IPA Economics

Posted by IPA on May 17, 2014

IPA Economics

The beloved IPA offers a crash course in micro economics as evidenced by this weeks Bloomberg Businessweek article America's Thirst for IPA Beers Trickles Down to the Hop Farmers. Data from the Hop Growers of America reports that the average price per pound has doubled since 2004. While the current $3.59 lb price pales in comparision to that other dried green cash crop, hops enjoy legal status in all 50 states and the increase is due to simple supply and demand. The aforementioned American thirst for India Pale Ale and the many hoppy variants within the category is obviously having a huge impact on the overall equation. There exists a more complex and interesting type of hop supply shortage at play.

It turns out that Aroma hop varieties yield less total weight and cost more than Alpha hops. In some cases the Aroma type are seven times more expensive than the Alpha type according to Chris Swersey, technical brewing projects manager at the Brewers Association. Aroma hops contribute the unique scents (duh) and more of the flavor attributes than Alpha, which lend more of the trademark bittering quality to the IPA. As brewers are becoming increasingly creative in the effort to differenciate their offerings, Aroma hops are naturally one major way to do so. And therein lies the reason that many growers are rebalancing their output of each.

hops in hand

Run of the mill boring watered down 'regular' beer is brewed with an average of .2 lbs of hops per 31 gallons whereas craft brewers average 1.25 pounds in the same batch. So while it may not make sense to break out your old grow lights from college and start an indoor hop garden, there are several specific named varieties that command ever increasing prices due to that simple age old economic principle, supply and demand.