Co-op confident of avoiding specialty hop shortage

SMALL BEER: Doug Donelan, of NZ Hops, has reassured brewers.
SMALL BEER: Doug Donelan, of NZ Hops, has reassured brewers.

New Zealand Hops is downplaying the possibility of a looming shortage of specialty hops, saying it is taking steps to minimise it happening.

Some brewers face dwindling supplies of their main ingredient as the craft beer market takes off.

Brewers Guild president Ralph Bungard, who owns South Island Three Boys Brewery, said a hop shortage in North America was also contributing to the lack of crop in New Zealand and had the potential to limit production of some types of beer.

"That, combined with a high demand from micro brewers, it means that we do run out of particular styles of hop," he said.

Mr Bungard said Americans were scrambling to get their hands on Kiwi hops as they were becoming more trendy in the American micro-brew market.

However, Doug Donelan, chief executive of the Nelson-based NZ Hops grower co-operative, said he was confident it would not run out of hops this year, although some smaller brewers without contracts might not get everything they wanted next year.

"There may be shortages in certain popular varieties, but in New Zealand the majority of major craft brewers have their hops contracted so they will be guaranteed their supply."

Overseas customers would also be supplied as they were all on contracts, he said.

NZ Hops would set an amount aside for smaller brewers and "drip feed" it to them.

"We think we will be able to manage it, we have managed hop shortages before."

Even though the domestic market took only 10-15 per cent of hops grown, New Zealand customers would not be sacrificed for overseas clients, Mr Donelan said.

"They are important to us as our policy is to ensure we remain big at home."

It still had hops from less popular varieties to sell from its 2012 crop which made it difficult for growers to afford to switch over to planting more of the sought-after aroma-type hops, he said. But NZ Hops had a five-year strategy to grow the industry which revolved around getting the variety mix right in existing gardens first before establishing new ones.

Sprig and Fern co-owner and head brewer Tracy Banner said talk of a hop shortage came as a surprise but she did not expect any problems.

The company was in the process of working out its hop requirements for the next year, which had more than doubled recently as it opened more outlets but still remained small compared with the big breweries, she said.

It always advised NZ Hops - which supplied 90 per cent of its hops - what it needed in advance and "they have been pretty good".

Sprig and Fern used a lot of riwaka hops which were very popular "but I'm led to believe they won't be in short supply next year".

Head brewer of Waikato microbrewery Brewaucracy, Greig McGill, said there would be a lag for certain types of hops in the market while supply caught up with demand. But rather than getting in a fizz over running dry, drinkers were likely to have more variety as brewers scrambled to make up the shortfall.

"It can be interesting for creativity because brewers are forced to experiment with different types of hops. So you get different tasting beers."

A recent Market Research survey found the total number of breweries in New Zealand increased from 48 in 2008 to 68 by the end of 2011.

The number of small craft breweries (those producing under 40,000 litres a year) has grown the most, doubling from 15 to 30 over the four-year period.

Mr McGill said that although there was huge growth in the craft beer market the beer giants would still dominate the market.

The demand for more hops is not just coming from the commercial operators. Brew Your Own director Chris Henry said the boom in craft beer had massively affected his trade - his store stocked only three different varieties of hops four years ago, and now stocks more than 50.

DB Breweries spokesman Simon Smith said craft beer was estimated to have 8 to 9 per cent of the total beer market in New Zealand.