Wednesday, January 9, 2008

Crisis in Beer

Part II: Are we going to have to mash Grape Nuts?

What has not been widely reported through mainstream media is the actual shortage of grain; barley, specifically. Barley is grown for food products, livestock feed, and malt. As mentioned in my previous post, malted barley is one of the four main components in beer. The grains impart flavor, color, and body to the liquid. The opening Grape Nuts reference comes from the fact that the cereal is made from malted barley, and, theoretically, could have fermentable sugars extracted from it.

Whether a mega brewery (A-B, Molson-Coors, SABMiller) or a micro everyone uses malted barley, in one form or another.

What are the culprits behind the shortage? Once, the same storms that sacked the European hops crops, did the same to their barley farms. Second, ethanol. Yes, ethanol - the catch-all alternative-energy savior of the United States.

American farmers are receiving substantial Federal subsidies to grow corn, to support corn-derived ethanol as the fuel of choice. The same applies to farmers in Mexico. Their government is paying them handsomely to cultivate corn; which is hurting the tequila distillers.

Unfortunately, you cannot blame the farmers. If you owned a farm, and were getting paid a king's ransom, you would grow corn too.

So, the US government is willing to pay, pay, pay for corn. And guess what, they don't care what quality of corn you grow, so long as it ferments into ethanol. It has been proven that corn-derived ethanol is grossly less efficient than standard gasoline. Not only that, it requires more energy to produce corn-based ethanol than what is rewarded back to the user. How about using switchgrass or poplar trees which produces approximately 540% more renewable energy that energy consumed in their production?

Instead of forcing the consumer to use a more expensive and inferior product, how about forcing the automobile manufacturers to redesign the internal combustion engine? Give them the subsidies! Or, adopt diesel engines as a viable work horse. Diesel technology has come a very long way in the past 25 years. Companies like Volkswagen, BMW, and Mercedes-Benz have practically perfected the diesel engine. They have also adhered to more strict guidelines for automobile emissions than those of the United States!

So, not only are the barley prices going up for brewers & breweries, but a similar pain is being absorbed by the livestock farmer. They can't afford to feed the herd! If they can't feed the animals, than the price of food in the stores goes up due to dwindling supply. To you this may seem like a bit of stretch, but it makes perfect sense to a lot of us.

I fell that, as Americans, we are going to experience a major impact on beer and foodstuff prices. I can see several fine local establishments going out of business because they have to raise the price of their goods due to the increasing price of the resources they need to survive.

Support your local, if you can afford it.

Wednesday, January 2, 2008

Crisis in Beer

Foreword: This is a multi-part post on the impending beer crisis. I am not, by any means, a professional journalist, nor do I claim to be. However, I have an opinion that I want to share on the subject. It is based on information that I have read in newspapers, magazine articles, podcast interviews, and brewery consolidations.

Part I: Where are my hops?

It has been reported, over the past several months, that the brewing industry is facing a shortage in the availability of many of the popular hop varieties. News outlets like the Associated Press, the Wall Street Journal, and National Public Radio have picked up on the tremors in the trade.

As most of the folks reading this know, hops are one of the four major ingredients that brewers user to make beer. The other three being malted barley, yeast, and water.

Hops have been used in beer for close to a millennium, while beer in one form or another has been around for close to 5,000 years. Prior to the inclusion of hops, an amalgamation of herbs and spices were used to "preserve" the beer. Unfortunately, some of the ingredients used were actually psychoactives. Once hops were "discovered", the monks, who were the brewers, found the cones to offer a better preserving factor, act as a slight bittering agent, and impart a delicate floral flavor.

If we fast forward to the present day, we find that the most popular style consumed around the globe is that of a Pilsner-type of light lager. By light I mean in color and body. The Big Three (Anheuser-Busch, Molson-Coors, and SABMiller) predominantly focus on this style, and their dedication to consistently and quality control are executed extraordinarily well. Most of these beers are very clear, crisp, and have a low-to-moderate alcohol content. They are also low on the amount of hops used - these beers aren't super-bitter. A lot of the bite comes from the carbonation within the beer. On the flip side, modern American microbreweries tend to use an abnormally high amount of hops in their beer, in order to put their own unique twist on a well-known style, or to experiment with something new (e.g. Watermelon Wheat and Imperial Pilsners). Their beer may range from the moderate lager that the mega-companies produce, to over the top, lip puckering, tongue twisting, mouth-scraping IPAs. For them, the latter generally requires a high amount of hops to be used so they can deliver a well-balanced beer.

The ironic part is both the mega-scale breweries and craft breweries have to use a large amount of hops. You are probably thinking, "in the last paragraph, you said the big guys don't use a lot of hops in their beer; what gives?" It is all about production scale. Whether you brew 5, 200, or 100,000 gallons at a time, you will encounter a time where you will need a lot of hops.

There was a series of events in 2007 that are easily identified as sources of the hops shortage. The first was a series of terribly devastating storms in Europe that destroyed approximately 40% of their hop crop. Now, assuming that Germany alone counts for 25% of the total, global, hop supply, a 40% drop in their yield results in supplying 15% of the world's hops. That is a reduction in availability of 10% on the world-scale. The second event was one of the worst droughts to strike Australia and New Zealand, that allowed them to barely grow enough hops for their own domestic brewing use. New Zealand is known as the world's foremost supplier of certified organic hops. The third event was the abandonment of growing hops in the United States, poor yields in the Pacific Northwest, and ravaging wildfires in the hops-growing region of the US. The sum of these events has led to a skyrocketing increase in price per pound. What the brewer could get for $5 USD a pound now costs in excess of $20 USD per pound. Homebrew supply stores are running out of perennial favorite hop varieties, as are the hop distribution companies who are responsible for providing the essential ingredient to breweries around the globe.

All told, the consumer can expect to see a 10+% price increase, per pint, based on the lack of hops alone.

Within the brewing world, this seems to follow a 7 to 10 year cycle. Unfortunately, something on this scale has never been encountered before.