Hop contracts are a hot topic in the minds of brewers as we come to the end of another calendar year.
Should I contract? What should I contract? What do I do if I feel trapped by outstanding contract balances?
These questions are impossible to answer in the abstract, each of you are your own context. This issue of Hop Notes will not answer those questions for you. But I do hope it will provide you with a general outline of thoughts around hop contracting, tips, and resources.
Where to even begin?
I was on a panel recently focused on this question about hop contracting. “Eric, what would you say to a brewer who is considering contracting?”. Where to begin? First, context is king. Your brewery’s position and needs are unique.
Here are three practical contract management tips that came out of that panel. If you’re not doing any one of these three things yet, I recommend to start right now:
Update your usage projections twice a year. Update your depletion math. Understand your position on each variety relative to previous and future 6 month use. Share this information with other segments of your business: ownership, marketing, sales, etc…to help inform your future plans. Maybe sales has a hot tip on a brand that is exceeding expectations or ownership is ready to commit more to ingredient sourcing.
Check in with all the suppliers you have contracts or agreements with twice a year. You did the math, you know your positions, communicate with them. Maybe it’s just a text “We gucci”. Or maybe it’s a longer conversation about shifting out of old hops. Whether your positions are good, bad, or ugly - a good supplier will always like to know! Pro-active communication can lead to big payoffs.
Set reminders in your calendar for this bi-annual math-ing, as well as for your storage fee and interest fee start dates if applicable.
Here’s some other resources to check out too:
ShanFerments: guide, blog, and great visual map.
Crosby Hops: blog.
Brewers Association: contracting guide for a number of ingredients, Members-Only content.
40,000,000 excess pounds - why should a brewer even contract?
First it’s a 40 million pound surplus, yes. But the majority of that is concentrated in just a handful varieties; Citra®️ and Mosaic®️ to name a few. Those hops are real long. Others are much tighter. Below you’ll find a list of varieties that are more on the low supply end. If you rely on any of the tighter varieties listed below, I believe you should be finding opportunities to contract these.
Besides securing your availability, contracts are a key communication tool. Brewer contracts are the most important message you can send to hop merchants and growers. Contracted acreage is the stable baseline that the rest of the market builds upon. Listen to the Beervana Pod interview with Max Coleman of Coleman Ag (linked below) to hear it direct from a hop farmer.
If you’re thinking about scoping a contract out, my recommendation would be go out two years, maybe three. Contract 100% of your projections in year 1, 50% of projection in year 2 as a starting point. Even less in year 3, if anything. Though your situation should influence these percentages too.
What hops would I recommend you contract?
American-Grown Noble style hops in general
Sterling, Mt.Hood, Mt.Rainer, Triple Pearl as examples.
These hops are seeing increased demand, after a long period of depressed demand led to acreage being removed, due to difficult growing conditions in Europe paired with the ever coming promise (threat???) of the year of the craft lager.
Cashmere, Cluster, Comet, Triumph
All of these hops have seen falling acres for a number of years. Triumph is an especially precarious situation. Unlike the C-hops listed here, it’s a new comer. Released in 2019, it’s big coming out party years were blocked by COVID. Triumph hasn’t really established itself in the market yet. Your contracts will help make sure your Triumph sticks around.
Centennial
Centennial is an interesting one for this list. It’s a cornerstone of American craft beer. At 2,500 acres strung for harvest in 2023, it’s acreage is far greater than the other hops on this list. The thing about Centennial is “split-bloom.”
Split-bloom is when a plant flowers early, trigged by early season heat, then flowers again at a normal harvest time. This leads to yield and sometimes quality losses. Centennial is already a notoriously low yielder. As early summer heat becomes more common, bad Centennial years become more common. If you like this hop, contracting for it will help keep it’s acreage strong.
Crystal
This hop saw a meaningful uptick in acreage last year, and as a Crystal bobo I applauded. I imagine most of that new planting was to account for new contract demand. If you weren’t part of that push last year and you rely on Crystal, you should probably go for it again.
Sabro®️
This hop was wildly over planted due to merchant speculation about demand that never quite came. If you are one of those coconut freaks who like Sabro®️, you may want to be sure you’ve got something on contract to give that clear demand signal.
Vista
Vista is the newest public hop variety, being new to the game acreage is still growing. Your contract will help that acreage grow faster and have more appeal to growers who are considering planting it.
More hop content:
The Business of Hops: The Beervana podcast sat down with Max Coleman of Coleman Ag to talk about the business of hops from the point of view of a large OR family hop farm. For those of you interested in going deeper in hops this is a great podcast interview.
Best Breweries of 2023: At least according to largely California-based following of Craft Beer and Brewing Magazine: the lists. Congratulations to dear readers Hop Butcher For The World for placing 1st in the Small Regional category.
“Brewing Is Ag” is my whole entire personality now: Apologies for another self-indulgent hop content bullet, but I am really proud of this motto. It's a clear and simple statement of some of my most deeply held values - and it’s resonating with others who are inspired to work in this space of connecting beer and agriculture. In the spirit of helping those of us Brewing Is Ag visionaries tell the story, I’ve added a small selection of new drop-ship Brewing Is Ag merch to Sannerud Hop Consulting’s page.
Thanks for reading Hop Notes 09. I hope you enjoyed it. If you did, please consider subscribing or forwarding it to a friend.
That’s all for now. If you have topics you’d like to read about in Hop Notes my inbox is open 24/7: ericrsannerud@gmail.com.