Market & Crop Updates
District New England Winter Technical Session
Roy Johnson
January 17-18, 2014
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World Beer Production – Calendar Years 2010 - 2012
2011
2010
+3.5%
+63 mill
1,863
mill hl
2012
+1.2 %
+22 mill
1,929
mill hl
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1,951
mill hl
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Top 10 Beer Producing Countries – Calendar Year 2012
Ranking
Share of Total
1.
China
490,200
25.1%
2.
USA
229,314
11.7 %
3.
Brazil
132,800
6.8 %
4.
Russia
97,400
5.0 %
5.
Germany
94,618
4.8 %
6.
Mexico
82,500
4.2 %
7.
Japan
55,465
8.
UK
42,049
9.
Poland
37,800
South Africa
33,000
10.
Source: Barth Report
2012 (1,000 HL)
Country
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3
Top 10 Breweries World Wide – Calendar Year 2012
Ranking
Volume (mhls)
1.
Anheuser-Busch InBev
352.9
2.
Heineken
321.7
3.
SAB Miller
190.0
4.
Carlsberg
120.4
5.
China Resources Breweries
106.2
6.
Tsingtao Brewery Group
78.8
7.
Grupo Modelo
55.8
8.
Molson-Coors
55.1
9.
Yanjing
54.0
Kirin
49.3
10.
Source: Barth Report
Company
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The World Beer
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The World Beer
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How Many Hops does it Take to “Hop“ the World Beers?
• The estimated amount of alpha brewers consumed in 2012 was 8,682
metric tons of alpha.
• Crop 2011 (used in brewing year 2012) had an average alpha yield of
10.3%.
• Therefore, it took 84,291 metric tons (185.8 million lbs) to hop all of the
beers in the world. (Reference, the US produces about 65 million lbs)
• This translates into a little more than 0.1 lbs/bbl (0.043 kg/HL).
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The State of the World Hop Market
• Since 2008 (the year of the Hop Crisis), the world produced more hops
than needed by the brewing industry.
• The theoretical accumulated surplus is a record 10,400 metric tons of
alpha (more than an entire year of world alpha demand) and equates to
approx. 230 million lbs.
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The World Alpha Balance
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The State of the World Hop Market
• So, why is the market actually quite lively with prices above the cost of
production – in some instances, significantly above the cost of
production?
• World beers use ~0.1 lbs/bbl, the craft brewing industry uses on average
1.2 lbs/bbl, more than 10 times the amount of hops than the average
beer.
• If the top world brewing chart were not measured by beer but by hop
usage, would the ranking change?
• No!
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But the No. 11 would be Boston Brewing Company!
Boston Brewing produced ~2.5 million HL beer in 2012
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Outlook – Crop 2013 and Beyond
• The US craft brewing revolution has materially changed the world
brewing landscape and has also particularly impacted the US hop
industry.
• There are now unexpected opportunities to be captured...
...but with every opportunity come challenges.
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Opportunities & Challenges
• US hop growers find themselves now in the 6th consecutive year of high
profitability.
• The same holds true for German growers and for most other growers
around the world.
• Hop marketers and processors around the world have also benefitted
financially from these last 6 years.
• Everyone has made money and is now investing into their facilities,
people and various strategies.
• Change is going to happen faster. (During the survival years of 1996 to
2006, the hop industry stayed static, as there was no money to risk)
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13
The World Alpha Balance
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14
The Alpha Market
• While we expect the German crop to be down – especially in its alpha
production, this is only temporary.
• The German alpha varieties are stronger alpha producers than CTZ,
Summit, Apollo, Bravo, etc. and therefore, Germany will capture more of
the world alpha market than ever before. (The world alpha market has
been the main target market for the US).
• Germany is developing new flavor varieties such as
Mandarina Bavaria,
Huell Melon,
Hallertaer Blanc.
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2013 Crop U.S.A.
Grower yields of the early-harvested aroma varieties were down this season as anticipated and for
the same reasons as described above, with shortfalls of 10% or greater depending upon the variety
and volume share coming from baby fields. The resulting supply shortfall caused the aroma spot
market to quickly rise to very high levels, ranging from $5.00/lb. for Willamette to $10.00/lb. for
Centennial.
Cascade, on the other hand, made a mid-harvest comeback with yields improving strongly. We
estimated a total of approximately 500 - 600,000 lbs of Cascade spots were available due to good
yields and likely some open production. However, due to the additional, unexpected demand for
2013 crop Cascade by the Craft segment the spot market remained very competitive and
led to prices between $8.00 - $10.00 per lb.
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Hop Market Outlook
The hop market has been changing in the last two years. With the introduction of flavor
hops; Cascade, Centennial, Galaxy, Citra, Chinook, Mosaic, Topaz and Sterling, dry
hopping and higher hop giving rates used by large regional Crafts 1.2 pounds per
barrel, compared to the major brewers who use one-tenth of a pound per barrel, have
created pressure on all existing acreage. Farmers are requiring three year contracts
to secure a particular variety, insure profitability and be able to prove to a bank, for
crop advances, that they can pay back their loans.
What does a brewer need to do to avoid shortages on the varieties they use?
1. To avoid bad moments by planning, talking often to your supplier and
consider longer term contracts.
2. Establish a working mutual relationship and loyalty to your supplier and communicate
your concerns, often. If circumstances change such as variety changes will they work
with you.
3. The hop supply business has changed dramatically. If you are a transactional buyer,
you’ll be left out in the cold when supplies are tight.
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Haas Innovation’s & Research Brewery
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Thank you for your attention
Questions?
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