Last Thursday I was having an early evening beer with a few friends at the Cock and Bull pub on cattleman, and I was reminded of an article I read in INC. magazine entitled "The Great Beer Crisis of 2008."
This is how it went down: The price of hops, a key ingredient in making beer, has historically been low, from $3 to $4/lb. In response to this, farmers over the past few years began to allot field space to other crops (corn, anyone?). In addition to this, the demand for headier beers, meaning beers requiring more hops, grew while at the same time flooding in the Czech Republic and Slovenia decreased the amount of hops available on the international market. As a result, the price skyrocketed to $15 to $24/lb.
"Holy Mackerel!" you might cry, "But how did all of the little microbrews I love so much stay afloat?" Well, I'll tell you how. Jim Kochs, founder of Boston Beer and maker of Sam Adams, and classic American entrepreneur, has long maintained a stockpile of hops. Sensing the impending demise of small microbrews, Koch decided to sell a portion of his hops at his wholesale price of $5/lb. Demand for these hops was so great, he created a lottery and sold 528 lbs each to 132 American breweries.
In addition to Koch's private stockpiles, Sierra Nevada has sold 150,000 lbs of hops to small breweries around the country. By keeping these small breweries from succumbing to the rising prices of integral ingredients, larger companies have stimulated more competition and community, resulting in a win-win situation not only for the consumer, but the seller, as well.
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