She said.......
It's about the beer
          He said........

Gina Miller            and                Bill Keeper

Hey Bill,  -   I know we care much more about the finished product but did you ever consider
the problems craft brewers might have in getting the necessary quality ingredients that go into
production?  It seems we've gotten doom and gloom reports of upcoming hop shortages,
particularly within boutique varieties for the better part of a decade, even as total hop growth
acreage has increased. Was it just a case a crying wolf since many of the craft industry's
highest-use hop varietals are keeping up with explosive demand (simcoe is now the second-
largest hop crop grown in the USA)?, Maybe, but as brewers continue to try to innovate and
explore the market, pockets of scarcity will remain a reality. Of course when it comes to barley
production, that is thankfully much more global (it's the fourth-largest grain crop currently
produced), but then again it has its own set of costs and logistics.

Most brewers I talk to tell me their access to grain is easy,but that's not exactly true for hops.  
No, their not running out but it seems a lot of the better hops, like amarillo and mosaic, are
sometimes contracted out for the next two or three years.  It becomes a waiting game that puts
extra pressure on new breweries fighting to surrive.

The reality is that mid-sized and large scale breweries control much of the market for
ingredients, getting early access to growers based solely on their scale. For most of the
industry — a full 98 percent of which brews at or below 15,000 barrels of beer annually — that
kind of blanket access is out of the question. They're either left to fend for themselves with
whatever remaining stock a hop farmer might have on hand, or they're forced to consolidate
forces in hopes of earning more leverage in the marketplace.  Now I appreciate that's part of
business but as a beer lover it's a concern if it hinders my favorite brewery.

I can hear you thinking, what then do they do to get hops?  Well, small breweries are often
forced into what's called the spot market, an impromptu buying ground for breweries to swap
excess amounts of raw ingredients — for a price. For example a brewery will buy hops from
other breweries who've maybe over-contracted but will pay them a premium price as much as
double the contracted price.  Ouch.

Without consistent access to long-term deals and bulk rate pricing, smaller breweries can find
themselves forced to innovate where they can and rely on the goodwill of others when they
can't. Still others may choose to keep their beers within the same rough ingredient tree,
keeping in mind the availability of a small amount of necessary dry ingredients for each of their

Maybe I worry too much. Well it's nothing that a pint of a double IPA won't cure.

That's it from me, chug-a-lug, Bill.....see you next time.

Hello Gina,

You should try my method - you drink the DIPA before writing your article, not after. Just kidding.  
Actually you make many good points (as always) but (you knew there would be a "but) something
tells me your concerns will and are not an issue that truly threatens the continued success and
growth of the craft industry.  From my  perspective I see a much bigger threat - distribution.

I know I spoken about this before but real danger lies in that fact that massive beer
conglomerates control 89 percent of the U.S. beer market, as well as many common distribution
channels for getting beer to store shelves. Think of it like a grocery store shelf: The placement of
that niche box of cereal really matters to the small company that made it and to the average
consumer walking by. That's even more true when you realize that there are many, many more
cereal boxes that can't get access to the shelf at all — because Kellogg's needs all the room it
can get, and it's willing to pay its way in. That's perhaps not an issue for the smallest breweries,
who are often hand-delivering kegs and cans to their local accounts, but for mid-sized breweries
or anyone on that cusp, the ability to grow relies on simply getting product in front of a
consumer's face.  And the big boys are working to prevent that at every turn.

To complicate things further, many states exist within a three-tier distribution system, which
includes the brewery, distributors, and retailers — this separates breweries from selling direct to
consumers by forcing the use of a distribution middleman who usually arebmuch more beholden
to big beer manufacturers, who command much of the market (and the distributors profit). In
many instances, small-time breweries looking for distribution rights are forced to put a large
degree of faith in the distributors and wholesalers themselves and that faith is not rewarded.  And
if they want to change distributors it's a long, difficult process in most states.  Not fair if you ask
me and I bet you agree, Gina.

How badly is the deck stacked against the new, small brewery in some states you ask?  Well, I
know of several states where anyone of any size that's manufacturing craft beer without a
brewpub's license must agree to sell its distribution rights (for free), effectively taking control of
their own market share out of the brewery's hands. To-go beer sales are also limited for anyone
with a brewpub or retailer's license, which is often capped at 10,000 barrels per year. Many
states let you can sell beer directly to consumers on-premises, but you cannot let someone walk
in, pick up a six-pack to take home, and walk back out. You don't even really control who sells
your beer (distributors and wholesalers do that), and you certainly can't manage the cost for the
end consumer.  Perhaps the best hope to change this is by lobbying the state legislatures.  It's
been done successfully in a few places so precedent is there.

My goodness Gina, you somehow got me all worked up.  I knew I should have had two beers
instead ofjust one before reading t
his column.  Actually we really have little to worry about at
least in the short run. Things are good with beer.  Need proof? I just saw that the number of
breweries in the US just topped 4,600!  

Here's looking at you Gina
Round 58