SPOT VS CONTRACT HOP BUYING

Brewers need hops to brew tasty beer.

Hops can either be bought on contracts (you agree a price now for delivery in a couple of year’s time), or on the spot market for immediate delivery. Contracts are generally best:

  1. Hop prices are volatile – as a brewer you can protect yourself from future fluctuations by fixing the price of much of what you will need now.
  2. Farmers want certainty – planting and harvesting hops are expensive. By contracting for a few year’s supply of Amarillo, you give a farmer (and their bank manager!) confidence that they will be able to recoup any investment they need to make in new wirework or kilning machinery.

However life isn’t always simple. Maybe business is booming, you have a new brewhouse, and it runs on pellet not leaf. What do you do with your old contracts for whole-cone? Maybe you do a collab with the funky new brewer down the road, and need some hops at short-notice?

Previously these shortfalls and oversupply have been handled through notice-boards (SIBA Classifieds etc), or individual negotiations between brewers and their merchants. However things changed a few years back in the US with the launch of an online marketplace – brewers there have been able to use the Lupulin Exchange to get back into balance, and also to get hold of varieties like Galaxy and Citra which were previously difficult to source.

The Lupulin Exchange has also solved problems for farmers: crop yields depend on the weather and so growers can’t predict exactly how many hops they will have after harvest. We grew a lot more hops than we had expected in 2017 and struggled to sell our surplus at reasonable prices. Brook House Hops is partnering with the Lupulin Exchange for their European launch – by transparently dealing directly with brewers, we hope to keep the market in balance across the UK and Europe.

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