Hops & Adjuncts
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Hops & Adjuncts Global Market Outlook

The growth of hops varies across regions, due to difference in prevailing climatic conditions, change in demand, preference of variety of hops, etc. The US and Poland were the only two countries with increased growth in 2015 compared to 2014, with a growth rate of 12.2 percent and 7.8 percent, respectively.

• The regional production of different types of adjuncts varies with regions from local preference and cultivation, hence preference to the usage of adjuncts to countries can vary from one to another, with respect to their pricing and availability

Global Hops and Adjuncts Supply–Demand Analysis 

• The hops cultivation area worldwide had risen by 7 percent compared to the previous year to 51,500 Ha, the volume harvested was only 87,400 MT. Y-o-Y decline in production volume of nearly 10 percent was mainly due to adverse weather conditions and a drought, with maximum temperature exceeding 30° C in Central Europe in July/August 2015.
• For the 2015 brewing year (crop year 2014), there was a deficit in the supply balance once again. As a result of continually  rising demand on one hand and low production volume on the other hand, this deficit will be even greater in the 2016 brewing year

Hops and Adjuncts - Global Trade Dynamics 

Germany and the US are the top importers and exporters, due to the demand of a variety of hops, which are cultivated by one and required by the opposite country. Both countries trade hops for this reason and are the top trading countries

Cost Structure Analysis - Hops

Hop orchards start yielding after 4–6 years. The first phase mainly has cost spend, focused on the facilitation of growing the crop, while the harvest and post harvest, which is considered the second phase, have processing costs, such as drying and pelleting, which occupies over 61 percent of the cost.

Craft Brewing Industry Growth and Challenges to Large Breweries

• Craft beer segment accounts for ~1.2 percent of the global beer market volume. However, it consumes almost 10 times more aroma hops per bottle compared to large (traditional) volume beer manufacturing
• This emerging trend has, in turn, led to a shift in the demand from bitter to aroma hops across the US and the EU
• As craft breweries mostly use an aroma variety of hops in beer formation, they require almost 10 times more hops in processing. This compels hop growers in the US to shift from bitter to aroma variety hops production to cater to the demand of the growing craft beer segment
• The global production ratio of aroma to bitter varieties is expected to be 52/48 in 2015 compared to a ratio of 47/53 in 2011. This will result in a supply deficit of the bitter varieties for the large brewery, and it will lead to a high price realization in the future, which will affect their cost. Furthermore, the excessive load for bitter hops will be partly shared by Germany, with an increase in acreage for bitter varieties

Key Price Drivers (2016) 

• Depleting stocks
• High demand from the brewing industry
• Changing climatic conditions in the EU affecting the yield