Can AB InBev Restrict the Flow of Hops?

South African hop fields. Photo credit: South African Country Life

Last week, AB InBev (ABI) made news (and sparked anxiety) by buying Asheville's Wicked Weed brewery. This week they've caused even more anxiety when news broke that they had seized the entire crop of South African hops. Dozens of stories have been written about it, and breweries have been shooting off angry emails all week. Stories like this one from Paste frame the issue starkly:

You want direct illustration of how InBev’s business practices hurt the entire craft beer industry as a whole? They’ve just presented the best possible example, by more or less cutting off the entire South African hops market from independent American craft brewers. Those hops, which include some of the most sought-after new aroma varietals on the market today, will instead be earmarked for the breweries owned by InBev’s “The High End” division, including the likes of the just-purchased Wicked Weed.
— Jim Vorel, Paste Magazine

Details of the situation have been well-reported and interpreted by Zach Fowle, Jason Notte, and Bryan Roth, among others. Roth was the first one to notice that the particulars in this case were unusual: the hop fields in question are owned by ABI (or more precisely, SAB, whom they just acquired), 92% of which are used for bittering, and only 44,000 pounds of which normally make it into the American market, anyway. (Breweries worried they won't have access to new flavors should be heartened to learn that about a million pounds of experimental hops were harvested in the US last year, or 23 times the amount South Africa sent.)

All the articles I've read quote Greg Crum, the largest importer of South African hops (and one of just two or three who do it at all). He naturally has a dark view of what all this means--and that seems to be at the center of the dire warnings. The upshot is that most of the articles are suggesting the potential for AB InBev to restrict the flow of hops to craft brewers, but not a very good example of it happening now. So on Twitter, Facebook, and elsewhere, I keep hearing the same question: can they do that? How worried should we be?

In a nutshell: not very. ABI, which produces on the order of one-third of the beer made worldwide, does clearly have enormous purchasing power. But nearly every ounce of that production goes into mass market lagers. Those beers require high-alpha bittering hops, not the lushly-flavored varieties prized by IPA-makers. ABI is putting together an impressive portfolio of craft breweries in the US and abroad, but these constitute a small amount of production, even weighed against the craft market. Craft breweries require vastly more hops per barrel than the big breweries do, and they punch way above their weight as buyers. Hop growers love craft breweries. It's hard to see how they could affect the supply of American hops right now.

Fair enough, you might say--but what about the future? Might things not change enough that this calculus would change? Notte raises this point in his piece:

The greater issue, which beer writer and historian Stan Hieronymus touches on in his 2012 book, “For the Love of Hops,” is that Anheuser-Busch InBev has never been shy about controlling the means of production. Before Anheuser-Busch’s merger with InBev in 2008, it had no problem buying up the majority of a hop farm’s acreage in Oregon. In fact, Anheuser-Busch alone once accounted for more than 75% of all of Oregon’s hop acreage.

But this is exactly the reason hop growers are going to be resistant to such an arrangement in the future. Gayle Goschie was one of those farmers who grew almost entirely for Anheuser-Busch. About ten years ago, they decided to pull the contract, and Goschie Farms was in big trouble. Fortunately, craft breweries came to the rescue and she began forming relationships with them, and the farm survived. Yet her case illustrates that farms with one client become vassals, and the entire business survives at the lord's whim. It was also the case that the big breweries funded research into ever-higher alpha hops so that they could use fewer of them--an arrangement that probably didn't sit well with growers. By contrast, craft breweries keep buying more and more hops every year.

It's worth keeping an eye on ABI's High End (their portfolio of craft breweries). Should the largest craft breweries all be collected by two or three of the giants, supply issues could be a future problem. But for the foreseeable future, there's no reason I can see to worry that AB InBev--or any large beer company--is going to endanger our supplies. The South African case was a weird one in which all the circumstances lined up; nothing like that exists here in the US. We should be fine.