Bucks & Beer: Hops are more expensive, thus so is beer, but you're still drinking 

So much fuss over a little leaf. Times are getting tight, at least that's what we keep hearing, especially in this part of the country. People are driving less in an attempt to spend less of their hard-earned cash on gas, they're eating out less as food costs increase, but here in Central Oregon, where we have a brewery for about every 15,000 people, it appears that people are still drinking.

We might be cutting down on our road trips, but we'll be damned if we stop drinking our locally made beer, or so say our local brew smiths. If there were ever a sign that there is confidence in the local beer industry, it is Three Creeks Brewing Co., the new craft brewery that Wade Underwood recently opened in Sisters. Underwood previously lived in Phoenix while operating an Internet-based company that he subsequently sold before settling in Sisters with the intention of opening the city's only craft brew pub.

"We're opening at an interesting time, that's for sure," says a laughing Underwood, a University of Oregon grad whose interest in brewing stems back several years to the early days of McMenamins.

"If you look at all the business models, it would tell you not to build this," Underwood says, citing models that suggest that a community needs at least 150,000 people to support a craft brewery. But he says the Northwest is an exception, and furthermore, Central Oregon is an even more substantial exception, supporting six brewing establishments before Underwood opened the seventh.

With seven beers on tap and a full restaurant component to his business, Underwood is also coming onto the Oregon brewing scene during a changing time in the business in which brewers are paying more than ever for hops and grains - two key ingredients to beer. The worldwide hops shortage was big news about a year ago, but the effects of that increase are beginning to make their way into your pint glass in the form of price increases. Rising transportation costs don't help the breweries either, Underwood says.

According to the Oregon Hop Commission, Oregon is the second largest hop producing state in the country, behind Washington, a state responsible for about 75 percent of the United States' hops. Although the Northwest has farmed hops for years, farmers often did so at a relatively low profit margin. There was an abundance of hops farmers, thus an abundance of hops, meaning low hops prices. But as farmers around the world moved away from farming hops, including some American farmers who moved into producing other, more profitable crops like corn (which can be sold to ethanol producing outfits), the supply wasn't at the level it once was, so prices skyrocketed.

Tyler Reichert, the owner of Silver Moon Brewing Co., says that prices for some of the hops he uses in his array of recipes have increased as much as 300 percent. Reichert, like most brewers, locks in his hops at a fixed price for an extended period of time through contracts, allowing some protection from extreme fluctuations in the market.

"It's still a squirrelly world out there in the hop wholesale arena. Contract offers are fleeting opportunities that come and go faster than the tides right now," Reichert says, but is persistently optimistic about the days to come.

"The future hop supply is forecasted to stabilize as more growers get back into the game," he says.

Reichert says his brewery is also experimenting this season with using fresh hops bought directly from a farmer in the Willamette Valley for its Fresh Hop beer. Rather than use packaged hops, other breweries are also using this fresh hop process in what are often called "harvest" ales.

Garrett Wales of Wildfire Brewing Co. (see the sidebar to read about the brewery's coming name change), which has only been on the scene for a little more than a year, brings into the hop price discussion another facet that some might not consider - the fact that certain beers require more hops. In fact, almost across the board, microbreweries use more hops per batch than mass-producing behemoths like Coors, Pabst or Anheuser Busch.

"What the cost increase does impact is if, for example, we wanted to do a big imperial IPA," Wales says, "You might second guess that."

What Wales is getting at, and most Bend beer snobs (that's an affectionate term, take no offense, this writer is proudly of that snob camp) already know, is that an imperial IPA requires more hops than a lighter, gentler beer. This means that should hops become even more expensive (which local brewers don't believe will happen) there is potential that we might see less proliferation of the "big" beers for which Oregon craft brewers have become well known.

On a related note, a shortage or price increase of other crops besides hops and grain can also manipulate beer production. Case in point: this summer hasn't been the best for raspberry farmers not only in this region, but throughout the world. So, what do raspberries have to do with beer? Well, if you're a loyal McMenamins beer drinker, you already know the answer to this because you probably enjoy or have at one time enjoyed the brewery chain's raspberry-flavored Ruby ale. According to the brewery's Website, this Oregon favorite requires 42 pounds of raspberries per batch. With the berries not as easily obtainable as when McMenamins concocted the recipe more than 20 years ago, the brewery is now using boysenberries in the mix.

Reichert, Underwood and Wales all say that the last thing they want to do is pass increased costs of production down to the consumer, but at some point it's necessary to maintain a profitable business. Beer, to the chagrin of suds-swilling Oregonians, is not exempt from the increasing costs of good and services. Most drinkers have noticed a more or less across-the-board cost increase at local brewpubs, as well as other watering holes over the past year. Yet, for the most part, people are still drinking in this slow economy.

"There's definitely a slowdown, but I don't think the [brewing] industry is taking as big of a hit as the restaurant industries. People are still going to drink," Wales says.

Zak Davis, a regional sales manager for Schmaltz Brewing Company, a New York-based brewer specializing in craft lagers and kosher ales, has been traveling the West Coast for much of the past year working to get his company's beer into more and more stores. While standing next to his company's booth at the Bend Brew Fest as festival volunteers distributed all 25-plus cases of Schmaltz brews he brought to the event, Davis discusses the changes in beer retail.

"Six packs have gone up a dollar or two. Some are up around $10 and that's definitely opening some eyes," Davis says, adding that these price levels don't make it any easier for him to get his product on store shelves. But still, in a similar vein of optimism that the sampling of local craft brewers I spoke with, Davis has faith that knowledgeable beer drinkers will sustain the industry.

"Think about it this way, there's a lot of people shifting away from high-level wines and going for the mid-level wines. But with beer, it seems like people who like good beer are still buying it," Davis says.

Yes, the economy has been better, but it seems that beer might be one thing we stick with through what might be tough times for some.

But leave it to a beer master like Reichert to explain why people are still reaching for a brew from Deschutes, Cascade Lakes, Wildfire, Bend Brewing, Silver Moon, McMenamins or Three Creeks, even when a big-name domestic might save them a buck.

"Isn't the pursuit of happiness a constitutional right?" Reichert asks. "We all want to be comfortable and we all want to enjoy ourselves. If a plane ticket to Maui is out of reach these days, a handcrafted pint of ale is always attainable."

Wildfire's Identity Revision

In the past year and a half that it's been bubbling up in glasses around Bend, Wildfire Brewing has gained a solid reputation within the somewhat crowded craft-brewing field. And this summer they unveiled their Summer Ale, which the brewery has touted as one of its most successful brews.

But the biggest hurdle for the young company has now been presented in the form of a letter from the Midwest-based Wildfire restaurant chain claiming that the Bend brewery was infringing on the company's trademarked name. There would be no court battle over the matter, as the Wildfire Brewing partners decided to step back and change their name.

While Garrett Wales and his other partners seem to be making the most of the change by holding a contest where the brewery's fans can submit potential names, Wales says the name change isn't going to be easy.

"It's going to take enough money and time to be a lot more than an annoying little thing. I mean, you're talking about changing 120 tap handles," Wales said.

As of press time, the company had yet to announce a new name, but we should get acquainted with the Brewery Formerly Known as Wildfire sometime soon.


Beer Facts:

• As of August 1, 2008 there were 61 brewing companies, operating 92 brewing facilities in Oregon.
• Within Portland city limits, there are 30 breweries, more than any other city in the world.
• In 2007 alone, Oregon breweries were responsible for pumping out some 860,000 barrels of beer. That's 1.72 million kegs or 285 million bottles of brew.
• Oregon has the highest percentage of local craft beer consumption in the country.<p>Almost 42 percent of all draft beer consumed in Oregon is brewed in Oregon.
• Oregon is second highest hop growing state in the country.
• The total impact from the beer industry on Oregon's economy is $2.25 billion.

Source: Oregon Brewer's