Germany: Drought leaves brewers and hop merchants on tenterhooks ahead of this year’s harvest
Drought in Germany, the world’s top producer and exporter of bittering hops, has left brewers and hops merchants on tenterhooks ahead of this year’s harvest of the ingredient that gives beer its refreshing bite, Financial Times reported on July 30.
Fears for the crop come after four years of a tight market. A boom in demand for craft beers has encouraged US farmers to switch acreage to aroma hops, which impart hoppy flavour and scent.
“Everybody is focused on the upcoming crop,” said Stephan Barth of the Barth-Haas Group, a leading hops merchant based in Hamburg.
Prices for bittering hops, also known as alpha hops, have jumped during several years of supply shortages. Most of the world’s hops are traded on long-term contracts, and forward prices for Herkules, a leading bittering hop, almost quadrupled between 2012 and 2016. The spot price has almost quintupled.
Bittering hops have a large amount of alpha acid which is extracted to give both mainstream and craft beers their bitter flavour. Craft beers also use a large amount of speciality aroma hops, with brewers using between four to 10 times more hops than the average lager.
German conditions have been too dry this year, with one of the key growing regions, Tettnang, hit by hail storms. Some of the country’s crop has also been attacked by a new aphid-like pest, weakening the plants, according to analyst Scott Casey at brewing materials consultancy RMI Analytics.
In the Czech Republic, the main growing area for hops used in Pilsner beers has also been affected by drought.
The US is expected to have a bumper hop harvest this year, but the planting area for bittering hops fell more than 13 per cent over the five years to 2016, while the acreage for aroma hops jumped by almost a third, according to the International Hop Growers’ Convention.
On the demand side, although sales of mainstream beers have been declining in developed markets, including the US, they have been strong in Asia and Africa, according to analysts. The craft beer boom has also lifted consumption of bittering hops, according to the Barth-Haas Group.
The annual supply deficits of bittering hops between 2012 and 2016 has meant that the brewery sector has been reliant on inventories accumulated between 2008 and 2011. However, those stocks were dwindling, Mr Barth said. “The [supply] surplus we had has been eaten up by demand,” he said.
The result has been that “high alpha varieties achieved the most remarkable price increase on the free market,” according to the IHGC, while there has been an oversupply of some specialty American aroma hops leading to a sharp fall in prices for those varieties.
Brewers and beer companies are unlikely to pass on the hop cost increases, but if climate change leads to the need for irrigation for growers, that production cost increase could result in higher beer prices in the long term.
The rise in bittering hop prices is expected to prompt farmers to increase their planting of high alpha acid varieties in both Germany and the US.
“In the US they’ve expanded in aroma at the loss of alpha, but with the prices this high, they might switch back,” Mr Casey said.
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