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Make Me Smart with Kai and Molly

Episode 114: Antitrust the process

May 21, 2019

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I've always wondered...

From farm to glass: How hops are priced

Robert Garrova Dec 26, 2016
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Linda Reed of Paso Hops in California shows off some of the 2016 hops harvest. 
Katherine Garrova / Marketplace

Jeremy Raub is co-owner of Los Angeles-based Eagle Rock Brewery. One of his seasonal beers is called the Milo Oatmeal Pale Ale, named after his toddler, Milo.

The beer is made with El Dorado hops, which give it a sweet, tropical aroma. Raub says he’s paying, on average, $9.90 a pound for El Dorado hops.

Raub can spend upwards of $35 per barrel on hops, and they’re easily the most expensive ingredient he uses in the brew process.

Hops being processes at Binary Hops in Central California 

So why $9.90 a pound? Thomas Marsh is a professor at Washington State University. He studies the hop market and says the USDA does provide some data, but pricing is hard to nail down.

“The only real publicly available price is that one from USDA once a year,” Marsh says. “But that’s a weighted average. It really doesn’t tell us much — what’s going on with a particular variety.”

Hops are different than say wheat or sugar because there isn’t a public exchange where growers, brewers and middlemen called merchants can go to get set pricing information. Individual brewers pay different prices.

Ting Su of Eagle Rock Brewery in Los Angeles shows off her hops tattoo. 

Ann George is Executive Director of Hop Growers of America, a group that promotes American grown hops.

“So just to give you an example: I met with some growers in the South Atlantic region last year. They are selling their fresh hops during harvest for $15 a pound. And the comparable hops coming out of the northwest to those brewers are running about 6 dollars a pound.”

And that’s why brewers have contracts with merchants as Professor Marsh explains:

“The contracting mechanisms put in place really kind of reduce the volatility in price.”

The price brewers pay per pound is private information and Marsh says they arrive at a figure partly based on closed-door networking between other brewers.

Back at Eagle Rock Brewery, Jeremy Raub shows his contract with a hops merchant.  

Ting Su, Milo, and Jeremy Raub of Eagle Rock Brewery in Los Angeles 

“Just to give you an idea here, for 2016 crop year, we’re contracted for $85,000 for the year.” Raub says.

That’s enough hops for about 77 thousand gallons of beer, in case you’re wondering. And the internet is changing things. Raub says online hop exchanges are sprouting up, so you can see the price other brewers are paying.

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