Farmers See Increased Hops Revenue, Craft Beer Sales a Variable

On Monday, Financial Times writer Emiko Terazono reported that, “US hop farmers have celebrated record revenues from their crops in 2016 as they planted more acres despite signs that the craft beer boom, which has boosted demand for the key brewing ingredient, may be peaking.

The value for the year’s hop crop soared 44 per cent this year from 2015, totalling just short of $500m, according to the US Department of Agriculture. ‘Higher hop acreage and production’ and the continued trend to shift hop production to more expensive varieties favoured by craft beer makers were behind the jump, said the USDA in its latest report on hop output.

“Craft brewers use four-to-ten times more hops than the amount used in the average lager produced by multinational brewers, and the surge in popularity for microbrews, which are high in flavour and aroma, has pushed up demand and prices for certain speciality hops. Nevertheless, as farmers push to plant more hops, US consumption of craft beer may be slowing.”

The FT article noted that, “In certain US cities, especially those on the west coast, craft beer consumption has reached almost 50 per cent of the market, said Michael McDougall at Société Générale in New York. ‘It appears that craft beer could be reaching a saturation point,’ he said.”

Ms. Terazono added that, “Hop experts are urging caution about further expansion of production. US sales of craft beer, which rose 18 per cent in 2013 and 2014, have fallen 8 per cent in the first six months of this year, according to the Brewers’ Association. “

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