Friday, September 21, 2007

SBP: Market Pressures come to bear on SBP

The big story in brewing circles is cost of ingredients (Stan mentions it here). Guys are talking about the price of hops going way up -- maybe to the point that not everyone will get the hops they want -- and the price of barley going up steeply under the demand of land to grow fuel for the Big Ethanol Boondoggle. We're looking at stiff price increases -- a couple bucks a case -- just so brewers can keep up.

What do I think about all this? Well, I'm reminded of something Fritz Maytag said (to a bunch of rye whiskey distillers and bottlers we got together for a Malt Advocate roundtable interview) about the crunch of sharply increased demand for rye whiskey and low aged stocks of the same:
Can I comment on the age thing? Broadly speaking, the whiskey world thinks that older whiskey’s better. It’s like the wine world used to think that older wine was better. And I submit to you that older whiskey is different. Wonderfully different. And many older red wines are wonderfully different. They’re not better, they’re old. And that’s wonderful. But I submit to you that, especially because we have a big shortage of rye whiskey, you are all going to discover the beauty of young rye whiskey.

Yes folks, I think a lot of brewers and drinkers are going to discover the beauty of lower-gravity beers.

23 comments:

Anonymous said...

Know what? It's a lot harder to make a great lower gravity beer than it is to dump a ton of hops into a 20 Plato brew.

Jeff Bearer said...

Scottish Ales to be exact. Most breweries can brew several months of scottish ales using the hops that fell out of the boxes and are lying loose on the ground in the coolers.

Oh, and lambics, use the hops that are lying loose under the brewhouse, yum.

Jeff Alworth said...

Viva la small beers!

Lew Bryson said...

Anony, you'll get no argument from me.

Jeff, ya still gotta pay for the malt...oh, wait, "Scottish" ales. I forgot about the ridiculous differential between "Scottish" and "Scotch" ales. Do the brewers in Scotland know about this?

Jeff -- Yahoo!!!

Ed H. said...

Classic Fritz to be sure. Here were his comments in October, 1998 just as the whisky project was getting some traction:

"So I will tell you about our whiskey. We have a little distillery in a corner of the brewery. It's a project that I am intrigued by, something that's been a dream of mine from way back. We're making rye whiskey, which is the traditional, original American whiskey. And the reason we are making whiskey is to sell beer. It's hard today to stay creative, and stay out in front. And I'm doing this, not only because it's a challenge, but bemuse our company will be talked about if we do it well. When people ask me how the whiskey is going, I say "It's just going great" We're not selling much, but it's like the beer business in the early '70s. We have the world by the tail. The world doesn't know it yet, but we do. And that was a wonderful feeling back in the 1970s when we knew in our hearts that we were making wonderful, traditional, flavorful, more expensive beer. And the world was going to find out, and the world would beat a path to our door. It was wonderful."

GenX at 40 said...

It's easy, Lew: Scottish is English for Scotch.

Alan Campbell McLeod
A Good Beer Blog

roan22 said...

or go in with your neighbor and DIY. If I can make beats that can get me a gig producing a song for writer/artist/photographer/DJ Jeffrey Liles in LA, then ANYBODY can do ANYTHING. Seriously.

roan22 said...

First off why are the prices 'really' going up? Is this about costly farming practices or number restrictions or something? Seems convenient for the 'hop farmers collective' type groups out there I imagine, as beer's rocket seems to shooting ultra-rapidly into the overpriced and hyped-up part of the High-End stratosphere.

Lew Bryson said...

No conspiracies that anyone's seen, and believe me: people are looking. It's just an issue of declining acreage in hops, due to a variety of factors, a bad harvest year in some producing areas, and continued problems with disease. In short, a bad year which may be followed by others. I understand that there are some areas in the U.S. that are producing just fine. Barley, on the other hand, is having the same problems other grains are having: traditional uses are being shoved aside in the race to grow ethanol crops to grab big -- ill-advised, in my opinion -- government subsidies. Prices will go up, because there's only so much productive arable land and available water.

Loren said...

What more brewers should discover, if possible...wherever possible, are small (i.e. second runnings) beers. Waste not...want not.

roan22 said...

You said the lack of acreage and water in the US, lol well you can't wave a magic wand and come up with that. Its like the reality of available ingredients is now catching up with the sales/demand. No wonder Victory signed a deal with the Germans.

Lew Bryson said...

Not really, Rebecca: the land/water issue is really about barley. There are lots of places people can grow hops, it's just that it takes quite a while to get a hopyard up and running; you can't plant this year and have hops in the fall.

It's more like an issue of competition for existing farmland: do you grow malting barley, or ethanol/biodiesel crops? Well, you grow whatever gets you more money. Scotch distillers fight this every year: farmers tend to sell to brewers, because they use so much more barley than the distillers do, and the distillers have to scramble. Small brewers are talking hop growers into growing the hops they want.

Rick Sellers said...

I have been looking into this for a bit now, just did a post on this if you're interested. There is certainly no conspiracy here, crops worldwide suffered - both the hops and barley. In the US, we seem to look good on aroma hops, from what I've heard, but the high AA hops seem to have suffered from pests and mildew this year. In Europe, the hop scene is just not good, for the second year in a row - especially Saaz, evidently. Then there's the lower than expected yields in barley in Europe, Australia, and the US. Canada seems to have done OK though.

I honestly don't think we'll see a shift in brewing this year, but we'll certainly pay a bit more for the pleasure of drinking beer or whiskey. If this bad news in crops continues, well, maybe in a couple years brewers will be brave enough to make the smaller beers and charge a bit more at the same time.

Now, I do agree that more small beers would be a good thing, the second-runnings for the monster beers we're seeing everywhere.

As for the idea that ethanol has something to do with this, I just don't see it, sorry Lew. Hop crops had more acreage this year around the world than last year, according to USDA stats. There is a problem in that we're seeing a massive increase in the production of beer, which is growing disproportionately to hop acreage - so it seems like a lot more demand with about the same supply levels - which is a magic formula for price increases.

Hey Lew, sorry for throwing up on your blog. Words just seem to out sometimes.

Lew Bryson said...

Rick, Rebecca, everyone,

Good God, you guys really are obsessed with hops!

The story is really about the malt. You can make hoppy session-strength beers, I've had 'em. But it's the barley that's competing with ethanol crops, not hops, and that's been written about in even mainstream media.

Hops are tiny footprint crops, and it doesn't take much to feed even a growing brewing industry. No, we're not running out of hops because of double IPAs, much as that would cause some brewers to puff out their chests. It's the farming, not the brewing.

We clear now? BTW, Loren, I'd love to see some second-runnings beers. How much extra work are they for a commercial brewer? Anyone know?

Rick Sellers said...

Sorry Lew, you're right... I did a whole thing on barley too, but got sidetracked in my comments... barley harvests suck around the world, but we'll see a whole lotta feed grade barley out there this year.

Bill said...

I'll jump in...

If it's the barley crop that's in danger, this will actually make it tougher for folks to continue with the "normal-strength" brews, not the giant brews. The amount of giant-strength brews is probably a fraction of one percent of all beer produced -- yet that's the segment where folks will easily pay higher prices to obtain said brews. But if barley supplies are threatened and prices jump on everyday brews, people might stay away or buy less because of this. I don't see folks reformulating their flagships or better-known brews. This could hurt craft brewers -- the big guys can ride out a year of little profit or big losses, but can the folks who do 5-10,000 barrels a year?

This is where we need marketing savvy -- if prices are going to go up, it's time to call the session brews that will come out at 3.5-4.5 abv "light beer" and price them lower than the main products. Sierra Nevada could sell a "Pale Ale Light," I'd bet, and if they could, others would follow. Lew -- you'd get your milds and other good-tasting low-alcohol session brews, and craft brewers could attract folks to their stuff. Beer snobs would have to come to grips with craft "light" beer, but if it provides a way to make money selling good quality, low abv stuff during a time of malt scarcity...

roan22 said...

LOL Lew I am in love with hops, haven't you seen that written on my BA profile?? Barley shmarley. Nah I'm just kidding. OK so what are other options. There has to be some right? How about hiring lobbyists to fight against the usurption of the land for strictly ethanol producing purposes. Why can't govt. farming subsidies include barley farmers? I'm sure once the average congressman finds out that their whiskey or beer is in jeopardy they'll fight to keep the costs lower. Or if they know already why don't they care? Sorry so many questions...I'm too curious.

roan22 said...

This is directed to Bill...Hi Bill, I just wanted to say I thought the "light" term when describing a quality in beer referred to the body, not the alcohol percentage. Labeling leads to stigma according to some, I don't think its a good idea personally but I'm sure others would. I don't know what the solution is but I too have a weird feeling this is not good for craft beer.

Loren said...

"I'd love to see some second-runnings beers. How much extra work are they for a commercial brewer? Anyone know?"

If the tank space is available it shouldn't be that difficult. I know Mike Roy when at Milly's in NH did second runnings beers pretty much with every batch brewed. Some oddball mixes too like a Scottish (HA!) Ale off an Impy Stout 1st and so on.

And that's at a brewpub. I would think a brewery would allow for more extra tank space, no? Maybe some brewers just don't have the experience to think it's actually worth the effort? Shame, if it's that.

Bill said...

Hi, Roan22,

It's pretty much "reduced calorie content from the flagship brew" that defines light beer, and the calories come from the alcohol and whatever carbs and bits of protein are in the finished brew, so less grain going into the making of the beer will reduce alcohol and therefore calories. Unless you add sugar.

The thing is, regardless of what folks think, light beers sell -- people want them for whatever reason. Bud Light sells more than Bud, Miller Lite sells more than High Life or MGD. Sam Adams Light sells. So calling low gravity brews "light" makes sense from an attracting-new-folks to your brews perspective. I'd bet you could package the same brew in different bottles, one called "light" and one called "mild" or "bitter" -- and the "light" would outsell whatever the other label said.

Lew Bryson said...

Dead-on, Bill -- especially the idea of beer labeled "mild" or "bitter" being DOA -- except for one thing. No one's yet been able to sell a beer labeled "light" in this market without a pretty large outlay of bucks. Not a lot of marketing bucks in the craft segment, at least, not yet.

scott said...

Second runnings beers: I brew one each year when I do my barleywine, but for smaller beers, like my 1.056 flagship - which isn't that small really, it just doesn't make sense. Chemistry of the runnings changes when you go too low... astringency, some sugar but little malt flavor, etc.

That is, IF you're conducting your runoff properly.

So, I never knew Fritz Maytag spoke in BOLD TYPE. He truly is a revolutionary!

Cheers,
Scott

Loren said...

"Second runnings beers: I brew one each year when I do my barleywine,"

And it's unbelievable too. Kind of a no brainer with high gravity brews wouldn't you think? If room allows.