Hops Market Declines as Craft Beer Sales Slow

Financial Times writer Emiko Terazono reported yesterday that, “A sharp slowdown in US craft beer sales growth has sent the speciality hop market from boom to bust with its effects starting to be felt by growers beyond its shores.

“The fall comes as growers both in the US, the world’s leading hop producer and exporter, and abroad have increased their planting areas as the number of craft brewers increased rapidly, causing demand to surge for popular aroma varieties.

“‘People [in the hop industry] are very concerned; this is a problem that’s affecting everybody,’ said Douglas MacKinnon, chief executive of trader 47hops in Yakima Valley in Washington, a leading producing area. The hop merchant was forced to file for Chapter 11 creditor protection last year as buyers reneged on their contracts and cash flow dried up.”

The FT article explained that, “The main issue has been the sudden slowing of growth in the craft beer market, which until a few years ago had been rising annually by double digits. However, market saturation, as well as competition from other alcoholic beverages, have affected growth, which peaked in 2014 at 18 per cent, slowing to about 5 per cent last year.

“The oversupply situation has been made worse by the jump in hop production and acreage which almost doubled in the past five years. Brewers fearing a shortage rushed to sign three- to five-year contracts with farmers, who increased plantings on the back of those contracts and high prices.”

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