Foreword | Key Data | Hop Acreage | Crop Quantities | World Hop Crop | Lab Values | Worldwide Use
Alpha Acid Production | Alpha Values | World Wide Beer Productions
 | Alpha Acid Supply/ Demand | Hop Cycle | Market Review
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Retrospective
In 2008 the world hop acreage increased by over 17,000 acres. Normal growing conditions in 2008 led to a worldwide crop of 113,000 MT (250 MM lbs.) with alpha levels above long-term averages. This meant an alpha production of 9,748 MT or a surplus
of approximately 2,500 MT above estimated demand of 7,212 MT for the 2009 brewing year. In the meantime it is clear that demand did not reach that level.

Record quantities of crop 2008 hops were sold ahead in USA, Germany, the Czech Republic, Australia and New Zealand. The spot hops that were generated by favorable growing conditions were largely sold but their presence resulted in a swift decline in the market. As we all know, the deterioration of the world economy reached a crisis point in Fall 2008. Its effect on the hop market was swift and it was clear that there would be surpluses of aroma and bitter hops due to both overproduction and slow deliveries of contracts. In May 2009 a hailstorm swept through Southern Germany. The growing hops that were destroyed by this storm were replaced by hops remaining from crop 2008. This put the German market into relative balance entering crop 2009.

In China, where forward contracting is not the norm, growers were not able to market a large part of their 2008 production. Similar problems surfaced in Poland and Slovenia, where contracts were not honored by producers in 2007.

Prognosis
In 2009 growing conditions and yields were normal. The world’s 2009 hop crop of approximately 111,000 MT was slightly less than the 2008 crop. Crop 2009’s alpha production of approximately 9,949 MT exceeded crop 2008 due to the continuing trend towards higher alpha varieties and mature production of acres that were newly planted in 2008.

As stated above, in Germany the crop 2009 hops that were destroyed by hail were essentially replaced by excess from crop 2008. The 31,500 MT actually harvested was less than in 2008 but was sufficient to meet the high forward contract levels. There are limited quantities of spot hops.

At press time the estimate for the 2009 USA hop crop is a record 42,000 MT. Weight and alpha yields range from average to above average. Similar to Germany, the high ratio of forward contracts limited the amount of spot hops. In addition, market concerns
resulted in close to 1,000 acres not being harvested and the disposal of some harvested hops.

It is important to note that the increase in acreage was initiated by brewers who sought to return to a stable supply situation. This action was superseded when the hop market cooled as international beer sales dropped during the economic slowdown in 2008. Volume decreased from 1,815 MHL in 2008 to 1,803 MHL in 2009. In addition, brewers increased the efficiency of their hop usage via increased use of isomerized and downstream hop products and/or
lowering the bittering units. In Russia and Ukraine the beer sales slowdown was exacerbated by additional taxes levied on beer. All of these


developments are negative for the hop industry. As a result we estimate the overproduction of alpha to be 2,700 MT. This is an increase of 200 MT from crop 2008. We have clearly returned to the bottom of the hop market cycle. We do expect acreage reductions
this winter but it will take some time for conditions to return to balance.

As stated in the introduction to this issue of Guidelines, the market pendulum has swung back to oversupply, which presents us with a different set of challenges than those of recent years. We must turn
these challenges into opportunities by working together to smooth the bumps in the road and maintain the long-term outlook that has always been a strength of the hop industry.