Hop Survey Results for 2013

USDA National Agricultural Statistics Service recently released their annual Hop Acreage Report, detailing hop variety data by state. The news is very good for craft brewers. A quick glance shows a substantial increase in overall hop acreage. Drilling down deeper shows that huge changes are afoot in Washington, Oregon and Idaho. In 2013, the U.S. total acres strung increased by 9.8 percent, adding 3,118 net additional acres for a total of 35,041.

  • Idaho led the way with a whopping 40 percent increase, adding 966 acres for a total of 3,389.
  • Washington was next, growing its largest base acres by 8 percent, adding 1,930 acres for a total of 26,970.
  • Oregon turned a corner this year after several consecutive decreases driven primarily by removal of Willamette acres. Oregon acres increased this year by 5 percent, adding 222 net acres for a total of 4,682, with increases of several key aroma hop variety acres offsetting yet another large decrease in Willamettes.

The drivers of this impressive growth become apparent when looking at hop varieties and types. Our analysis indicates that total aroma hop variety acreage increased by over 4,400 acres. This means that roughly 1,350 acres of alpha acid producing varieties were removed and replaced by aroma hop varieties, in addition to 3,100 totally new aroma hop acres.

Our analysis further indicates that the proportion of total U.S. acres represented by aroma hop varieties passed 50 percent for the first time ever. The proportion of aroma hop acres has grown from about 32 percent of total U.S. acres in 2011, to over 40 percent in 2012, to 59 percent in 2013. These staggering figures demonstrate how quickly growers are responding to craft beer volume demand for aroma hop variety pounds.

Aroma Hop Varieties of Note

Variety 2013 Acreage 2012 Acreage Increase (acres) Increase (%)
Cascade 5,330 ~3,230 ~2,100 65.1%
Centennial 2,233 1,736 497 28.6%
Chinook 1,672 1,490 182 12.2%
Citra 1,278 538 740 137.5%
Simcoe 1,264 940 324 34.5%
Total 11,777 7,943 3,834 48.3%

Acreage in aroma hop varieties essential to craft brewers increased considerably, with ~2,100 new cascade acres going in the ground. As a group, total acreage strung in the five varieties shown above increased by nearly 50 percent. Equally impressive were reductions in several key alpha acid varieties such as Galena (-504 acres, -53 percent) and Nugget (-480 acres, -54.9 percent).

Other highlights of this report include the changing role of craft brewers as captains of certain varieties. AB continues to pivot away from Willamettes, while craft brewers consume more of the variety; the result is that craft brewers will consume about 25 percent of the 2012 crop, but will likely consume over 40 percent of the 2013 crop.

In contrast, as large brewers pivot towards Cascades, craft brewer (U.S. and overseas) consumption of all cascades will drop from over 95 percent of the 2012 crop to less than 65 percent of the 2013 crop. These contrasts illustrate how quickly large brewer demand can change the face of varieties important to craft brewers.

Last but not least, this year’s report contains far greater detail of many varieties than in years past. This detail sheds light on many varieties cherished by craft brewers which in the past were aggregated in “other” categories, and allows for more in-depth analysis with great accuracy and fewer estimates. The Brewers Association welcomes grower willingness to communicate these details.

The Importance of Hop Contracts Grows

So what does this mean for craft brewers? Well the answer is, it depends on your relationship with your growers and dealers. Much of the large aroma hop acreage increases are the result of contracts executed by U.S. craft brewers seeking to secure supply of varieties they need for future rapid growth of their brands.

It’s not clear how much extra inventory will be available for the spot market; growers simply won’t string acres on speculation. Importantly, many of the new cascade acres were heavily contracted by large brewers. And many acres of aroma varieties are likely allocated to fill rapidly growing demand by overseas craft brewers for U.S. aroma varieties.

Lingering market tightness in certain varieties may or may not resolve itself with this year’s crop. Craft volume and per barrel hopping rate growth have changed the game so quickly that annual acreage increases are not always sufficient to re-fill the pipeline. Baby year acres do not yield as well as mature acres, and this year is characterized by a lot of baby acres.

Supply shortages in certain varieties may linger as growers continue to play catch up, rather than getting even or getting ahead. And shortages in popular licensed varieties have caused many brewers to switch into typically plentiful public varieties. For example, the 25 percent increase in 2012 Cascade acres was not sufficient to fulfill total craft demand. And hundreds of new 2013 Cascade acres were contracted by very large brewers and to fulfill overseas craft demand.

So U.S. craft brewers should not expect the spot market for this variety to suddenly become more elastic in spite of the large acreage increase; in fact, continued craft volume growth (both in the U.S. and overseas) and shortages in licensed varieties might yet result in continued tightness of public variety supply.

The best way to secure the hops you need for your brands is to communicate your needs to your dealer and to your grower through hop contracting. As always, craft brewers compete with the largest beer producers for the aroma hop pounds they need; that competition has intensified as larger brewers have pivoted to Cascade and a few other varieties important to craft brewers.

But craft brewers are also now competing with other craft brewers, both U.S. and overseas, whose brands are growing very quickly, and who have contracts in place to ensure that growth. Our 2012 hop usage survey indicated that over 90 percent of respondents purchase their hops under custom contract, and, that over 99.5 percent of U.S. craft beer volume is produced with contract purchased hops. Today’s dealer-brewer relationship is often characterized with very small contracts, even for a single 44 pound box or less. Be sure your dealer shares the sense of scale of your business.