News on the hops market: Demand is rising

Hops market - demand is rising
© Barth Haas Group

The beer market has been influenced by the craft beer movement of recent years, bringing taste and flavor increasingly into the spotlight for brewers around the world. This global trend has also fundamentally changed the hops market. Research into innovative hop varieties that heavily influence the flavor of beer is being conducted on both sides of the Atlantic.

At approximately 61,500 hectares, the amount of land being used to grow hops worldwide is at its highest level since 1997. However, at the same time, crop yields and alpha values (a measure of bitterness) have been slightly below average according to Stephan Barth, Managing Partner of hops trader Joh. Barth & Sohn. As heavily hopped beers continue to account for an ever larger share of the market worldwide, demand for hops is on the rise. Estimated alpha demand is reaching new heights although global beer production has fallen since 2014. “Overall, we believe that the hops market is actually under-supplied. This is clear to see not least on account of the persistently high prices for hops sold on the spot market, both in terms of aroma varieties and bittering varieties,” says Barth.

Germany and the U.S. dominate the hops market

With a 72% market share of the land used for growing hops, Germany and the U.S. dominate the global market. 77% of all the world’s hops come from these two countries. In 2015, the U.S. knocked Germany off the top spot as the world’s largest hops-producing nation in terms of land area. Since then, the U.S. has been continually consolidating its dominance.

What’s more, no other country grows as many different hop varieties: There are now 87 different varieties growing there, with 36 resulting from private breeding programs alone. Seven U.S. varieties now apparently rank in the top eight aroma varieties, which are virtually indispensable for strong-tasting, cold-hopped beers. Number eight on the list is an Australian variety, according to Barth.

Anbau von Hopfen
© Barth Haas Group

“If the 2019 harvest develops normally, it should provide the brewing industry with enough bittering hops,” says Barth. However, the hops market also seems to be facing issues in the U.S.: Some U.S. aroma varieties, such as Centennial and Chinook for example, are in excess supply, whereas bittering hops are in short supply. Globally, there is not a lack of land for growing bittering hops, as there has been an increase in the U.S. since 2017 as well as continuous expansion in Germany for years. However, harvest yields and alpha acids are low due to the weather in Germany.

The amount of land for growing hops has increased again

The amount of farmed land used for growing hops in Germany has risen for the fifth year in a row to more than 20,417 hectares. The number of hop growers fell in 2018 by 11 to 1,121 businesses. 903 of them are located in the Hallertau region with an average growing area of 18.6 hectares per business. In the U.S., in 2019, a total area covering 23,205 hectares is being farmed (+4% compared to the previous year). Worldwide, in 2019, hops are being grown on around 61,500 hectares (+1,100 hectares compared to the previous year).

Land areas have also expanded in Germany for varieties that were already cultivated in the largest growing areas, namely the Herkules, Perle and Hallertau Tradition varieties. These “top three” now account for 61% of the land used for growing hops in Germany. The amount of land used for cultivating aroma varieties has risen to 11,222 hectares. However, there was a decline in particular for the following varieties: Amarillo (-94 hectares), Saphir (-23 hectares) and Mandarina Bavaria (-23 hectares).

Anbaufläche von Hopfen weiter vergrößert
© Barth Haas Group

Prices for hops sold on the spot market are very high

Similarly to the harvest year 2017, the hops spot market for bittering varieties was active again on account of the below-average alpha harvest in Germany. Despite the yield situation in Germany and the originally very high price expectations in the U.S., demand for alpha-rich hops sold on the spot market turned out to be rather moderate.

According to the Barth-Haas Group, the world’s largest supplier of hop products and services, a very large proportion of the coming global hops harvest is under future contracts. Many variety segments will approach a saturation point on account of the constant expansions of growing areas over recent years. The prices for 2018 harvest hops sold on the spot market seemed to be very high for almost all varieties. This in turn had an effect on the contract market. Contracts with good conditions and with long terms have been concluded both in Germany and in the U.S. in recent years. It remains to be seen whether the current reports of crop shortfalls will have an impact on the prices.

Anyone keen to get a good idea of the variety of different hop tastes available should visit the popular tasting arena at drinktec 2021, a huge space where an alternating range of beers from all parts of the world, including some with very special hop varieties, can be sampled for free every day of the trade fair. Attendees will also get the chance to sample the beers in the running to win the “European Beer Star” competition. drinktec will be held from September 13 to 17, 2021, at the trade fair site in Munich.

Dirk Omlor

Dirk Omlor was an editor at renowned beverage publishers for around two decades. In July 2018, the graduate engineer for brewing founded a text and consulting office with the central project together with his long-time colleague Barbara Rademacher.