TrimTab Brewing CEO on Confounding Hop Shortages: "It's a Crazy, Cards-Stacked-Against-You Industry"

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TrimTab Brewing CEO on Confounding Hop Shortages: "It's a Crazy, Cards-Stacked-Against-You Industry"

TrimTab Brewing Co. is one of Alabama’s hippest brewing outfits, known for their work in fruited sours and modern IPA. Based in Birmingham, as a focal point of one of the state’s most passionate beer cities, you’d be forgiven for looking at them and assuming beer is easy to sell. Make the beer, sell the beer, right? Well, no, not quite so much.

This week, TrimTab CEO Harris Stewart published a long, impassioned blog post on the company’s website, entitled “Join the beer business they said. It’ll be fun they said.” In it, he laments the difficulties inherent in the modern beer industry that spring from the confounding system of hop contracts, which routinely require breweries to plan their exact hop needs years in advance. Obviously, this is near impossible in an industry where trends flare to life seemingly overnight, making one varietal suddenly “must have.”

Using TrimTab’s highly sought-after The Original 006 Hazy Double IPA as an example, Stewart explains why the company is only able to both produce the beer in small quantities and exclusively sell it via their own taproom. To do it any other way would be accepting losing money on the beer. He says the following about trying to acquire enough Galaxy hops to make The Original 006 in the first place:

OG 006 has a hefty dose of Galaxy hops in it. We love Galaxy. Once upon a time we had contracts for Galaxy. Now we’re with the huddled masses, trying to mentally and financially justify being extorted just to get enough to make a single batch. Sometimes the offers can be more “reasonable.” By reasonable I mean it might be 2-3 times the original contract price. Yea. However, increasingly most of the time these evil con artists will charge 5-6 times the original price, sometimes even higher. Fuck you. Pay me.

Clearly, Stewart isn’t a fan of the secondary market for American hops, and he’s by no means alone among brewery owners. To those who are unfamiliar with the process, here’s how he describes the “spot market.”

If you can’t get a contract on hops, you then are at the mercy of the “spot market”. The spot market is essentially the brewery dark web in all its glory. It’s an open market. People that post available hops come in two categories. They’re either poor pitiful bastards trying to sell hops they can’t use, trying to lose as little money as possible (yes, they’re selling hops at a loss). Or, they are the worst people on Earth. Yes, they are the worst. On Earth. Not Yelp reviewers. Not people that put pineapple on pizza. Not neighbors that lawnmower at 8am on Sundays. The worst people on Earth are the people that gouge prices for highly sought after hops on the spot market.

Hop prices generally range from $7/pound for your garden variety to $14/pound for sexier hops. If a hop gets some hype they first get contracted to hell, and then the wholesalers tell everyone that didn’t get their name in the hat fast enough to go eat a fork. Then the wolves come out to play. Many of these miserable excuses for human beings that get access to these hops don’t even use them! Instead, they jack up their prices, and put the gun on the table. Want Vic’s Secret? Fuck you, pay me. Want Enigma? Fuck you, pay me. You get the idea.

We love this beer [The Original 006] and want to make as much of it as possible. We distributed 006 earlier this year because we were able to find hops that some “saint” sold us for a little more than 3.5x the original contract price. What a guy! However, we weren’t as “lucky” the last time. The only Galaxy we could find was a whopping 6.2x the contract price. That is crazy. That is insane. And that is unprofitable, even at the higher price point we charge for this beer.

As a result, putting out a beer like The Original 006 via traditional distribution isn’t even an option for TrimTab, because in order to make a profit, they’d have to be charging something like $30 per 4-pack. Instead, putting out a limited quantity (which is all they can make) via their own taproom in a limited release is the only way to make that beer make financial sense. It doesn’t matter how many people are clamoring for it, or how much the fans want them to produce more batches. Everything is limited by the chokepoint of ingredient costs and availability. As Stewart puts it:

If you’re a retailer out in the market, please accept our apologies that we can’t send it out through distribution. We simply can’t lose money on the beer we make, and we hope that you can appreciate that.

We wish that we could press the “BEER” button and spit out limitless quantities of this stuff. Unfortunately, we are bound by the realities of operating in a really scarce commodities market, a highly regulated distribution scheme, and are left ultimately to the whims of Chads everywhere that want a pound of flesh for an ounce of hops on the spot market.

So, the next time you find yourself asking why a brewery with a popular but hard-to-find beer “doesn’t just make more,” then perhaps you should revisit Stewart’s post in full.