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Hops & Adjuncts Market Supply Exceeding Demand, Says Beroe Inc

Source: PR Newswire

RALEIGH, North Carolina, October 15, 2019 - The global demand for hops and adjuncts is growing at a steady pace with average forward contract rates of 76 percent, according to Beroe Inc, a procurement intelligence firm. The hops cultivation area worldwide had risen by 9 percent compared to the previous year and the production of adjuncts has been growing globally, driven by an increase in demand from the brewing industry.

The major regions producing hops are the EU, for 55 percent of the total supply, the Americas for 36 percent, Asia for 6 percent, and Australia/Oceania for 2 percent. Major producing regions for sugar adjuncts are Brazil, India, Thailand, the EU, and the US. For Corn and derivatives adjuncts, major producing regions are the US, China, and Brazil, for wheat is the EU, China and India and for Rice adjuncts is China and India. The Czech Republic and England have the highest forward contract rates for 2020 at 90 percent each. 


Beroe, which is based in North Carolina, further stated that procurement experts can access this report on its recently launched market intelligence platform Beroe LiVE: live.beroeinc.com

The demands from the brewing industry, in terms of volume, quality and variety are growing across the world, driving the demand for hops and adjuncts. Global adjuncts consumption by region is approximately 34 percent for corn-based adjuncts, 26 percent for sugar-based, 25 for wheat-based and 7 percent for rice-based. Changing climatic conditions affecting the yields is a major challenge posed to the market.

The craft beer segment accounts for around 1.2 percent of the global beer market volume. However, as craft breweries mostly use an aroma variety of hops in beer formation, they require almost 10 times more hops in processing. This emerging trend has, in turn, led to a shift in the demand from bitter to aroma hops across the US and the EU.  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.

Key Findings:

  • Large breweries contract with multiple suppliers over long terms to ensure a hassle-free supply of hops during challenging situations. These suppliers are usually in different regions. The volume of hops ordered is in bulk quantities, however, only production-specific quantities are delivered to the buyer at a given time.
  • The brewing industry does not hold an upper hand during negotiations for adjuncts, considering the low volume sourced compared to other industries, like food and feed, accordingly, brewers, generally, source adjuncts from small traders/importers in underdeveloped countries to increase their bargaining power.
  • In the hops market, High capital investment for processing facilities with large production capacities and availability of raw materials and complexities involved with hop varieties are major barriers to entrants. Fluctuating margins, due to dependency on weather conditions, also pose a challenge to new entrants.
  • The top exporting countries for hops are Germany for 47 percent of total exports, followed by the US for 19 percent, the Czech Republic for 8 percent and Slovenia for 4 percent. The Czech Republic has decreased its export capabilities, due to increased domestic demand from the brewing industries.
  • The prices of grains used for adjuncts are fixed based on exchanges like CBOT, EURONEXT, or local domestic prices, with suppliers determining margins or premiums. However, commodity prices are always prone to high fluctuations, with no steady profit margins.

The research methodology adopted for the report included:

  • Experts with twenty years of domain experience
  • Interaction with buyers
  • Inputs from supply chain partners

The average crop cycle of hops is two years, and suppliers fix the forward contracts, along with the price and volume for the upcoming years, based on yield rate, alpha content, etc. Prices for adjuncts reflect the supply-demand situation at any point in time of the particular grain. Predominantly the prices are fixed in forward contracts, and premiums/discounts are considered to this with respect to yield, demand, and certain other parameters

The report also includes:

Market and Pricing Analysis:

  • Global Market Outlook
    • Market Snapshot
    • Demand-Supply Analysis
    • Alpha Production Analysis
    • Trade Analysis
    • Cost Analysis
    • Forward Contract Rates
  • Regional Market Outlook (Germany, Czech Republic, Poland, Slovenia, England, and US)
    • Market Snapshot
    • Demand-Supply Analysis
    • Alpha Production Analysis
    • Trade Analysis

Industry Analysis:

  • Craft Brewing Industry Growth and Challenges to Large Breweries 
  • Porter’s Five Forces Analysis

Supplier Analysis:

  • Top Five Hop Suppliers
  • Supplier Portfolio

Adjuncts Market Outlook:

  • Market Outlook of Adjuncts
  • Porter’s Five Forces Analysis 

About Beroe Inc.:

Beroe is the world's leading provider of procurement intelligence and supplier compliance solutions. We provide critical market information and analysis that enables companies to make smart sourcing decisions—leading to lower costs, greater profits and reduced risk. Beroe has been providing these services for more than 13 years and currently works with more than 10,000 companies worldwide, including 400 of the Fortune 500 companies.

To learn more about Beroe Inc., please visit: http://www.beroeinc.com

Media Contact:
Rob McMurtrie


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