Amorada Tequila – the Essence of Passion

By: Nan McCreary

For many Americans— as well as others throughout the world — enjoying tequila means downing a shot of the spirit with a dash of salt and a slice of lime. To Terray Glasman, founder of Austin-based Amorada Tequila, the drink is much more than an alcoholic beverage. Rather, it’s a reflection of her culture, with memories of food, love, laughter and celebrations complimented by the special juice from the agave that flourishes in the hills surrounding Jalisco, Mexico. From these memories — and respect for tradition — Glasman created an ultra-premium spirit to be sipped and savored, much like fine wine, packaged in beautiful hand-crafted bottles, each a one-of-a-kind work of art.

Born in Mexico City, it was Glasman’s Mexican roots, and frequent trips there for her telecommunications company, that inspired her to jump into the tequila business. “When I traveled to Mexico, I found myself always going to the agave fields and thinking, ‘I really love tequila, and what’s available in the U.S. I don’t like,”’ Glasman said. “I am very picky about tequila. I don’t want it to burn; I want it to be smooth and tasteful.”

It took Glasman five years to find a distillery that shared her passion for making tequila the “old way,” that is, a tequila with no additives – that would express the flavor of the barrels, and nothing else. Together, she and the distillery crafted a recipe made from 100 percent Weber Blue Agave, which is the gold standard for purists in the tequila world. They selected plants that grow in the red volcanic soil in the Highlands, which generally produce sweeter and smoother-tasting tequilas, with definite floral and citrus notes. As a rule of thumb, the Weber Blue Agave takes five to eight years to mature. Glasman’s recipe specifically calls for waiting eight years before extracting the juice of the Piña, or pineapple, inside the agave.

Once Glasman mastered the formula, she began to design a bottle that would “reflect the love of the product” inside of it. “Amorada stems from the word enamorada which means ‘in love,’” she told Beverage Master Magazine. “I wanted to create a bottle that everyone would love, a bottle that was not only strikingly beautiful but also something people could use after they’ve consumed the tequila, be it a decanter or a container for flowers or a candle.”

The patented, visually-stunning bottles are available in cobalt blue, amber or red, depending on the style of tequila inside. Every bottle is hand-crafted (with the exception of the hand-blown red Anejo bottle), hand-etched with Glasman’s signature, and hand-labeled. The Anejo bottles are also filled manually since no two bottles are alike. “The bottles have come a long way to get to your table,” Glasman said. “A lot of love and passion has gone into each bottle, and each has a unique personality. I love admiring each bottle and their beautiful imperfections.”

Amorada Tequila made its debut in 2014. Currently, the company produces three types of tequila: a Blanco, a Reposado and an Anejo. The traditionally unaged Blanco comes in a cobalt blue bottle, and, according to Amorada Tequila’s descriptors, “the pure essence of agave gives way to subtle pineapple and earth with pepper and vegetable lingering momentarily.” In an amber bottle, the Reposado is “rested in once-used French Cognac barrels for up to eight months. When this Reposado first hits the tongue and palate, vanilla, brown sugar, earth and oak marry and linger for several seconds. In the moments after, these aromatics give way to an assemblage of intense almond, clove and cinnamon on the nose.” The Anejo is “aged for a minimum of 18 months in both Bourbon and French Cognac. Ample vanilla and oak are prevalent when first sipping this complex Anejo, but only linger for several seconds before transitioning into tobacco and caramel. As these flavors dissipate, rich butterscotch takes over and coats the glass.”

In addition to these three tequilas, Glasman is producing an Extra Anejo, which ages for 44 months, first in Cognac barrels, then in bourbon barrels and finally in Sauternes barrels. The tequila, which will be released at the end of 2019, will be bottled in a stunning handcrafted black bottle, which is the final stages of design.

Tequila to Savor

Amorada Tequila is not something you shoot in a bar. This is tequila to savor. “Every flavor profile in our aged tequilas come from the barrels themselves,” Glasman said. “There are no sugars, or other flavors added.”

Glasman uses virgin synthetic corks to prevent oxidation or impurities which could compromise the flavor. “When you drink the Blanco,” she said, “you get the true essence of the agave plant. Good tequila always starts with the Blanco.” As a testament to its quality, in 2017, Wine Enthusiast gave Amorada Blanco a 4-star plus rating. One reviewer said, “This Blanco tequila is superb! The fact that it’s not filtered gives it a delicious, floral aroma and a full, bright, buttery, earthy taste. This tequila is a throwback to how real Blanco tequilas should be made – traditionally. Makes for a delicious margarita as well! Not to mention how beautiful the hand-crafted, cobalt-blue, ‘heavy’ bottles are!”

For Glasman, this pat-on-the-back validates her theory on the proper way to drink tequila: treat it like a fine wine. Similar to wine, you open the bottle and allow the tequila to breathe, then pour it into a glass and swirl and sniff to appreciate the aromas fully. Finally, you taste the tequila, and enjoy it slowly, one sip at a time. Tequila, like wine, can also be artfully paired with food. As both a tequila and food aficionado, Glasman regularly works with her team of experts, Austin bartenders and chefs to create menus for tequila dinners. Her favorite pairings include Blanco with seafood, Reposado with steak and Anejo with desert, preferably chocolate cake. For tequila lovers, Glasman includes a rotating list of tequila recipes on her web page, www.amoradatequila.com.

Ever the entrepreneur, Glasman is always alert for opportunities to market her tequila. When big distributors wouldn’t take on her product, she decided to self-distribute and acquired a distribution license so she could sell to restaurants and liquor stores herself. “It’s a lot of work, but I love it because we get to know our customers.” Glasman has also managed to develop a relationship with Total Wine & More, and now has her product in all of the company’s 335 stores. Most recently, she was able to enter China through the Alibaba Midnight Pitch, an Austin event where small business people pitch their brands to Chinese markets. “They only accepted 10 percent of the products,” Glasman said, “I felt like I’d won the lottery.” Currently, Glasman is preparing patents and trademarks so she can distribute in Mexico.

A Champion for Women

As one of the few female tequila makers in the world, Glasman has a special affinity for reaching out to women. “I’m a woman in man’s world,” she told Beverage Master Magazine, “but I’m a champion for women, and believe in doing what I can to empower them. My bottles are made for women. Men like them too, but they’re more interested in the tequila inside.” Glasman’s goal, she said, is to let women know that tequila does not have to be harsh. “I want to educate people that there are tequilas you can sip — like ours— that can be enjoyed like a good Cognac or a fine wine.”

Glasman not only considers women to be her target audience, but she is also committed to supporting those in need and has created a non-profit, the Amorada Love Movement (ALM), where five cents of each bottle sold is donated to helping single mothers. “When I started Amorada Tequila, one of my goals was to give back,” Glasman said. “I wanted to create a company where people love the product and love the bottle, and at the same time help other people.” Besides promoting ALM, Glasman is very active in the Austin community, and donates tequila for charitable events, whether they’re for pets, foster children, or veterans or, as she said, “anything that has a cause in Texas, whatever the need, within reason.”

A passion for tequila, a passion for art and aesthetics, and a passion for empowering women are the defining principles behind the success of Terray Glasman and Amorada Tequila. “I love what I do, and I can’t imagine doing anything else,” Glasman said. “When I used to travel to Mexico with my telecommunications company, I always remembered the beautiful occasions of multiple families coming together for parties and gatherings, and I remembered the tequila, which is central to the culture in Mexico. Making tequila brings back memories of my life and when I traveled. I also found myself helping women in need. With my business — producing tequila — I can support both of those passions simultaneously. I truly believe that in this world you can’t take anything with you when you leave, but at least when I leave, I will know that I’ve left something meaningful behind, and that’s a beautiful feeling.”

For more information on Amorada Tequila, visit their website at www.amoradatequila.com

Hop Farming Extends Beyond the Pacific Northwest

By: Robin Dohrn-Simpson

Throughout the U.S., interest in hop farming has expanded beyond the Pacific Northwest. Farming entrepreneurs from California to New York love beer and want to try their hand at growing local hops. They want to discover what varieties will thrive in their soil and withstand regional weather conditions all while creating a local hop source for brewers.

What does it take to grow hops? Growing requires three key components: full sun, access to water for irrigation, and moderate-to-well-draining soil. If this is true in the Pacific Northwest, why can’t regions throughout the country also be prosperous?

That’s precisely what Eric Sannerud and his partner Ben Boo of Mighty Axe Hops in Foley, Minnesota asked themselves.

“There’s really no reason not to grow hops in Minnesota,” Sannerud said. “The cold winters aren’t a challenge for hops. The plant’s perennial structure is deep underground. The plant dies back in the winter. There is nothing necessary to protect it from harsh winters. It springs back to life after the snows melt. The difference in growing in Minnesota is that in Oregon, Washington and Idaho it’s more desert-like. The Pacific Northwest has a longer and hotter growing season, but in Minnesota, there’s more humidity and water.”

Buy Local

In today’s culinary climate the “buy local” movement was also a consideration for them. “We care about where our food and hops come from. It’s important to have local ingredients. We also want to distinguish ourselves from other regions,” Sannerud said.

Eric March and family of Star B Ranch and Hop Farm in Ramona, California, already had a strong buffalo business on 1200 acres. In 2008, Marsh and his wife, Amie, decided to expand and include a hop farm on the property. Since then, they’ve become the largest commercial hop farm in San Diego County.

“I’m an agriculture man at heart,” March said. “I was exploring growing grapes in a newly created wine region outside of San Diego until my wife started researching hops. We discovered that with the growing craft brewing scene in San Diego there is a substantial demand for local hops. We looked at the temperature, soil, sunlight and air needed to grow hops. Although San Diego is coastal, where we live is 30 miles inland. It gets very hot here. We have loose, sandy, loamy soil that is well-drained. We have wells for our water. So we tried it. We currently have three acres planted with Chinook, Cascade, Amalia, Hallertauer and Neomexicanus.”

Challenges

Like so many other growers, March and his employees taught themselves how to plant and grow hops. “In fact, one of our first years I kept seeing hops cones on the ground and thought my crew was wasting valuable hops,” he said. “It turned out the deer were chewing on the plants and spitting out the hops.” They’ve used that to their advantage now. To battle mildew, it’s recommended not to have greenery right on the ground, but three feet up. “The deer get to eat the base leaves, and since they don’t like the hops, they leave it alone.”

Additionally, throughout the years the Star B team learned how to make the task of harvesting easier and more profitable.

“Before, it was very expensive and labor intensive to have a profitable hops business. Hand harvesting and hand processing of hops, while fun, was extremely tedious and time-consuming. This made it hard to provide larger quantities of hops fast enough to our customers. This led us to purchase a Wolf Hop Harvester from Germany,” said March. “We can [now] harvest up to 170 bines an hour.”

Terroir: the Sense of Place

Terroir is a common word in the wine world and now is being used in craft brewing as well. According to Ann Van Holle, Head of Research and Development at De Proefbrouwerij, a Flemish brewery in Belgium: “Terroir in connection to beer refers to the special characteristics of a region for the cultivation of hops, comprising growing conditions (such as soil composition, nitrogen, moisture) and climatologic conditions as well as biotic variables (such as microorganisms, managing practices). Terroir may have a significant influence on regional hop properties including aroma, flavor, bitter substances and longevity, affecting the brewing values of the cultivated hops.”

Mighty Axe Hops’ Sannerud told Beverage Master Magazine, “It’s important for different regions to have something that sets them apart. We think Minnesota soil and climate create a certain flavor of hops.”

For Star B, the water is what makes a difference. “Our hard water here accentuates the ‘hoppiness,’” said March. “Basically, it pops the hops. People also tell us our hops are citrusy.”

Mighty Axe Hops has received a grant to pilot a two-year program with the Department of Food Science at the University of Minnesota in conjunction with Dr. Zata Vickers, a sensory scientist, on hops terroir. “We want to see if terroir in hops is a thing. There’s a lot of interest in this and quite a few studies, but nothing conclusive,” Sannerud said. “By bringing [together] Mighty Axe’s understanding of hops, the world-class researchers at the University of Minnesota, and St. Croix Sensory’s history of sensory analysis, we are well positioned to do it.”

The study will be conducted mostly through sensory perception, championed by St Croix Sensory. According to their website, “St. Croix Sensory is a laboratory dedicated to practicing state-of-the-art sensory evaluation and to advancing the science of sensory perception.”

Chris VanDongen of the University of Minnesota told Beverage Master, “The University of Minnesota’s Department of Food Service has provided information on how to set up a descriptive analysis panel to measure hops aroma and flavor sensory attributes to the lab. Descriptive analysis is a sensory method where the attributes of products are identified and measured precisely by a trained panel. This type of analysis delivers objective and detailed quantitative information about a product’s sensory attributes.”

Subjects participating in the study have been trained as “noses” to taste and smell hops, according to Sannerud. These “noses” will taste and smell hops from a variety of locations and determine if there are distinct differences between soil types, growing regions and temperature variances, to name a few.

“Aroma and scent are subjective,” Sannerud said. “Our premise is that, like grapes and cheese, hops grown in different places have unique characteristics due to where they were grown.”

By early 2019 the initial results will be in and ready for a follow-up. Sannerud and Boo are excited to see how their hops hold up to those from the Pacific Northwest.

Future Vsion

The partners at Mighty Axe Hops hope to create and grow a strong hops industry in Minnesota that will assist Minnesota breweries in making their beer stand out.

“It’s important for us to have something that sets our state apart from other states,” Sannerud said. “Many smart people are sitting back and watching us; waiting to see if we’re successful; waiting to see if there’s a viable industry there. They’re questioning if there is enough demand and if we can make a go of it. For me, this is long term. I dream of creating and growing a new industry here. I want to build a co-op structure where we would have technical assistance and support with marketing. We want to work cooperatively.”

Star B’s March has similar goals and would like to expand his acreage to include several hop varietals. March also wants to gain the experience and knowledge to grow hops and brew beer on his property. The industry is so new that there are no regulations in place for growing and brewing at the same location. March is working directly with county officials to help build a solid agricultural plan. “Just like the wineries that grow grapes, process them, make their wine and sell their wine at the same location. That’s what I want.”

Hop Growers Anticipate Plenty of Product for Brewers This Year

By: Jim Offner

Brewers across North America anticipate plenty of hops, as growers continue a years-long trend of increased production.

Last year, hop production across the U.S. totaled around 104 million pounds, over 55,000 acres.

The Pacific Northwest is the runaway production leader for hops in the U.S., with Washington alone accounting for 53,000 acres.

“Currently, the Pacific Northwest crop looks very good,” said Ann George, executive director of the Yakima, Washington-based Hop Growers of America (HGA).

Irrigation water supplies are adequate this year, and mild temperatures have contributed to good growing conditions, George said.

Roy Johnson, national sales manager with John I. Haas Inc., which is based in Washington, D.C. but grows hops in Yakima, as well as other regions worldwide, agrees.

“I think we’re going to look at an all-time high, as far as yield,” he said. “Right now, the industry is full of hops, depending on variety.”

Johnson estimates hop acreage in the Pacific Northwest region that includes Idaho and Oregon, as well as Washington, will reach about 59,000 this year, which should produce over 110 million pounds. If such is those predictions hold, he adds, they would be record highs.

However, Johnson also cautions that some varieties likely “will be pretty tight.” He did not specify.

Overall, it looks like 2018 will be productive for hop growers, Johnson said. He also notes that some areas could see earlier-than-usual starts to their harvest activities.

“It looks like they’re coming on real strong in Oregon,” Johnson said. He adds that Washington’s Yakima Valley typically gets underway in September.

“They may be processing hops in Oregon really early in August this year; they look really good now,” Johnson said. “The weather has been really good.”

Indeed, there may be an overabundance of hops on the market this year – a description that also applied to 2017, indicates Brian Tennis, president of the Traverse City-based Michigan Hop Alliance (MHA).

“Same,” he said when asked about the upcoming fall hop market. “There are too many hops in the ground already.”

Supplies, acreage trending up

Brewers sometimes have a different take on supply forecasts, said Jaki Brophy, spokeswoman for the Hop Growers of America.Brewers tend to say there is a shortage, often when they have not contracted for that variety,” she said. “Since that is the only formalized way for brewers to communicate their needs – in addition to guaranteeing a certain amount of supply – there may not always be enough acreage of a particular variety if too many people have counted on being supplied through the spot market.”

Thanks to continued, increased demand for hop-forward beers, hop acreage continues to climb worldwide – U.S. acreage has nearly doubled in five years, according to Brophy’s organization. However, that’s a two-sided issue, HGA points out.

If anticipated acreage is actualized, then in five years’ time, hop acreage in the U.S. will have practically doubled, the organization said. “Thanks to increased contracts with breweries and the rapid efficiency of U.S. growers who can respond so quickly to customer demand, hop acreage has risen 95.8 percent in five years,” HGA reports.

The U.S. Department of Agriculture said hop acreage continues to trend upward. According to USDA, total U.S. acreage for hops was 55,339 in 2018, compared to 53,282 a year earlier. Washington continues to dominate production, with 39,273 acres in 2018 – up from 38,438 in 2017. Idaho came in with 8,217 acres in 2018, compared to 6,993 in 2017 – and vaulted past Oregon as the No. 2-producer. Oregon had 7,851 acres this year, just over 7,849 in 2017.

Organic hop acreage in the U.S. is still a tiny part of the business, but it, too, is showing some growth, USDA said, reporting a jump from 315 in 2017 to 431 in 2018.

Since 2012, the U.S. has added 28,465 acres, including the estimated acreage as reported by International Hop Growers’ Convention, and has more than 50 varieties in the ground.

“To put it into perspective, the U.S. acres added in the last five years is larger than the total acreage of any other hop-growing country in the world, outside of our own and Germany, the two largest hop-producing countries,” HGA’s George said. “Further, our estimated 2017 acreage increase (5,185 acres – a 9.8 percent growth) by itself is larger than other individual countries’ total acreage outside of the U.S., Germany, and the Czech Republic.”

A wave of new microbreweries that have sprouted in recent years is a significant driver of that acreage expansion, George notes. “Since about 2012 the acreage increase has been driven largely by the craft sector’s requests for additional aroma hop acreage,” she said.

MHA’s Tennis agrees. “Craft brewers are on the cutting edge and are looking for the next big or interesting hop, so we are constantly looking for new and exciting varieties to plant, or older varieties that brewers may have forgotten about,” he said.

There should be no hop shortfall for the immediate future, Haas Inc.’s Johnson said. “What you’ll see in 2019, you’ll see a decline in acreage. Contracts will come off the books. They’ve got higher inventories and will be using some older hops.”

That’s OK, too, Johnson said. “To be perfectly honest, there’s nothing wrong with a 2- to 5-year-old hop; those are fine. They can use them with confidence. The big thing is the supply has not met demand up to this last year.”

Where is the market predicted to go?

Hops are one of only a few ingredients necessary to make beer. They ignite flavor and aroma and corral runaway sweetness.

Experts point to Cascade as the top variety in 2017, followed by Centennial, although there are more than 60 other varieties available to brewers.

“We use Cascade and Citra; Columbus is the finishing hop, but it’s fairly expensive,” said Tom Williams, owner of St. Pete Brewing Co. in St. Petersburg, Florida. “Grains and hops are an expensive part, but it makes a huge difference on the beer.”

Choosing the right varieties for one’s beer is a crucial step in the process, Williams said. “I think it’s tremendous, the aroma, the bitterness. It’s pretty amazing how the varietals can change. If you need a beer with different varieties, you’d taste a drastic difference in terms of the aroma and the taste. That’s why people are so finicky about which ones they use and when they put them into that beer process.”

The demand for new hop varieties is growing, and brewers likely are moving on from some established varietals, experts say. However, change doesn’t necessarily lead to instability in the hop market, they say.

“We should see some varieties being replaced,” MHA’s Tennis said. “Cascade, Centennial, and Crystal among others are overplanted.”

The market seems poised to accommodate any such changes, HGA’s George said.

“With beer sector growth flattening, most varieties of hops are now adequately supplied,” she said. “While a small increase in Pacific Northwest hop acreage is anticipated this year due to contracting arrangements that were previously in place, acreage is expected to stabilize, with continued ‘rebalancing’ of varieties to reflect changes in contracting.”

Changing varietal preferences could ultimately impact costs, though, said St. Pete Brewing Co.’s Williams.

“For hops, I think it’s going to get more expensive, just because of supply-demand, especially when people try to get into some of these hop profiles,” he said. Even Citra was tough to get a couple of years ago. All it takes is a medium-sized brewery, and they obliterate a crop.”

The varietal choices are part of the fun of the brewing business, but sometimes it’s tough to get ahold of certain hops, Williams said. “I love the different hops,” he said.

For hops that are supply-challenged, costs can escalate in a hurry. “In a 10-barrel batch, we have to pay a premium, but we can go out and get it,” Williams said. “There’s a couple we can’t get, but we can always get them from other breweries.”

The inventory of hops held by growers, dealers, and brewers on March 1, 2018, totaled 169 million pounds, 21 percent more than March 1, 2017, stocks inventory of 140 million pounds, according to USDA. Stocks held at dealer and grower locations on March 1, 2018, totaled 132 million pounds. Hops held by brewers totaled 37 million pounds.

Stocks held by brewers on March 1, 2018, totaled 37 million pounds – which was virtually even with 2015. Inventories held by growers/dealers totaled 142 million March 1, 2018, compared to 46 million in 2015.

While the volume of hop stocks has been increasing every year – the USDA’s 2017 report showed a 9 percent increase – following a 7.5% increase the year prior – the overall production has grown as acreage increases, so the percentage relative to the total U.S. crop has gone down, HGA reports.

In addition to volumes of stocks increasing, there are also developing trends with the stock reports showing a rise in the amount of stocks being held with merchants, and less with brewers. As a perennial plant in which one harvest needs to last a full year of brewing demands, it is typical to have stocks larger than 100% of any given year’s production at this time of year.

“It is important to note that the amount of hop stocks which dealers are holding has increased,” George said. “Merchants are taking on increased risk as the proportion of stocks held in their possession has risen over 10% in the past three years. The stock report is another key signal to the market, and we will continue to monitor these data trends.”

Craft brewers seem to be instigating a wave of new varieties and plantings in general. “While growth in local small brewers has provided opportunities for new hop production across the U.S., this acreage remains small and focused on local brewery use,” George said.

The increase in acreage has generated concern in some corners of the industry about a possible imbalance between “alpha” and “aroma” hop production. Such worry appears to needless, George said.

“While the continued and rapid growth of acreage has some concerned about an imbalance in variety acreage as tastes change and growth in the craft segment begins to slow, growers will be looking to rebalance that over the coming years,” she said. “To note, alpha acreage is projected to be increasing as well in the U.S. after many years of predominate aroma increases.”

More than 60 varieties of hops

HGA’s George points out that there are more than 60 hop varieties grown in the U.S. – “each providing different brewing characteristics.” Each is noted for meandering in a certain aromatic direction. Some are “fruity”; others, “earthy”; others lean “spicy.” The list goes on.

“Every brewery is going to be different, based on their beers,” St. Pete Brewing Co.’s Williams said, discussing variety preference. “Centennial is a big one. Citra is one we like to play around with. There are so many strands of hops, you just never know.”

“What” is one issue where varieties are concerned, but there’s also a question of “when.”

“The timing of when [brewers add the hops to the boil] can make the beer taste completely different,” he said. “We may put a hop in at the last five minutes of the boil and turn it off. They lose their taste and smell quickly on the boil.”

“Each brewery has its own ways. Recipes are specific for this amount of pounds at what time. It’s very specific,” said Williams

West Coast Indian Pale Ales (IPAs) are “higher-hopped” than their New England IPA brethren.

“New England IPA styles use very little bittering hops; they charge it up big-time in the whirlpool,” Haas Inc.’s Johnson said. “They’re using a lot of Citra and Mosaic hops—those are very tight.”

Shelf life comes into play with some brews more than others, Johnson notes. “With New England IPAs, you’re lucky to get 60 days out of them; they’re just not set up to hold as long as other styles of beers,” he said. That’s another reason like the Tree Houses and Alchemists are doing well, because they sell right out of their taprooms. It’s kind of an interesting market being developed. The consumers are equating that cloudy beer with flavor.”

Hops are natural preservatives, Johnson notes. “You’re hopping; you’re put aroma hops into the whirlpool. Most craft beers are stored cold, anyway.”

Securing supplies ahead of time

Brewers typically contract at least a year ahead of time to ensure their hop supplies meet their anticipated demand, MHA’s Tennis said. However, he notes times have changed.

“Contracts aren’t critical as they were in years past because there is so much supply out there, but there some varieties that are still scarce,” Tennis said. He also notes brewers should try to lock down contracts for new Neomexicanus varieties, as well as most varieties coming out of Australia and New Zealand.

Brewers looking for tight-volume hops should secure their supply “as soon as possible,” he said.

Craft brewers should look one to three years ahead concerning contracting hop supplies, Tennis said, noting that more massive operations likely should contract for five years.

The reason is security, but contracts also involve a kind of gamble. “Less risk of price hikes, but you can also get locked into some bad contracts, so be careful,” he said.

In general, Tennis said brewers should sign contracts for each variety they need. “Depends on the variety,” he said. “Some are easy, others you have to be on a waiting list.”

Varieties can dictate how far in advance a brewer needs to contract for supplies. “It’s variety-specific,” Tennis said. “Sometimes, years before harvest, while other more common varieties, it’s not uncommon to sign a few months or weeks before harvest.”

There are no “hard deadlines” for signing contracts to secure hops, George notes. “However, if a customer wants to ensure delivery, getting contracts signed in time for new acreage to be planted – or varieties to be changed – would be necessary,” she said. “In that case, contracting no later than January or February would be recommended. Customers need to keep in mind that first year plantings (babies) are likely to yield only 50 to 75% of a mature crop.”

George also recommends five years for contracts. “Five years is preferred, as it will provide the grower additional years to amortize the cost of establishing a new planting.”

Contracts are good for growers as well as brewers, but contract length is probably variable, St. Pete Brewing Co.’s Williams said. The bottom line is don’t run out of hops. “I’m sure the growers would like to have as much runway in forecasting, but I don’t even know when that would be,” he said. “I don’t think there’s a set [deadline for signing a contract]. If we were bringing a bigger beer to market, I’m sure John (St Pete’s brewmaster) would say, ‘I want to make sure we can get that hop for the year.'”

Williams notes the “bigger-volume brewers” likely will sign longer contracts as “a hedge” against possible supply shortfalls or higher prices.

Haas Inc.’s Johnson said it’s probably best to have contacts finalized “by March or April – before they’re starting to move rootstock and changing portfolios, so they grow the appropriate mixture of hops.”

Some brewers contract directly with growers, Johnson said. “By the end of this year by before the first quarter, before farmer decides what to grow – late February and March. They start twining them in April and May.”

Some brewers also will procure hops on the spot market, to “keep it loosey-goosey.” That can be advantageous, Johnson said.

“See where they are, making sure they’re pulling what they have contracted,” he said. “Another brewer may have what you need available. It’s never stagnant, never solid. It’s always moving around, which is interesting. It can be challenging.”

HGA recommends planning whenever possible, Brophy said. “We try to focus on communicating that if something is integral to your brewery, you should lock it in with a contract. If you are willing to make possible substitutions and aren’t willing to honor your agreement if your growth projection turns out to be inaccurate, then spots may be for you.”

St. Pete’s procurement practices have worked well, Williams said. “We haven’t had any issue that wasn’t our problem for planning and forecasting. That’s the challenge for us; we don’t want to commit to overbuying. Some guys are sitting on 500 pounds of hops at the end of their contract, and they try to unload it.”

CCE helps breweries & cideries hone their craft

By: R.J. Anderson

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Home to more craft breweries and cideries than you can shake a pint glass at, the Finger Lakes region continues to entice new craft beverage consumers and producers. Recognizing the value and continued potential of these growing industries, Cornell Cooperative Extension (CCE) and its educators have joined forces with industry leaders to provide research-based resources for the area’s current and future brewers, malters and grain growers.

Those collaborations were most recently on display at the second annual Finger Lakes Craft Beverage Conference hosted by CCE of Seneca County April 1 and 2 in Seneca Falls, New York.

Featuring research from CCE regional agriculture program specialists as well as real-world advice from current producers, attendees learned about avoiding potential pitfalls. From hop-growing basics and cidery set up, legal advice and supply chain analysis, there was a depth and breadth of learning opportunities.

“This event is important because it is the only craft beverage event in the state that covers such a wide range of topics – especially the legal and business-related topics,” said event organizer Derek Simmonds, CCE Seneca’s agriculture economic development specialist. “It also serves as a great networking event.”

Noel McCarthy, a home brewer and cabinet maker opening a malt house north of Syracuse next year, said the conference was a great way to immerse himself in the craft beverage industry. “I heard from brewers, grain growers, educators and all kinds of other people in the industry about trends and best practices they see across the state,” he said. “It’s given me a better sense of how everything fits together.”

McCarthy pointed to research-driven sessions, such as Elizabeth Newbold’s presentation on brewery supply chain analysis, as being especially useful. Newbold, a food distribution and marketing specialist with CCE’s Harvest New York regional agriculture team, surveyed New York’s brewers to gauge demand for locally produced ingredients as well as their interest in promoting the use of those products through a statewide branding and labeling program. In both cases, Newbold said the data indicated brewers believed consumers are willing to pay the premium prices that accompany products containing local ingredients, which cost more to grow than crops that are mass produced in states such as Oregon and Washington.

The brewers’ willingness to invest in local ingredients is partly tethered to the 2012 farm brewery law, which provides tax and fee cuts while easing some regulations for brewers who use New York state-grown or produced ingredients. With the laws escalating requirements for inclusion of New York ingredients – at least 90 percent of a product’s hops and other grains will have to be New York-grown by 2019 – the demand for locally produced hops and barley will only increase. That’s good news for current and future growers like McCarthy.

“Hearing the brewers’ responses in Elizabeth Newbold’s survey really justified my reasons for pursuing the malt house,” McCarthy said. “It’s an exciting time to be sure.”

Along with research and shared expertise, the conference promoted a collaborative culture between presenters and attendees, novice and expert alike. Brewers, malters and growers as well as scientists and educators could be found sitting side-by-side trading stories, sharing advice and networking.

“That was probably my favorite part,” said McCarthy. “Some of those people might be my customers one day. Events like this help reveal that the pieces are indeed coming together for my business and for other like-minded folks attracted to these great industries.”

R.J. Anderson is a communications specialist/staff writer for Cornell Cooperative Extension

Extension Helps N.Y. Brewers, Growers Raise a Pint

By: R.J. Anderson, Courtesy of the Cornell Chronicle

The essential ingredients of a pint of locally produced New York state craft beer are quite simple: hops, barley, yeast and water. Much more complex, however, is how the supply chain of those elements comes together to create beverages that adhere to New York’s escalating farm brewery regulations.

It’s a recipe further challenged by the relative infancy of the farm brewery industry and its explosive growth. Since the introduction of the state’s farm brewery license in 2013, which offered tax benefits and relaxed regulations for breweries using New York-grown ingredients, there are now more than 160 farm breweries online. And while the path to startup has been made easier, there exists significant challenges for farm brewers looking to procure New York-produced ingredients. In addition to lending distinctly local flavors to their beverages, Empire State hops and barley satisfy the state’s mandate that farm-brewed beers contain at least 20 percent New York-grown ingredients – a requirement that jumps to 60 percent in 2019 and 90 percent in 2024.

Helping the industry link and grow a more inclusive supply chain are Cornell Cooperative Extension (CCE) specialists. Examples of CCE efforts were recently on display at a pair of Farm-to-Pint tours that brought together more than 70 New York hop and barley producers, maltsters, brewers and state officials with Cornell and industry researchers.

By design and per New York state legislation, our craft beer supply chain is a relatively short one,” said event organizer Cheryl Thayer, an agricultural economic development specialist with CCE’s Harvest New York regional agriculture team. “Because of those limitations, it’s imperative that the supply chain stakeholders not only know one another, but understand the intricacies involved in each node of the supply chain.

“We thought a perfect mechanism for this was to bring those stakeholders together and follow the life cycle of a pint of New York state beer,” she added.

Funded by the New York Farm Viability Institute, the bus tours – one held north of Albany in Washington County June 29, the other near Rochester Aug. 4 – each began with a stop at a local hop yard and malting barley field. In addition to hands-on, real-world conversations with the growers, those stops included updates from Cornell College of Agriculture and Life Sciences scientists Gary Bergstrom and David Benscher, who joined CCE crops specialist Mike Stanyard and CCE hops specialist Steve Miller for research-based discussions about ongoing trials and trends.

Each tour also included a visit to a craft malt house. “Malt house owners are a vital middle link in the craft beer production chain,” said Thayer. “But with the recent reintroduction of malting-grade barley to New York agriculture, they are also the newest additions to the supply chain. Because of that, attendees were very interested in seeing a working malt house in action and spent quite a bit of time picking the maltsters’ brains about their trade and preferences when working with growers and brewers.

Wrapping up each event was a tasting at a farm brewery where the groups networked while sampling beers featuring hops and barley from earlier tour stops.

“The attendees were very appreciative of having a forum where they could absorb new information while making those important new connections,” Thayer said. “The exchange of information and candid discussion about challenges and opportunities currently present in the supply chain was probably the most valuable takeaway for them.

“Along with a lot of people across the state, we at CCE think the craft beer industry has the potential to cultivate emerging market opportunities for growers while simultaneously supporting good agricultural economic development initiatives,” Thayer continued.

“That’s why we’re doing all we can to support its continued growth and success. But for those things to happen, the industry needs to develop a strong sense of community and understand the role of each link in the supply chain – and we’ll do everything we can to help make that happen.”

R.J. Anderson is a writer/communications specialist

with Cornell Cooperative Extension.

Petition for a Writ Far-fetched? Nope!

By: Dan Minutillo, APC

If a state regulatory agency with jurisdiction over the craft brew industry makes a decision that appears to be arbitrary and capricious, having a direct effect on your business, then, you have the right to petition a court for relief using a Writ of Administrative Mandamus. An unnecessarily fancy phrase meaning that a court of law reviews the administrative decision and decides if, under applicable law, the decision is not rational. Most times a writ is requested by an association or group of companies that are affected by the agency decision so that a positive result will affect many companies in the association or group.

STATE ADMINISTRATIVE AGENCIES

State administrative agencies with jurisdiction over the craft brew industry create policies that can affect your business. I recently wrote in this magazine about a Tennessee agency which passed a regulation indicating that only people domiciled in Tennessee for a certain time could get a permit to sell alcoholic beverages in the State.

For the purpose of this article, let’s say that an administrative agency in California, like the California Department of Alcohol Beverage Control (ABC), passed a regulation indicating domicile restrictions to get a permit to sell craft beer om the State; that a company had to be in business in the State for ten (10) years and then that company could sell alcoholic beverages. This regulation is then challenged by you as arbitrary and capricious at the agency level, and the agency denies your challenge.  You argue that this domicile restriction is illogical, with no purpose other than to discriminate against out of state craft brew companies. You lose at the agency level, that is, the ABC reviews your challenge and denies it.

THE APPEAL; THE WRIT

That administrative decision (the denial of your challenge) by the ABC can be appealed to a court by “writ”, and you, the appellant, will win and ensure that this decision and underlying regulation is stricken if you can prove that the decision and underlying regulation is arbitrary, that is, without a rational basis.

So, there are a few criteria to get you into court to have the ABC decision (the denial of your challenge) reviewed and to win on your writ:

  1. That the decision/regulation was made by an “administrative agency” of a state (or of the Federal government), like the California ABC;
  2. Normally, that you have exhausted your administrative remedies. This means that if there is a method of appeal at the ABC, then you must first make that appeal and follow all other procedural rules regarding an appeal at the ABC before you bring a writ.
  3. That all of your ABC remedies have been exhausted and denied, and this denial must usually be in writing by the ABC (evidentiary issue).
  4. That you have standing to be heard by a court. Standing means that you are a “party in interest” which usually means that you, that is, your business has been affected by this ABC regulation/decision. You have standing if you will be or have been damaged by the regulation or decision. For example, if I teach math to high school students in a local school, I would not have standing to bring a writ in this circumstance because the ABC regulation/decision does not affect me. But, if you make or sell craft beverages, this regulation/decision does affect you, so, you have standing to bring the writ.
  5. That any applicable statute of limitation has not run. Most actions brought in a court of law must be brought to the court before a certain time period, that is the statute of limitations. Various statutes limit the time in which you can bring certain actions. Some statutes are as short as ninety (90) days from the time of the ABC denial of your challenge.
  6. That you can prove that the decision/regulation was made by the California ABC in an arbitrary and capricious manner, that is, there is no basis in fact or law to support the decision (the denial). It was whimsical and therefore an abuse of discretion by the ABC. The case law language is that a court on a writ will not disturb the ABC’s decision absent an arbitrary, capricious, or patently abusive exercise of discretion by the ABC.

THE STANDARD

Some courts call this a “rationality review”. Is the regulation/decision rational, that is, justified in fact and in law. No matter how you look at this, the key here is that the ABC did something that has damaged you and, after exhausting your administrative remedies, you are able to prove that the ABC’s decision is arbitrary and capricious—and you win.

THE REMEDY

I will discuss remedies, that is, what decision a court could make on a writ and how it could affect you, in a later article for this magazine.

Dan Minutillo has lectured to the World Trade Association, has taught law for UCLA, Santa Clara University Law School and their MBA program, and has lectured to the NPMA at Stanford University. Dan has lectured to various National and regional attorney associations about Government contract and international law matters. Dan has provided input to the US Government regarding the structure of regulations. He has been interviewed by reporters for the Washington Post and other newspapers.

Brew More Pay Less: A six pack of tax tips for breweries

By: Brandon Scripps, Senior Audit Manager, Sensiba San Filippo.

Lavender, bacon, maple syrup, chipotle. A decade ago the only thing these flavors would have in common is a row in a jelly bean box. Today, the combination of innovative flavors and unique business character has led to the success of the ever-growing craft beer industry.

With creative, and often obscure, flavor profiles flooding the market, beer consumers are rejoiced by the plethora of options at the taps and down liquor store aisles. In fact, nearly 65% of beer lovers say that they prefer craft breweries due to the volume of variety. Where there used to be only several major beer companies monopolizing the market, there are now 5005 breweries in the US, 99% of which are small, independent craft breweries.

With an ever-growing demand for more and more unique varieties, it’s no mystery why breweries are popping up all over the nation. Whether established or just getting off the ground, it’s important for brewers to know what options there are in terms of tax benefits. Like any business, producing and retaining enough of your profit is critical to sustainability, and beer is no different. Here is a list of tax tips that will help you maximize your wealth and keep those taps flowing.

Domestic Production Activities

Deduction (DPAD)

Since brewing is the process of transforming raw ingredients into a final product, breweries are inherently considered manufacturers. The Domestic Production Activities Deduction (DPAD) is a deduction available to U.S. manufacturers and can amount to as much as 9% of net Qualified Production Activities Income (QPAI). To be eligible, the brewery must pay W-2 wages and must be producing a profit. The deduction applies only to manufactured products at the brewery, and therefore resale and merchandise sales do not qualify. To avoid later complication and questions from the IRS, a well-organized accounting system is recommended to distinctly separate qualified DPAD related expenses and revenue from non-manufactured activities.

R&D

Think that research and development only happens at tech companies? Think again. Breweries are constantly innovating the brewing process, developing new or improved product formulas and testing out new procedures — all of which are qualifying R&D activities. The tax credit can be applied to expenses associated with any R&D activities, including wages, supplies and services used during the process. The qualification process is tricky and requires a four part eligibility test. For this reason, it’s recommended that you have extremely organized and accurate documentation on the costs associated with the R&D activities. Qualifying activities include anything developed or improved, such as bottling processes, preservative chemicals, filtration methods, flavor or aroma profiles, or other advances in methodology or procedure.

To make things better, congress recently passed new legislation that enables small businesses to apply their R&D credit to offset payroll taxes. Like many start-ups, breweries often struggle to make and sustain a profit their first few years in business. While not profitable, the odds are they still have payroll to maintain. This legislation allows small businesses and breweries to put those R&D credits toward those payroll taxes rather than income taxes to realize an immediate cash benefit.

Charitable Donations

While charitable giving is a great way to boost employee morale and help others along the way, it’s also an exceptional way to save some cash throughout the year. Contrary to popular belief, charitable giving can mean donating physical items rather than just straight cash. Like other businesses that have an inventory supply, breweries often have an excess of inventory or out of season beer throughout the year. Let’s say your brewery makes a delightful winter ale, but come springtime, consumers no longer crave those comforting notes of nutmeg and cinnamon. By donating this excess beer to a qualified charitable non-profit for a fundraising event, you could receive a tax deduction directly correlating to its market value. The beer must of course be in consumable condition, and must be donated to a registered 501(c)(3) to qualify. Be sure to keep documentation of the donation as well as a signed form from the charity to receive the tax benefit.

FICA Tip Credit

For brewpubs, customer tips are a critical part of employee compensation. The FICA tip credit gives brewpubs the chance to claim a credit on their federal taxes, including social security and Medicare. Note that this credit is only applicable to tips that put the employee in excess of the national minimum wage ($5.15 per hour). Employers are responsible for 7.65% of FICA payroll taxes, making this credit a huge asset when properly utilized. A simple year-end payroll report will showcase all of the necessary information to qualify for this credit.

Section 179 Deduction and

Bonus Depreciation

Having good equipment is an essential part of a successful brewery. Section 179 of the IRS tax code gives businesses the opportunity to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. In an effort to encourage business growth and investing, this deduction is one of the few that really helps small businesses grow their operation. While businesses used to write off a portion of the purchase each year as a part of depreciation, this deduction allows businesses to write off the entire purchase price for the year they buy it (up to $500,000 in 2016). This covers everything from software, corporate vehicles and machinery.

Bonus depreciation is also a great way to quickly recover the cost of capital assets. Essentially, bonus depreciation allows breweries to purchase equipment (thus pumping up the economy) and expense a portion of the asset immediately in return. Bonus depreciation allows for an immediate deduction of up to 50% of the cost of the assets, above and beyond the Section 179 deduction claimed. As part of the extension, the amount available for immediate deduction will be 50% in 2016 and 2017, 40% in 2018 and 30 percent in 2019. It’s important to note that bonus depreciation is not applicable for used equipment or other assets — in which case it’s best to take the Section 179 deduction on those assets when qualified.

California Sales Tax Exemption on

Manufacturing Equipment

Since brewing naturally requires a large amount of production equipment, most brewing equipment will qualify for California’s manufacturing sales tax exemption. The exemption allows a 4.1875% sales tax rate reduction on qualified production purchases. Claiming the reduced rate is simple and well worth the benefit. When making a qualified purchase or lease, simply provide a Partial Exemption Certificate for Manufacturing Equipment to the seller. Although the exemption began in July of 2014, it’s not too late to get a refund for the sales tax exemption that could have applied to prior qualifying purchases. Consult with your tax advisor to see about getting a refund for any past overpaid sales tax.

Whether it’s a bold new flavor, a more economic bottling procedure, or a new facility to expand your operation capacity, be sure to take advantage of the many tax incentives offered to breweries.

If you want to learn more about how your brewery can start saving cash, contact our craft beer and wine specialist, Brandon Scripps, at 408.286.7780 or at bscripps@ssfllp.com

Hop Growers Face Challenges to Meet Rising Brewery Demands

By: Krishna Ramanujan, Courtesy of the Cornell Chronicle

The New York craft beer industry is really hopping. From 2012 to 2016, the number of breweries more than tripled, from 95 to 302, according to the New York State Brewers Association, and the industry contributes $3.5 billion to the state’s economy annually.

Lawmakers seeking to tap into the industry’s economic potential have passed new policies that provide incentives for New York hop growers to jump on the bandwagon and supply the growing demand for local ingredients. As these growers have learned, cultivating hops has its challenges, mainly from pests and two pervasive diseases, and Cornell researchers are lending a hand.

Plant disease experts David Gadoury and doctoral student Bill Weldon, both at the New York State Agricultural Experiment Station in Geneva, are providing expertise to help everyone from hops hobbyists to professional farmers through outreach materials, public presentations and field visits.

Real-World Challenges

Three years ago, J.D. Fowler and a team from Fowler Farms, added 30 acres of hop plants to their 2,000-acre family farm in Wolcott, New York, giving them one of the largest hop yards in the state. Fowler Farms mostly grows apples, but added hops to take advantage of increasing demand from a skyrocketing craft beer industry and recent legislation that stipulates farm breweries must use a percentage of New York-grown hops.

“We thought we’d get in on the front end of it,” Fowler said. As is the case with new opportunities, he wasn’t the only one trying to take advantage of a surge in the local beer industry.

While Fowler grows his hops on a large scale with the same agricultural standards that have kept Fowler Farms in business for six generations, most New York hop growers plant just 1 to 5 acres and started within the last five years. For many growers, inexperience combined with challenges from persistent hop diseases, and such pests as aphids, leaf hoppers, Japanese beetles and two-spotted spider mites have led to inconsistent quality and failed crops.

“Many New York growers lack practical experience with hops,” said Gadoury, a senior research associate in the Plant Pathology and Plant-Microbe Biology Section of the School of Integrative Plant Science in the College of Agriculture and Life Sciences. “It’s kind of like having a depth of knowledge on NASCAR and you’ve gone to a lot of races, but nothing in your experience equips you for getting behind the wheel and driving at 200 miles per hour. It’s a very different thing to read about it compared to doing it.”

In order to get new hop growers up to speed, Gadoury and Weldon have focused on outreach and education. Funded by a one-year, $15,000 Engaged Graduate Student Grant through the Office of Engagement Initiatives, as well as two grants from the United States Department of Agriculture (USDA) Specialty Crops Research Initiative, Weldon traveled to the Pacific Northwest to gain insights from experienced growers; Washington, Oregon and Idaho produce roughly 98 percent of U.S. hops. He also met with New York State growers to better understand their needs.

With this knowledge, he helped produce a new Cornell website https://sips.cals.cornell.edu/extension-outreach/hops that serves as a hub for hops-related information. Growers can find a set of fact sheets on such topics as the five things to consider before planting your first hop plants, and managing downy mildew vs. powdery mildew. A set of videos in development will help with identifications and management strategies.

This past summer, he and Gadoury fielded calls from New York growers, collected pathogen samples, diagnosed diseases and advised growers on management strategies.

Hops History

One hundred years ago, New York was the center for hops production in North America, with an optimal climate for the plant. But the combination of powdery mildew and downy mildew, aphids and alcohol prohibition killed the industry. Hop agriculture moved to the inland Pacific Northwest after that, where a dry climate limits downy mildew, though powdery mildew is a problem.

In 2013, New York lawmakers signed the Farm Brewing Law, designed to bolster New York’s economy by increasing demand for locally grown products and creating new businesses surrounding the brewing industry. The initiative revitalized hop growing in the state.

According to the law, receiving a farm brewery license in New York state requires beer to be made from locally grown farm products. The law is being implemented on a schedule: until the end of 2018, at least 20 percent of all hops, malting barley and all other ingredients must be grown in New York state; from 2019 through 2023, no less than 60 percent of these ingredients must be grown in-state; and from 2024 on, no less than 90 percent must be state-grown.

Overcoming Challenges

In spite of high hopes, a resurgence of the hop industry in New York hasn’t been easy. After a hot, dry 2016 summer, Fowler noticed a disease, which turned out to be powdery mildew, on some of the leaves of a hop variety called Zeus. And this year, after a wet summer, some of his crops fell victim to downy mildew.

Gadoury and Weldon visited Fowler’s farm in 2016, took samples and soon after made a diagnosis. They offered Fowler treatment advice, which included spraying safe chemicals and removing infected leaves and diseased plants. For early in the following season, they advised spraying, pruning, training shoots and stripping lower leaves after the first year to reduce humidity.

Tactics for managing downy mildew and powdery mildew differ, particularly when it comes to spraying. Fungicides that are perfect for suppressing downy mildew may not be effective against powdery mildew and vice versa.

“The focus is really on educating growers to choose the right materials for the right disease and then applying them on an as-needed basis,” Gadoury said. “It’s also important to have a knowledge of the basic biology of the organisms that threaten hop plants.”

Fowler has learned that good quality hops come from having a protocol for growing. “Timing is very critical between harvest and processing the hops; there are a lot of steps where the process can go wrong,” he said.

The marketable part of the plant, called the hop cone, grows when the plants start to bloom. This period and the month thereafter present a critical phase for managing disease. “The hop flower, which ends up being the cone, consists of rapidly growing tissues that are more susceptible to infection; it’s a time when pathogens can take advantage of that young new tissue,” Weldon said.

Fowler said he has found that certain varieties are more susceptible to mildews. He has five varieties that make up the bulk of his hop yard, but this year added five more test varieties of interest to brewers.

According to brewers, the quality of New York-grown hops has been inconsistent so far. Many brewers source their local hops from hobbyists, who are still learning. Also, brewers want certain varieties, such as Cascade for IPAs, but some of those varieties may be more susceptible to disease and pests. As a consequence, many New York brewers have no choice but to source some of their hops from Washington and Oregon, and that’s a lost opportunity for New York hop growers.

“That’s one of the things we are trying to change, having high-quality varieties and enough of them,” Fowler said.

Getting the word out to growers on how to grow healthy, high quality hops is a top priority of the Cornell and USDA projects. Weldon is scheduled to make presentations at the Annual Cornell Hops Conference at Morrisville State College in Morrisville, New York, in early December, and at the USA Hops annual meeting in Palm Desert, California, later this winter.