Hop markets: aroma in demand
Bad weather, lower alpha percentages play roles
The Northern Hemisphere harvest has proven to be a tale of two markets for the hops industry.
In the United States, production remained flat as higher yielding varieties compensated for the poorer performing crops. However, in Europe production levels on average dropped by 14%, due to exceptionally adverse weather conditions.
In the bigger picture, world production declined 8.9% to 79,038 metric tonnes in 2013 (2012: 86,772 mt), while overall alpha acid production also fell 18.1% to 6,517 mt (2012: 7,960 mt).
However,demand increased 1.5% to 7,562 mt (2012: 7,334 mt), as did hop acreage, which was up 0.5% at 46,284 hectares (2012: 46,041 ha).
2013 estimated production (mt): 27,500
2012 production (mt): 34,475
Forward contracted: 80% (2013) 70% (2014) 55% (2015)
German hop growers suffered the most from extreme weather patterns. Much of the crop was devastated by the adverse conditions, which started with a particularly cold and wet winter, followed by a severe hailstorm in June, which affected 4,000 hectares of the main Hallertau region.
The hot and dry summer that followed, where temperatures spiked at 40°C, produced below average yields across the board. However, there were exceptions, with high alpha varieties such as Magnum and Herkules recording close to average yields and alpha acid content.
Amongst aroma varieties, which account for 53-54% of the total German acreage, most of the crops produced lower than average yields, while alpha acid production for the two main varieties Perle and Hallertau Tradition was down 50% on last year.
Johann Pichlmaier, managing director of growers’ cooperative HVG, said: “Generally production in Europe was low this year and while there was still some inventory, there was also a slight increase in demand for aromas, as well as some price increases for certain varieties.”
Joachim Gehde, managing director of Hopsteiner Germany, reported a deficit of 450 mt to 500 mt, with a particular shortage in aroma varieties such as Tettnanger, Saaz, Hersbrucker, Saphir and Spalt Select, resulting in some price increases.
Most brewers, however, have a surplus of inventory, mainly in high alphas, according to Thomas Raiser, sales director at Barth-Haas.
“There is enough inventory in the bitter segment from the previous crop, which is more than sufficient to cover any shortfall,” he said. “It is a completely different story in the aroma segment, where the market is quite a bit tighter.”
As a result of lower yields, forward contracting for 2013 remained steady at 80% (2012: 80%). On the flipside, Raiser said the spot market, on average, has achieved prices of €5 per kilo for aromas on the farmer market and €20 to €25 per kilo for high alphas, and will continue to be limited until at least 2015.
This year has also seen an increased interest in newly-released flavour hop varieties including Mandarina Bavaria, Hallertau Blanc, Huell Melon and Polaris. However, commercial availability has been limited, with only 100 hectares harvested in the Hallertau this year, mainly for trial by small European and US brewers.
2013 estimated production (mt): 30,300
2012 production (mt): 27,782
Forward contracted: 100% (2013) 90% (2014) 75% (2015)
The year’s exceptionally hot summer in Washington’s Yakima Valley resulted in below average yields of aroma varieties such as Willamette, Tettnanger, Fuggles and Centennial. High alpha varieties, such as Columbus, Tomahawk and Zeus, also fell below average.
Ann George, administrator at USA Hop Growers, said initial estimates indicated that overall yield for 2013 was about average, with Centennial in Oregon the only crop to significantly fall below long-term levels.
Don Bryant, president and CEO of craft-focused merchant Hopunion, indicated that alpha yields were about average for this year’s crop. However, yields for aroma varieties such as Cascade and Centennial were down 5% to 7%.
The exceptions, he said, were IPA-centric hops, mainly Citra, Simcoe and Mosaic, which all delivered above average yields.
Increasing demand from the burgeoning US craft brewing movement is driving a shift in planting of hop varieties, away from higher alpha varieties in favour of aroma varieties. George reported a 50:50 split between alpha and aroma acreage, compared to a ratio of 70:30 four years ago. It’s equivalent to a shift of 4,000 acres out of the 29,000 total acreage.
She added that the balance is expected to be tipped next year with the planting of additional Cascade hops. “The word on the street this year is that we will continue to see an increased conversion of alpha variety acreage into aroma.”
Bryant said that there has been a “feeding frenzy” amongst craft brewers for IPA friendly varieties. Sales of varieties such as Citra, Simcoe, Amarillo and Centennial totaled more than 4.5 million pounds for 2013.
He added: “There was about one year’s worth of alpha in inventory before harvest, so the glut continues. But in aroma, production is barely keeping pace with the market.”
Such has been the swing towards forward contracts that according to Bryant 96% of crops were bought on contract this year, compared to 75% five years ago. Many brewers already have substantial contracts that are set to expire in 2020.
Among the new varieties available, Calypso, Delta, Mosaic (an offspring of Simcoe), Citra and Amarillo are all largely contracted for this year, with some availability for 2014.
Last spring Washington State University released three new varieties. Cashmere (an offspring of Cascade) and Yakima Gold (offspring of Cluster) were available in very small quantities. Tahoma (an offspring of Glacier) was produced on an experimental basis.
A fourth variety, Ceres (an offspring of Perle), has been developed by the US Department of Agriculture in Oregon. All four varieties will be available to sample at the Craft Brewers Conference in Denver come April 2014.
2013 estimated production (mt): 7,000
2012 production (mt): 10,188
Forward contracted: n/a
China experienced a 31% drop in production in 2013 to 7,000 mt while alpha acid content also fell by 15% (2012: 6.8% alpha acid content).
The market for aroma hops, which accounts for 15% of the overall crop, remained tight, however there was still an excess of alpha hops from the previous five seasons.
In total, 25% of the 2013 crop was contracted with fixed quantities and prices, and an additional 20% was contracted with fixed quantities without fixed prices. Spot prices for Qingdao Flower, which represents 75% of the total crop, were between RMB 32,000 to RMB 33,000 per tonne of pellets this year. By contrast, SA-1, the country’s main aroma variety, has achieved prices of RMB 48,000 to RMB 50,000 per tonne of pellets.
Picha Wuttiattapong, general manager of Hopsteiner China, said at least two new varieties of imported aromas and high alphas were grown in small amounts this year, but they were not yet commercially available. He anticipates a surge in demand for imports from Europe and the US next year, driven by the popularity of aroma and flavour hops.
Rest of the world
In England, while the harvested crop has been 10% to 20% reduced from last 2012’s 1,461mt, the quality has been much higher, with few pestal diseases, according to Dr Peter Darby, head of research at Wye Hops.
“I think the winter made a huge difference to this year’s harvest,” he explained. “We had a very long and protracted cold spring, which went on until June and the hops never really fully recovered from that.”
The early varieties such as Goldings, Fuggles and Bramley Cross were affected by the long hot summer that followed. Later varieties like First Gold, Pilgrim and Target all performed much better.
Paul Corbett, managing director of hop merchant Charles Faram, noted there was greater demand for exports and from craft brewers, resulting in most forward contracts being fulfilled and limited availability on the spot market.
He said, “I think generally it is going to be a pretty tough year in terms of supply, so we are looking forward to a better crop next year.”
Darby added there had been a continued focus on developing flavour hops such as Fuggles as well as more exotic varieties to meet craft market demand.
Among the new varieties commercially available in small quantities were Jester and Minstrel, while some Anchor has been planted for next year.
The Czech Republic produced about 5,000 mt of hops in 2013 (2012: 4,338 mt), more than 1,000 below the 10-year average, with approximately 200 of the country’s total 4,319 hectares devastated by floods in early June.
Total acreage was reduced by the lack of long-term contracts after the strong harvests of 2010 and 2011, and the frost damage last winter. Alpha acid content, on average, was also 10% to 15% lower (2012: 4.1% alpha acid content), for a crop that consisted largely of Saaz semi-early red-bine hops.
Zdenek Rosa, chairman of Bohemia Hop, said there was long-term demand for all Czech aroma varieties, such as Saaz, Sladek, Premiant, Saaz Late, Bohemie and Kazbek.
Czech growers have also developed a new citrus aroma hop called Kazbek, which is available only in limited quantities for the craft industry.
Elsewhere Slovenia’s crop yield plummeted as much as 50% below the long-term average as a result of the hot European summer, according to Raiser, with Styrian Golding and Savinjski Golding most affected.
As a result of increased forward contract activity and higher aroma prices, Hopsteiner’s Gehde expects Germany’s total acreage to remain unchanged next year.
He also anticipates Herkules plantings will continue to replace Magnum, following a swing of more than 1,100 hectares over the last five years, as well as a decline in Northern Brewer and Spalt Select.
“Nature proved this year that it’s worth keeping inventory as a buffer, certainly in niche varieties, in the event of a lean year,” he said.
Meanwhile, in the US, Hopunion’s Bryant wrned of potential shortages of aroma varieties. “With the consumption of aroma hops growing in the region of thirty per cent a year in the craft industry, reluctance on the part of the brewers to contract, or by growers to extend their acreage, will mean that we run into the perfect storm in a year or so.”
Sources: 2013 harvest estimates for Germany, United States and China provided by Barth Haas. 2012 production figures from The Barth Report 2011/12.
Alex Wight is a freelance business journalist based in Surrey, England.