No one strategy applies to all stages of the hop market so you shouldn’t buy your hops the same way all the time. When hops are short, you will have to contract to get what you need. If there is a surplus of hops, you can safely buy on the spot market and the hops you need will probably be there tomorrow.
Don’t contract more hops than you need. If you contract for more than you need, you send confusing signals to the hop growers. They will plant enough hops for that volume … and then some. If your demand doesn’t materialize, you’ve created a monster that jeopardizes farmers, merchants and thousands of other people who depend on the industry. If you contract for too many hops, plan for a way to use those hops or take them to the landfill.
Don’t contract for growth that isn’t there. It’s great if you think you have the capacity to increase sales by 10 or even 50 percent next year. If you’re sure about that, meaning that you have commitments from customers, then buy some hops to cover that. Otherwise, it’s pie in the sky and you shouldn’t.
Don’t contract for growth upon growth upon growth. If you think you’re able to grow 50 percent in the next year, that doesn’t mean you should contract for 50 percent growth for the year after that and another 50 percent growth the year after that. Take it easy. Chances are the hops will be there.
Always plan to buy at least some of your hops on the spot market. Sometimes you’ll pay more for the hops you need, but more often than not you won’t. The spot market can fluctuate wildly based on the supply, which changes with the weather. It can go down just as quickly as it goes up. Plan to contract for most of your hops, but not all of them … live a little on the wild side.
The hop merchant you’re working with has no idea if he is the only person from whom you’re buying hops or if he’s just getting 10 percent of your business unless you tell him. It’s OK to be open about spreading the love around. They’ll still respect you.
Be open to using older hops. When stored properly in pellets, 1- or 2-year old hop pellets can work just fine. For some reason, the perception exists that the most recent crop is always the best. That’s not always true. You can usually find older product available for a spot purchase.