Shortages in 2014 Lead to Massive Hop Acreage Increases in 2015

We just returned from the Hop Growers of America Convention in San Diego, California.  Of course, San Diego was amazing! Props to HGA!! During the convention, HGA released its annual Statistical Report. Here are some thoughts regarding some of the information you can find there … and some comments on the information you won’t.

Hop Reception at Stone Brewery

Although U.S. growers planted an additional 3,600 acres (+10.26%) of hops in 2014, the yields were down 4.79%. Growers figure that an unseasonably hot July in the Pacific Northwest resulted in lighter cones and yields in some varieties that were down as much as 40%.  Of course, that means those acres will offer more “normal” yields in the coming year … assuming all goes well.

In 2015, There’s no margin for error for hop growers. Hop acreage increased by 10% in 2014, but the craft beer industry grew by 20%. As we mentioned, 2014 yields were down. You don’t have to be a rocket scientist to figure out that those numbers don’t match up. Growers worldwide simply can’t plant hops fast enough to keep up with demand with the craft market the way it is and allowing for variability due to Mother Nature.

Does this remind anybody else of Scotty telling Captain Kirk, “I’m giving her all she’s got Captain.  If I push it any harder, the whole thing’ll blow.”  Somehow the Enterprise always made it through, but it was never an easy trip.

Some Highlights From the Report:

–The Pacific Northwest (Idaho, Oregon, Washington) harvested 98 percent of all commercially grown hops in the United States.

–The 38,011 acres planted in 2014 was the most since 2009 (39,726 acres).

–Although alpha hop acreage continues to come out at a record pace, CTZ continues to be the king of the U.S. hop varieties, making up 23 percent of the hops planted. Cascade, however, is the king of aroma hops though at 16.6 percent.

–Proprietary varieties, if taken all together, comprise a greater acreage than Cascade.

–Today, Germany is the world’s alpha producer, owning 44 percent of the market. The U.S. is second at 39 percent. It was less than a decade ago when those roles were reversed.

–The top countries from which the U.S. imported hops: Germany, United Kingdom and Australia.

What’s NOT Included in the Report:

–There are at least an additional 5,000 acres (+13%) being planted in the United States 2015, but that doesn’t mean production will increase by 13%.  Baby aroma yields can be 25-30% lower than a mature hop field.

— 5-year contracts are becoming the norm.  The Brewers Association reported at the convention that the average length of the contract is over 3 years.

–The majority of the 2015 hop crop has already been contracted by merchants for their brewery customers.

–Growers are already trying to figure out their 2016 expansion plans.

–With an estimated additional 1,800 acres from Germany (assuming it is all destined for the U.S. craft market) and an additional 5,000 acres from the United States (both estimates at this point), and the increased yields from varieties that did poorly in 2014, will there be enough hops, on paper at least, to match the 18-20% growth of craft beer sales in the U.S.?  We will likely see more variety specific shortages in 2015.  Let’s not forget though that those additional German acres won’t come into full production until 2017.  Oops!

At the end of the day, agriculture is never a guaranteed bet, even though it may be more stable now than ever in history.  Growers are constantly at the mercy of Mother Nature. A freak hailstorm in June and we could be in a short situation overnight.  It’s better to cover your needs if the option is available.

To view the complete 2014 Statistical Report from HGA click HERE.