Saturday / November 17.
HomeMarketsCraft beer sales slip after record US hop revenue

Craft beer sales slip after record US hop revenue

US hop farmers have celebrated record revenues from their crops in 2016 as they planted more acres despite signs that the craft beer boom, which has boosted demand for the key brewing ingredient, may be peaking. 

The value for the year’s hop crop soared 44 per cent this year from 2015, totalling just short of $500m, according to the US Department of Agriculture. “Higher hop acreage and production” and the continued trend to shift hop production to more expensive varieties favoured by craft beer makers were behind the jump, said the USDA in its latest report on hop output.

Craft brewers use four-to-ten times more hops than the amount used in the average lager produced by multinational brewers, and the surge in popularity for microbrews, which are high in flavour and aroma, has pushed up demand and prices for certain speciality hops. Nevertheless, as farmers push to plant more hops, US consumption of craft beer may be slowing.

Sales of craft beer at retailers fell 0.4 per cent in the four weeks to early December from the same period last year in volume terms, according to Nielsen, the consumer data group. 

Nielsen’s so-called “off-trade” data, which cover about two-thirds of the overall US beer market, showed that sales for the 12 weeks to early December fell 1.5 per cent while rising 4.2 per cent for the 52 weeks. 

In certain US cities, especially those on the west coast, craft beer consumption has reached almost 50 per cent of the market, said Michael McDougall at Société Générale in New York. “It appears that craft beer could be reaching a saturation point,” he said. 

Despite some analysts’ forecasts of “peak craft”, many growers have remained bullish, as certain specialty “aroma” hops, popular among craft brewers, still command high premiums. Prices were also pushed up by lack of supplies last year after dry weather in both Germany and the US, the leading exporters of hops, hit output.

According to the USDA, US farmers planted 17 per cent more acres in 2016 compared with the year before, with production at a record 87m pounds — up 11 per cent. The price per pound rose 31 per cent to $5.72.

Hop experts are urging caution about further expansion of production. US sales of craft beer, which rose 18 per cent in 2013 and 2014, have fallen 8 per cent in the first six months of this year, according to the Brewers’ Association. 

Earlier this year, the Hop Growers of America highlighted the cyclical nature of hop demand, with Ann George, executive director, noting: “We have seen the downside of this market before due to oversupply.”

Source link