been supportive in the face of higher prices.

Matt adds that it helps to get the word out about what’s driving the increase. And others say the tale of hops and small-batch breweries, where locking in prices three years out isn't affordable (like the giant brewer A-B can do), goes something like this:

Small-batch brewers (who often work on thin margins to begin with) last year had to make a snap decision and commit to hops at sharply higher prices. How much? Suppliers couldn't immediately say, but not committing meant the risk of not having hops. (An example of sticker shock: It’s costing Flying Fish in Cherry Hill a skyrocketing 80 grand just for the Styrian Goldings it uses in its seasonal Farmhouse Summer Ale.)

Then there's malt costs. Sowing barley has taken a back seat to corn and soybeans. Brewers need malted barley, the government thinks corn figures into the next fuel source (yet, sugar cane yields better results as far as ethanol goes) ... The commodity shift has picked craft brewers' pockets.

Wheat beer brewer High Point Brewing says their barley went from $20 to $35 per 55-pound bag; owner Greg Zacardi Butler says the brewery uses 15 to 20 of those bags per 15 barrels of beer. (Prices for the noble hops he uses jumped from $5 a pound to $20 to $25. Greg says High Point luckily overordered hops for 2007, so they got plenty at the lower price point. Still, the higher prices bring pressure.)

So yeah, we’re paying more for beer, a buck or so more per sixpack at the liquor store, and that quarter to half-dollar more for pints at the brewpubs. But don’t shove everything into the woe unto us column just yet.

Pint prices we surveyed hadn’t hit 5 bucks yet – you could pay as much as 6 bucks for a pint of Sam Adams at traditional bars – and folks at Triumph Brewing’s Philly location told us back in December they hoped to hold the line on pint prices if at all possible.

Also, consider this: Craft beer prices hadn’t really risen much for some time. And while no one likes paying more, your money is going for a better product: fresh, more flavorful beers.

So save any bitching for gas prices.