Market Report 06/2023

The first six months of 2023 have almost passed, and in just 8-9 weeks, the 2023 hop harvest will begin. Below, you will find some initial information about it.

Weather in Germany 

So far, the weather has not been as extreme as in 2022, but it has still been significantly below average from region to region.
While the Hallertau, Spalt, and Elbe Saale regions are again below the 10-year average, sufficient rainfall has been recorded in the Tettnang growing area near Lake Constance.

Hail damage has been isolated.

Once again, the weather over the next 4 to 6 weeks will be crucial for alpha acid content and yield per hectare.

Cultivation Areas in Germany and the USA 

Due to the decline in craft beer in the USA and Europe, hop-growing areas in the two largest hop-producing countries, Germany and the USA, have decreased.
The American growing area, in particular, saw a reduction of more than 2,000 hectares. Mainly flavor varieties were removed and partially replaced with high-alpha varieties like CTZ (Columbus, Tomahawk, Zeus).

A similar trend (reduction of aroma and flavor varieties in favor of high-alpha) was observed in Germany, though the area reduction was only a marginal 24 hectares.

Once again, the Herkules variety saw the largest increase in cultivation area, with an additional 355 hectares.

Varieties like the no longer in-demand German Amarillo, as well as low-yield crops of Hallertauer Magnum, Hallertauer Tradition, Perle, and Saphir, were primarily removed.

Of the German flavor varieties, only Hallertau Blanc and Mandarina Bavaria, with cultivation areas of 100 and 200 hectares respectively, still hold some market significance, while all other flavor varieties have dropped to around 50 hectares, with the trend continuing downward.

However, it has become apparent, especially in the very dry years of 2018 and 2022, that these new breeds are more heat-resistant than the older landraces Hallertauer Tradition and Perle.
In this context, it would be a great loss if these varieties were to disappear from the market.

Great hopes are being placed on the new varieties Aurum, Diamant, and Tango (aroma varieties), as well as Titan (high-alpha variety), developed by the Hop Research Center Hüll.

The cultivation areas of these four varieties total around 180 hectares in 2023. The largest area is Titan with 94 hectares.

Since these areas are under contract, only small quantities will be available for trial brews on the spot market in 2023.

Hop Harvest 2023 and Beyond 

In addition to the points mentioned in my last market report from December 31, 2022, it is worth noting that a shift in thinking is occurring throughout the entire hop value chain, from growers to traders to breweries. Due to the unpredictability of the past three years, contracts with terms of 8–10 years, and even longer, are being viewed very critically, as they have become difficult to calculate.

To this day, there is no other industry where a raw material is sold and bought so far in advance without any real means of securing it.

In my view, contracts with terms of 3 to a maximum of 5 years will likely become the norm in the future.

On the other hand, it’s important not to overlook that long-term contracts still have their place and validity for all parties involved.

The movements in the energy markets over the past 12 months have shown us what is possible in spot markets.