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A Slowing Craft Beer Market Shrinks Demand for Locally Grown Hops

A Slowing Craft Beer Market Shrinks Demand for Locally Grown Hops

Back in 2010, there were high hopes in Colorado that locally grown hops, the plant that gives beer a bitter or citrusy flavor, would help feed the then booming craft beer market. In just six years, the industry sprouted from almost nothing to 200 acres, according to the trade association Hop Growers of America.

Inside the chilled storage room at the 22nd largest craft brewery in the country — Odell Brewing Company in Fort Collins, Colorado — brewer and agronomist Scott Dorsch pulled down a large box with the words “whole leaf hops” printed on the front. He ripped open the silver packaging to reveal a mound of flattened, dried green hops, crisp and airy like dried leaves.

Of the estimated $25,000 worth of hops in the room, none were from Colorado.That’s because a large company like Odell requires a more reliable source. When they have bought local hops in past, it’s only to make a seasonal, limited-distribution beer.

“We would buy more hops than what Colorado could produce,” he said.

Hops may not have panned out to be the major crop that some farmers had bet on. And Dorsch said the green rush all began with one well-known company.

“If it hadn’t been for Coors I don’t think there would have been 200 acres of hops growing in Colorado,” he said. “I think that people would have given up a long time ago.”

Going big

With the largest single brewery facility in the world, the Coors Brewing Company operates out of Golden, Colorado. A company they own, called AC Golden, wanted to jumpstart the local hop industry for their beer, “Colorado Native,” which uses only local ingredients.

Starting in 2010, AC Golden officials said they paid farmers a premium price for their crop in an effort to help get them established. Farmers reported being paid up to $15 a pound, far above the going market price at the time of around $4.

There’s a high startup cost to growing hops. The vines require trellises, which cost anywhere from $10,000 to $20,000 an acre to install.

Ron Yovich, was one of about a dozen farmers growing hops for Coors. Like most, he was a small first-time farmer and that premium price allowed him to purchase expensive harvesting equipment from Europe.

“At that point, (Coors) had a significant role in basically keeping us afloat for the first few years,” he said.

The premium price allowed Yovich, as well as other farmers interviewed for this story, to make a return on the investments. But it wouldn’t last.

The slowdown

Between 2010 and 2015, the market for craft beer was booming (see graphic).

In 2016, it started slowing down as wine and spirits took a larger share of the market, according to Bart Watson, an economist with the Brewers Association, a national trade association. He said while the craft beer market is still growing, it’s just less so because consumers have far more options.

“There’s a lot of competitiveness out there. It’s hard to get on, in shelvesets and get tap handles,” he said.

This is in part, he said, why the hop industry in Colorado still hasn’t reached the scale that Coors and some farmers had bet on.

“We may see the hop industry scale back in places like Colorado simply because they were building for a future that was bigger than what we’ve actually seen,” he said.

The Pacific Northwest is the nation’s major supplier of hops, especially Washington’s Yakima Valley, which produces more than 39,000 aces, or 71 percent of the nation’s hops. Idaho and Oregon are the next largest and together three these states pushed the U.S. to its biggest-ever hop harvest in 2018.

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Photo Credit: pexels-energepiccom

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