Press Clips Part II: Hops Shortage Creates Pricing Surge; Tenth & Blake CEO Retires

The Wall Street Journal postulated an alarming threat facing the craft beer industry this week, reporting that the rising price of hops could put small brewers, specifically those that produce fewer than 15,000 barrels a year, out of business.

The paradox of it all, of course, is that the threat exists “ironically, amid steady growth for the industry,” the articles notes.

The increasingly insatiable demand for hop forward beers has led to a “serious hops shortage in the U.S.,” nonetheless, according to the website, driving the “average price for all hops to $3.59 a pound in 2013, up from $1.88 in 2004.” In tracking the price curve over the past decade, the website — citing a Washington-based hops merchant, 47 Hops — said that “choicier hops” could run brewers more than $10 a pound by the end of this year, which could have grave implications for smaller brewers.

The Journal does offer a solution: should more brewers get in on the growing popularity of session beers that boast lower alcohol content and a diminished hop characteristic, farmers may be able to “catch up” with the industry. Additionally, the article adds, a stylistic shift would “take the pressure off smaller breweries to produce hop-heavy signatures or die.”

On the opposite end of the spectrum, a large company like MillerCoors, with its buying power and capital assets, is far less threatened by any kind of raw material shortage. Still, change is afoot at the conglomerate’s independent craft division, Tenth and Blake Beer Co. (T&B), which markets popular crafty varieties like Blue Moon and Leinenkugel.

Tom Cardella, CEO of T&B, will step down after 27 years with Miller Brewing and MillerCoors. T&B launched in 2010, in response to the “constantly evolving and changing” landscape of the craft beer revolution, Cardella told BevNET in February.

In a note to employees (and obtained by the Milwaukee Business Journal), MillerCoors CEO Tom Long described Cardella as “one of the most respected people in the industry,” as well as a “fabulous friend and partner.” Long cited a number of accolades in his farewell endorsement of Cardella, chief among them, his critical role in the formation of T&B

“[M]any of us owe much of our success to the coaching Tom has given us over the years,” the letter read. “And the creation of Tenth and Blake stands out as a crowning and extraordinary success. Without Tom, this entity would not have been born. It was his idea.”

According to the Business Journal, the company is currently conducting a search for Cardella’s replacement at T&B.

While T&B may have been created to capitalize on the popularity of craft beer, its Canadian stepbrother, Molson Coors Brewing, seems less impressed with the nation’s small producers.

Molson Coors CEO Peter Swinburn told Bloomberg that the nation’s craft breweries are “massively overvalued.”

“I’m sure the craft owners would say they’re not overvalued,” Swinburn told the website. “I’m just saying we have to generate value from any purchase we make, and we find it difficult to get the returns we want.”

Swinburn did, however, say he wouldn’t rule out buying SABMiller PLC’s 58 percent stake in MillerCoors, should it become available.

“The important thing for me is to put the company in position to take advantage of whatever comes our way,'” Swinburn told The Wall Street Journal.

Nevertheless, one thing brewers both large and small have to deal with is climate change. The latest report about this topic, which has been surfacing with disconcerting regularity, comes from St. Louis Today.

“Locally, more than two dozen local breweries, not to mention Anheuser-Busch, employ thousands and have a huge economic impact on the region,” the article read. “And they will face unique challenges with climate change.”

In an effort to get ahead of the problem, at least on a local level, local political figures, the grassroots environmental Sierra Club organization, and the NAACP vocalized these concerns and promised to combat them through cooperative partnerships.

“I’m going to work with the Sierra Club to do all I can on the state levelÔǪto bring about strong environmental protection laws,” Missouri State Sen. Jamilah Nasheed said, speaking at Urban Chestnut Brewing Co.

To do its part, Urban Chestnut has installed (or is in the process of installing) solar panels on the roofs of its brewery and new brew hall.

“We’re just a tiny little piece of the whole puzzle,” Urban Chestnut co-founder and brewmaster Florian Kuplent told the website.

Another tiny piece of the craft brewing puzzle? Beer labels. The Alcohol and Tobacco Tax and Trade Bureau has released a new sample label generator tool meant to help industry members better understand what changes they are allowed to make to approved labels without having to submit a new application for approval.

The new tool allows the user to view samples inclusive of the desired changes and automatically generates sample labels complete with allowed amendments.