UK: Hop growers urging brewers to renegotiate prices
British hop growers are urging brewers to renegotiate prices to help mitigate crippling costs, The Grocer reported on June 16.
Hop growers are facing increases of over 15% in wage costs and approaching 100% in fuel costs, The British Hop Association warned this week, as well as “significant increases” in the price of fertilisers, spray chemicals, string and other inputs.
It was therefore “imperative that brewers, hop merchants and hop traders are open to discussions to re-negotiate upwards their contracted and uncontracted hop prices to absorb the huge inflationary pressures faced by growers”, said the BHA.
The cost per kilo of hops has risen by £1.11 since 2021, according to farm business consultant John Pelham of Andersons Midlands, who worked with a group of hop growers to quantify their costs.
“Based on Andersons Midlands’ experience of risk for growers, their professional opinion would be that a surplus equivalent to 10% of turnover would be appropriate to allow for both risk and grower profit,” said the BHA. For the 2022 crop, this would be equivalent to a farmgate price of £11.92 per kilo.
However, there may be little room for brewers – especially independents – to budge on hop prices.
“It’s not great news for any small players because I imagine our contracts aren’t quite as resilient,” said Felix James, co-founder of Small Beer Brew Co.
“We are very squeezed – all our British hops are organic, which already comes at a premium.”
Plus, “with hops that are still in the ground it’s a tough one to play because the market price fluctuates anyway”.
Julia Austin, founder of Tyne Bank Brewery, added: “I understand their point of view, but if you’re going to forward contract, you need to have risk management in place. It’s a bit like [brands] with supermarkets – you agree pricing and even if duty goes up you are stuck with it.”
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