HOUGHTON "Hefty hops prices coupled with the increasing cost of barley malt are boosting the cost of production for the Copper Country's microbreweries and brewpubs.
"It's going to be a problem," Keweenaw Brewing Co. co-owner Dick Gray said.
Barley malt is the main ingredient in most craft-brewed beers. Fermented malt sugars give the beer its alcohol content.
"Grain costs are up between 30 and 75 percent since November," Gray said. "It costs more to make beer now than it did two months ago."
Hops, which is actually a flower, is an essential flavor component of beer. It balances the sweetness of the malt. Hops prices are high due to a world wide shortage of the ingredient.
The primary reason for the current hops shortage was actually a glut in the hops market during the 1990s and early 2000s, according to Julia Herz, a spokesperson for the Brewers Association, which represents craft brewers. With hop prices down, many farmers took their fields out of hop production in favor of crops getting higher prices on the market.
Over the last year, those surplus stores of hops have been gradually used up and the diminished hop production worldwide is now unable to meet demand.
"About 10 to 15 percent of the world demand is not able to be filled," Herz said. "Some hops will not be available right now and some hops are just much more expensive."
Weather conditions have hampered global hops production and are a prime factor in the decline of the barley harvest worldwide. According to the Brewers Association, craft brewers are feeling the brunt of the impact.
"They're likely the hardest hit by these cost increases because they are known for making fuller-flavored beers," Herz said. "To get more flavor in your beer, you need to use more ingredients."
At Keweenaw Brewing Co's taproom on Shelden Avenue in Houghton, the combined price increases could spell the end of a proud tradition: the $2 pint.
"I don't think the $2 pint will be around a whole lot longer but we'll try to hold our price as best we can," Gray said, adding he could foresee bumping the price up to $2.50 in April.
"We've had $2 pints since we opened in April of '04, so we're trying," Gray said.
The limited hops supply may complicate the microbrewery's plans to increase production at its South Range facility.
"If we brew as much beer as we did last year, we have enough to get there, barely, but of course we're trying to expand on that," Gray said.
Gray said at the taproom, where brewer David Lawrence makes beer in 16-barrel batches (a barrel being equivalent to two conventional kegs of beer), there is flexibility to experiment with different hop varieties. But at the South Range facility, where Keweenaw Brewing Company makes canned beer for the wholesale market, consistency is the name of the game.
"Our Pickaxe Blonde Ale, we need it to be the hop we use in Pickaxe Blonde Ale or something very similar to it," Gray said.
Pickaxe Blonde Ale is hopped with the Pearl and Saaz varieties.
Lawrence said the shortage is leading to fewer available varieties of hops.
"It's actually been dwindling down from the most common, widely-used varieties down to the least favorable, least common varieties and now we're running out of those," he said.
Gray said craft brewers position in the marketplace doesn't give them a lot of pull for hop buying.
"We don't have a lot of buying power relative to the other breweries so we're not exactly first in line," he said.
Keweenaw Brewing Co. buys its hops from Hop Union, one of two suppliers in the United States.
"I'm on the list, but I'm 136th on the list in the U.S.," Lawrence said.
Keweenaw Brewing Company made 2,300 barrels of beer last year, which Gray said is a fraction of what craft brewers like Samuel Adams produce.
Tim Bies's Red Jacket Brewing Co. in Calumet is even smaller. In fact, the brewpub brews in such small volumes that the hops shortage has not had a major impact there.
Bies uses four different hop varieties in the two primary Red Jacket beers. Fuggle and Northern Brewer hops go into his Oatmeal Espress. Good Ivan Pale Ale is hopped with Hallertau and Summit varieties.
Late last year, Bies said, he was able to set aside a supply of the latter hop.
"(The supplier) had a promotion and I bought a bunch of it and froze it," Bies said.
He said he has enough hops on hand to last through the end of spring, by which time he hopes more hops will come to market.
But even if he's not in danger of running out of hops, he has had to pay more for them.
"I was paying $5.15 a pound and now it's 30, I think the last one was, so the price has gone way up," Bies said.
Herz is optimistic about light at the end of the tunnel for hops prices, however.
"This is not a permanent situation," Herz said. "What we're hoping to see now is more acreage being rededicated to hops."
That could take time, however, since hops has a long growing cycle. It takes three years for hops plants to produce fully-flavored flowers.
Lawrence said as the more common varieties of hops become increasingly scarce, some small breweries might turn to bittering ingredients that predate hops. These include yarrow and heather.
"Maybe people will start going to what are called "farmhouse-style" beers," Lawrence said.
He also said craft brewers have a beer ingredient that is not in short supply: ingenuity.
"Creativity is really, really high right now," Lawrence said. "I'm sure everyone will figure out something to balance out the sweetness of malt."
Dan Schneider can be reached at dschneider@mininggazette.com