Dear Readers,
The 2016 hop harvest is completed and the 2017 harvest will already be starting in 10 weeks. Time to look back on the 2016 campaign and forward to 2017.
But first let us examine the beer market which will be decisive for the development of the hop market!
beer market :
The trend is unfortunately unstoppable – beer sales worldwide are stagnating or rather declining slightly each year. In 2016 Germany was able to withstand with a small plus of 0.1%, thanks to the special effects of the European Football Championship and “500 year Purity Law” which was celebrated with an event in almost every brewery.
However read the relevant trade press and almost everything is about craft beer, so you could come to the conclusion that all is well. The fact is overlooked however that the craft beer market in Germany and Europe plays only a very minor role with just 1-2% market share of the overall beer output.
INSIDE BEER
(Free newsletter subscription at http://www.inside.beer/index.php?id=82) The edition from 29.05.2017 examines the Brewer’s Association 2016 annual report and it soon becomes clear here too that not all that glitters is gold!
Even though the sales of craft beer amount to 12.3% = 28.3 million hectolitres of the total beer sales and are still increasing (+6.2% year on year), four of the five largest craft brewers in the USA, representing an output of 9.0 million hectolitres, have suffered heavy losses in output. The Boston Beer Company, for example, lost 246.000 hl, Wisconsin’s Minhas Craft Brewery even 322.000 hl.
The reasons for this can be found in an increasingly tough competition. The number of craft brewers is currently just under 4,500. Another shortcoming of many craft brewers is the lack of distribution channels.
Substantial investments are to a great extent third-party financing. Annual growth is an obligation but the growth rates of the past years can no longer be realised by the “big players”.
This explains the large number of sales of (former) successful craft brewers to the large corporations (AB-I, Heineken, etc). The founders sell to the former archenemies and cash up.
Since 2011 AB-I, as market leader, has bought up 15 craft brewers in the USA and Europe through the company THE HIGH END (nomen est omen!?).
The market shakeout in the USA has begun. This will also have an impact on the hop market!
hops – Germany – review of 2016 harvest :
| growing region | estimation harvest 2016 | official final weight result harvest 2016 |
| Hallertau | 35.600,00 t | 36.953,51 t |
| Tettnang | 2.130,00 t | 2.194,16 t |
| Elbe – Saale | 2.950,00 t | 2.845,41 t |
| Spalt | 650,00 t | 730,03 t |
| Rheinpfalz / Bitburg | 44,50 T | 42,98 t |
| Germany | 41.374,50 t | 42.766,09 t |
Once again the estimation was very close to the actual final result.
spot market 2016 harvest :
Only a small spot amount from the 2016 harvest remains in the trade. Many varieties, especially “noble aromas” and also “high-alphas” are sold out. Demand exceeds supply.
hops – Germany – outlook 2017 harvest :
Low rainfall in the months of April and May, high summerlike temperatures shortly before Easter followed by a return of winter, were stressful for the plants. The rain of the last few days was not enough to compensate for the deficit. At the moment it is too early to make a prediction regarding harvest quantities and alpha values.
The growing area of the hops give an initial indication of the 2017 harvest. This has once again increased by more than 5% as compared to last year to now 19,608 ha.
The area under cultivation of hops in Germany has never been so large!
The quote for pre-contracts for the coming harvest is however very high as the hop growers only invest in growing area if they have the pre-contract offers from the traders – and this is currently the case!
The largest increase in growing areas has been for the variety of Herkules. Within just 4 years the area has doubled to now nearly 5,800 ha. This is owed to the fact that the USA has in the past moved more and more from the sector of the high-alpha hops in favour of the so-called flavour hops. It has obviously become clear in the USA that they should not leave this field without a struggle, as the growing area for the US high-alphas has increased again by 8.9% as compared to the previous year after being significantly reduced in 2014 and 2015.
In Germany people also want to have a share in the success of the American favour varieties and for a long time now “Cascade” has been grown in the German hop-growing areas. The latest example is the attempt to establish the American variety “Amarillo” in Germany. 280 ha were put in off the cuff. It remains to be seen if the German Amarillo reaches the same quality as the US Amarillo. This will not make the marketing of the new Hüller cultivated species (Ariana, Callista, Hallertau Blanc, Hüll Melon and Mandarina Bavaria) any easier!
The growing areas of traditional varieties such as Perle, Hall, Tradition, Nugget, Hall. Taurus and Hall. Magnum have once again been reduced.
For this reason Hall. Taurus, for example, with a growing area of only just under 280 ha, will only play a minor role.
The pre-contract quotes for the “noble aromas” (Spalt-Spalter, Tettnang-Tettnanger, CZ-Saazer) lie at nearly 100% so that there will be no spot market hops should there be an average harvest in 2017.
hops – USA – review of the 2016 harvest + outlook of the 2017 harvest :
The harvest results for 2016 in the USA were behind the long-time mean. Affected in particular were the yields and alpha acid content of the high-alpha varieties. Stocks of hop products from the 2016 harvest are still available with traders.
The high-alpha growing area in the USA has increased for the first time since it was reduced 7 years ago (see middle of p. 3).
In total the hop growing area in the USA has increased more than 9% to now 23,436 ha over which 60 different hop varieties are distributed.
This means that, regarding the surface area, the USA is the largest hop growing country in the world.
The hop growing area worldwide has increased by 6.1% to now 59,462 ha. This too is an all time high!
With this market report I hope that I have been able to give you some important information on the market assessment.
Should you have any questions regarding my market report please feel free to contact me by phone or e-mail.
Best regards
Rudolf Eisemann
(T.: +49 (0) 6226 – 4353 | E.: re@eisemann.de)