As was to be expected, the collapse of beer consumption due to the measures to contain the coronavirus all over the world will impact the demand for hops, leading to a production surplus. This will put a strain on the market for several years, the German Hop Industry Association (Deutsche Hopfenwirtschaftsverband,DHWV) reported.
As a result, U.S. trading companies are currently negotiating with American growers regarding cancellation of planned expansion of crop-growing areas and shifting of contracts into the future to counteract a foreseeable overproduction primarily of aroma hops. In the United States, a 1200-hectare net increase in growing area was planned, almost all of this in aroma hops.
The lack of Eastern European seasonal workers (inside.beer, 29.3.2020) will certainly affect early work in the German hop growing regions. Larger operations will be especially affected by the worker shortage. In the end, whether and to what extent this will lead to lost harvests cannot be assessed at this point, say the DHWV.
Regardless of the success of these actions, a significant surplus of aroma hops for the craft brewing sector will come onto the market. In Europe and most likely all over the world, this will coincide with a demand shortfall in the craft brewing sector.
Since the alpha acid content of these hops ranges from 10% to 14%, they are suitable to be used as high alpha hops at any time during surplus situations. This will result in the surplus situation spilling over into the high alpha market, which in turn will especially impact German hops production.
Hop processing facilities are currently working at full capacity under stringent safety procedures and precautionary measures. Supply chains to customers remain intact despite occasional delays caused by logistics; still, customer supply is currently assured.
Following an initial surge in contacts from customers worried over the possibility that the product might no longer be obtainable, calls are again decreasing. In the hop industry as in all economic sectors, diminishing customer demand and delayed payments will have a negative influence on the liquidity situation of the trading companies and processing facilities that can vary depending on the length of the crisis.