This year’s American Hop Convention in Santa Rosa, California was packed full of useful information that highlighted the opportunities, and the impeding hurdles that both brewers and farmers should prepare for in the coming years. Brewery challenges, inventory accumulation, and future hop production plans were the primary topics of the weekend as we heard from multiple hop merchants about plans to reduce American hop production in 2023. Internationally, Germany saw a 29% decrease in production from 2021 to 2022, and the Czech Republic was faced with a staggering 49.4% reduction from 2021 to 2022, resulting in major supply issues for German varieties, and specifically a significant shortage of Czech Saaz. Now it seems it’s the US market’s turn to reduce acreage, and what it means affects all levels of our industry.
Brewers faced their share of challenges this past year as well. Between staffing issues, aluminum order minimum increases, and CO2 shortages, the avenues to get beer in a sellable format have become increasingly difficult for some. Beyond that, with the 30% increase in barley costs, and over-contracted hops piling up, brewers are forced to consider their surplus of inventory before seeking out new hop varietals, stifling innovation efforts and creativity.
Since 2015, the US has produced more hops than were shipped to breweries for 6 out of the 8 years. From 2017 to 2022, it’s estimated that American farms overproduced by a total of around 40 million pounds, the majority of which are considered “sold”, but not yet shipped. In efforts to address this growing inventory issue, farms are expected to reduce acreage by over 10,000 acres. This reduction will bring hop production down by 10 - 20 million pounds and will continue until inventories return to a healthy level.
What does this mean for brewers?
This reduction in hop acreage will bring production well below the demand, creating a short market on current crop year hops for breweries. This will likely create a very competitive market for contracting current crop years and force spot buyers into purchasing older crop year hops. This isn’t all bad, as it’s a great opportunity for over-contracted breweries to use up old inventory and renegotiate future contracts.
Unfortunately, this change is inevitable for the US hop market, but we are very optimistic that it will create a healthier market for both brewers and farmers in the future. Now is the time to support your farmers, and let us know what you need going into the new crop year so that we can continue to supply the market with a healthy supply of the hops you need, so that consumers can drink the beers they love, without compromise. We look forward to getting things back on track and are dedicated to helping our brewery and farm partners every step of the way.