The hops growers and the hops trade are currently battling on two fronts, which might lead to severe turbulence within the industry - insolvencies not excluded.
On one hand, due to the increased demand for hops following the craft beer boom and the trend toward more heavily hopped beers in the years before the pandemic, producers massively expanded cultivation areas and processing capacities. However, as the demand for hops did not increase correspondingly, enormous stockpiles have been built up in recent years in the hope that the boom might continue. Processed hop products, such as hop extract, can be stored for several years, which often helped to cover peak consumption periods in the past but now prove to be a problem.
According to calculations by the German Hop Industry Association, more hops have been produced cumulatively for the fifth year in a row than have been consumed by the brewing industry. As researched by the German beverage magazine Inside Getränke, there is already a global stockpile of up to 120,000 tons of raw hop equivalent. In the cooling warehouses of traders, hops products from Germany and other European countries worth 250 million euros are now piling up. At the same time, the industry is hesitant to enter into follow-up contracts due to uncertainty about beer sales and demand for hops.
Of the approximately 42,000 tons of hops, 40,000 tons have been sold for this year according to Inside, and 39,000 tons for 2025 through long-term pre-contracts. The pre-contracts for the following years (2026: 26,000 tons, 2027: 22,000 tons, 2028: 14,000 tons) are causing concern among hop growers because the reluctance to sign follow-up contracts to the 2025 contracts is becoming noticeable.
It is feared, however, that without these follow-up contracts, the hog cycle could occur again. This would happen if farmers drastically reduce their cultivation areas, leading to shortages. In the USA, the cultivation area has already been reduced by 21.7% in one year, mainly due to the massive sales slump of craft brewers. Australia has also announced a similar reduction in hops acreage by 21%, albeit from a much lower overall figure. (inside.beer, 2.5.2024)
To make matters worse, the likely ban on dimethomorph (DMM), a contact fungicide against downy mildew, is looming as a crisis for the hops industry. According to an EU implementing regulation, member states must revoke the approvals for fungicides containing DMM by November 20, 2024, at the latest. There will then be a sell-off and phase-out period until May 20, 2025.
A similar problem was already known earlier with stockpiles of US and CZ hops from 2022 or earlier, which contain bifenazate, a fast-acting contact poison against mites. Bifenazate "should not be used for processing canned or frozen food with a best-before date beyond April 2024." (inside.beer, 29.2.2024)
If the maximum residue levels of DMM in hops are simultaneously drastically lowered, it could mean that hops and possibly the beer produced from them can no longer be sold retroactively. A nightmare for the entire industry, as DMM fungicides were and are used on up to 90% of all German hop-growing areas. In this case, according to an insider who grows and sells hops, "we will all go bankrupt."
