Hops Contracts

And in the UK, it IS this issue of hop contracts, or forward contracting, which is guaranteed to catalyse fiery debate among the brewing sector that often rely on them. As the burgeoning industry continues to bloom, placing increasing pressure on frequently strained supply lines, the dialogue between merchant and brewery is more important than ever.

“The next four years are going to be very, very interesting. There will be a healthy level of breweries in operation, while some will fall away and some will be bought. But the ones that remain will deserve to be there, in my opinion,” explains John Willetts, director at Kent-based hop merchant Simply Hops.

As the brewery landscape develops and transforms, the demands and requirements these operations place on hop merchants will change, whether people like it or not. And for Willetts, this is where breweries will need to play even closer attention to the role hop contracts play in their business.

“There are some dangerous messages going out. And these messages are at the detriment of other breweries. If people are contracting 20% more than they need. Then you could argue there are around 200 breweries in just the UK alone that could be at risk of missing out,” he argues.

“So is contracting essential? On certain varieties, yes. If you want some of these big varieties such as Citra, Centennial, Mosaic, Cascade and Amarillo, as well as popular Australian and New Zealand offerings, then you need to contract ahead or it is quite likely you will not be able to get them.

“More than 80% of Citra in the ground today has already been sold through to 2019.”

Simply Hops doesn’t specify that breweries stick to sole hop variety in a contract, but rather a minimum package across all required varieties of 800kg a year.

It currently caters for around 1,400 breweries and 2,000 customers across Europe, with its biggest market being the UK, by far, accounting for 50% of its current market, while growth is taking place in Italy, Iberia and Scandinavia.

Willetts is keen to point out that contracting isn’t essential for all hop varieties. “But do you lose anything by contracting? Not really. Although prices do fall sometimes, but at the moment, supply assurance is the greater risk, and you may actually save some money contracting ahead, although this is not guaranteed. But if you are basing your beers on single hop varieties then it is essential.”

The company doesn’t want breweries to be in situations where they end up with more than they need and then end up having to pay for them, he stresses.