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If you are curious how the 2023 American hop harvest went, you are not alone.  We have some insights into what happened along with a very preliminary crystal ball forecast for the 2024 harvest.

In a nutshell, the U.S. hop industry roughly doubled its production acreage in the 10 years starting in 2012 (actually a 109% increase).  However, the U.S. Craft brewing industry started to plateau in 2016, moving from a peak of 18% annual growth to low single digit growth by 2019 (the year before the pandemic).  As most are aware, the pandemic caused a decline, and Craft beer has almost, (but not quite) made it back to previous volumes. 

Several factors combined to create a hop market glut. First was the pandemic itself.  Breweries were locked down either for months (or years, in some countries).  Beer not produced did not use hops.  Beers that were popular in the pandemic were mass-market “Dad Beers” using far fewer ingredients than Craft beer. Many breweries found themselves long on contracts and were simultaneously paying for extra freezer warehouse storage of these contracted hops. During that 2017-to-2022 time frame of slowing growth, the number of Craft breweries contracting for hops dropped by more than half, as they were sourcing excess hops wherever they could find excess in the marketplace.  Simultaneously, hop growers did not tap the brakes and continued to add acreage (and excess inventory grew) through 2022.

In January 2023, the situation was clearly outlined to hop growers at the annual hop convention.  A request to voluntarily take 10,000 acres (of over 60,000 acres) out of production was requested, with compelling evidence of an oversupply of hops.  In the end, over 8,000 acres were taken out, but 2,500 acres of high-yielding new hops were planted, yielding a net decline of only 5,500 acres.   Furthermore, not all production acreage is created equal.  Some fields produce better for a variety of reasons.  It is a safe bet that the worst-performing fields were taken out, not the best yielding.

Two of the highest acreage (and most popular) varieties, Citra and Mosaic, which occupied 31% of 2022 harvested acreage, dropped to 26% in 2023.  Cascade acreage declined by 12% in 2023, but harvest ironically increased by 12% due to higher yields.   Centennial production declined by 12%…not because of reduced acreage, but because of early bloom impacting yield for that variety.  It is, after all, farming. Centennial yield was actually 25% to 30% below average. 

Overall, higher-yielding acreage combined with more favorable growing conditions actually resulted in an even larger harvest (up 2%) in 2023 in spite of fewer producing acres.  The elephant in the room actually grew, as the problem was kicked down the road.  Again, in January 2024, a call went out to voluntarily reduce production by another 10,000 acres to balance the market.  This time, growers seem to be taking it seriously.  But will it be enough for the market to reach equilibrium in one year?

In the meantime, there are loads of older hops (as old as 2015 crop), that can be had for under $1 per pound. And despite the low price, dealers (or brewers) are having a hard time giving them away because of their age.  The glut is also variety-specific and ironically, some varieties will remain in short supply.  Balancing hop production with brewery needs had gotten out of alignment and it needs to be balanced again. The tea leaves seem to be pointed in that direction, but what nobody knows for sure is how long it will take.  With thousands more acres being taken out of production this year, the market is poised to show signs of reaching equilibrium…but by when?

Montana has landed in Norway. The historic E.C. Dahls Bryggeri in Trondheim, Norway has launched its latest seasonal–Montana Cold IPA. Not only is it dry-hopped with 100% Montana-sourced hops, but that hop is none other than Ahhhroma™, a new proprietary variety from Glacier Hops Ranch in Whitefish that was launched just last year.

The E.C. Dahls brewery was founded in 1856, and has maintained its status as the largest brewery in the region ever since.  Now, as part of the Carlsberg Group, E.C. Dahls enjoys the expertise and experience of brewmaster Wolfgang Lindell, who was brought up from Carlsberg’s R&D center in Copenhagen to head up the Trondheim brewing operation.

Ironically, in 2015, when Lindell was still in Copenhagen, he tracked down GHR CEO Tom Britz at the BrauBeviale trade show in Nürnberg.  Wolf was keen on meeting Tom as he had been following GHR’s early hop growing efforts on Facebook. Turns out that Wolf had attended high school in Montana, not from Glacier Hops Ranch, and was tracking anything Craft beer and hops-related back in his hometown.

Fast-forward to the Drinktec event in Munich last September; Wolf re-connected with Tom and learned of the new Montana-grown Ahhhroma hops.  Impressed with the aromatic intensity, Wolf and his marketing team built plans for a Montana Cold IPA to be launched in their “Rotating Tap” series.  The intent was to exclusively use Montana hops, riding the coattails (and global interest in Montana) due to the Yellowstone TV series.  

Hang on to your saddle horn, this is gonna be fun.

GHR’s Ahhhroma hops (exclusively grown in Montana) impressed Wolf as having the best sensory profile of all available options.  

Early reaction from the E.C. Dahls marketing team after the launch is, “People totally love it!!! That for sure includes us. The Ahhhroma is really something special.”

The biggest news coming out of the American Hop Convention at the end of January in Santa Rosa, CA was the necessary reduction of 10,000 acres (over 16%) of U.S. hop production.

The difficult case for acreage reduction was clearly made that the pandemic hangover has stunted beer production, and the growing inventory of warehoused hops is already 35 million pounds.  Had it not been for a poor harvest by the three largest nations by production (U.S., Germany and Czech Republic), that excess inventory would likely exceed 50 million pounds today. Half a decade of continually increasing hop acreage has not been balanced with beer production, as demand faltered in 2020 and has still not recovered to 2019 levels. We confirmed with multiple growers that they were already planning to idle considerable acreage. 

Complicating the situation further for hop growers is that cost of production went up approximately 21.4% since 2020, while yields declined last year.  U.S. production went from 38.9% of global hop production in 2020 to 44.1% of global production last year, despite yields that were down 12%.  It was worse elsewhere.  Germany was down 29% and Czech Republic was down 50%.

What does it mean for breweries? 

• For starters, acreage reduction will go into effect this year. 
• Access to Spot markets will likely shrink over the next two years until the excess inventory is used up. 
• Planning ahead to secure contracts will need to become en vogue again. 
• Maybe not with 5 year forward contracts, but 2-3 year contracts.
• Cost containment efforts will have to increase as growers will have to increase pricing to survive.

US Craft breweries approaching saturation point

Bart Watson, Chief Economist for the Brewers Association provided early results from the annual BA survey.  Gross responses were well representative of the membership, with 1,500 responses to date.  This is the 14^th consecutive year of data collected, and while based on Craft volume as defined, when asked, Watson said that the trends would be the same for all “Craft-style” breweries, regardless of the BA definition.

What is the saturation point?

Among the preliminary findings was that the total number of Craft breweries (open and newly opened, net of closings) showed an increase to over 9,400 Craft breweries in the U.S, with the current growth curve going flat by 2024.  Ironically, 7 years ago at the same convention, Watson had predicted a saturation point for American Craft breweries would be approximately 10,000 Craft breweries.

IPAs continued dominance

IPA’s continue to grow in overall Craft dominance, approaching 45% share of Craft in scan data.  However, the composition of the IPA subsegments have shifted since 2017.  Increases were led by Imperial IPA and New England or Hazy IPA, while decreases have been seen by Session IPA and “other”.  A dark horse identified was the growing popularity of IPA mix packs.

In styles, there is growth in Craft lagers and pilsners and medium hop styles are losing market share.  Dan Love of Mother Earth Brewing presented insights into Idaho Craft segments that showed that while IPA dominance of 40% was consistent with the national BA survey results, the “Other Pale Lager” category representing styles such as hoppy lagers or pilsners, was the only category significantly up, increasing 16.6% over the year prior.

Craft Hopping Rates fairly stable

The average hopping rate hit 1.5 lbs per BBL among the Craft segment in 2015, and has been within about 5% of that number for the past 9 years, except for 2018, an outlier year with 1.7 lbs/BBL reported on the survey.  Depending on who is reporting the number, the Craft-style segment represents 19% to 26% of all beer sales, and with such a high hopping rate vs. industrial beers, Craft-style uses three to four times the total volume of hops compared to global industrial beers.

Making a move:  Hop Oils

An interesting finding in the BA survey was the decreasing use of hop pellets, declining from 84.7% to 78% of total usage.  43% reported some “downstream product” usage.  Total usage of downstream products increased from 10.8% of pellet pound equivalents, to 19.5% of pellet pound equivalents in 2022.  The increase was led by hop oils which grew from approx. 3% to nearly 12% year-on-year.  Hello Hopzoil?

One of the reasons for the increase in downstream products usage was efficiency and the impact on yields and the importance to squeeze every dollar of revenue out of every batch.  Inflation and cost pressures have almost made it a necessity for hop-forward styles.

New hop flavored yeast strains discussed

A question from the audience about new hop-flavored yeast strains recently introduced elicited some interesting, if not humorous discussion.  A couple of the brewers on panels responded that they had tried them out of curiosity, but found that they missed the mark.  “It’s like ‘Beyond Meat’ for brewing” said one brewer to laughter from the crowd.  “There’s no ‘there’ there”, he said, assuring the audience that they represent no replacement for real hops.

Okay, the dust has settled, everyone has returned home and caught their breath after a productive Craft Brewers Conference in May.  Allow me to reflect and perhaps pontificate a bit on what I saw and heard. 

At a 30,000 foot level, the 2022 CBC in Minneapolis was as close as possible to a “normal” CBC as I’ve seen in the past three years.  Yes, we participated last September in Denver, but the attendance was slightly less than 50% of a recent norm, and the shadow of the pandemic (facemasks were still required to enter, although by the time things got going, most officials looked the other way).   

This event in Minneapolis employed the major airport I.D. system of CLEAR to enter your vaccination status, and that was quick, incredibly easy and if you were not vaxxed, you simply presented a negative test and in you went.  The BA adhered to CDC best practices as COVID is/was still lurking.   

It was evident by the time we walked into the German Hop hospitality suite on Monday afternoon that things were getting near normal.  The buzz was palpable.  This felt good, promising. 

In our recent history at Glacier Hops Ranch, we first exhibited at the CBC in Philadelphia back in 2016.  The reaction was “who are you guys?”  “Nobody grows hops in Montana”  “What is this hop oil?”  Pretty much a bunch of blank, curious stares. 

Fast forward to spring of 2022.  The second time we have been a Platinum Sponsor of the CBC.  And the reactions were notably different.  “Yeah, I’ve heard of you.”  “Now tell me how do I use this stuff?”   

The overwhelming concern, we heard over and over, was dealing with increased costs that were continuing to pile up. Aluminum (please repeal the tarriffs, please), energy/fuel, labor, shipping.  What solutions are available to cut costs without sacrificing quality?  It seemed that there was an emergence of these economic realities sinking in.

The messaging we had for how much more revenue a Craft brewery could make on every batch, particularly with popular hop-forward beers, resonated more than ever before.  It was like rare relief to Craft brewers who are being hammered with increased costs from all sides.

This was our second effort hosting a Beer Hospitality Lounge, allowing us the opportunity to showcase (and allow brewers to rank) our Hopzoil-infused beers.  One of the efforts was a blind tasting between a Dirty Blonde Ale dry-hopped at an equivalent rate of one pound of Cascade pellets per BBL, and the identical base beer dosed with our recommended equivalent of water-soluble MAJIK Hopzoil.  This was by far the most popular beer(s) that we showcased and we actually ran out of those beers before the final day. 

The statistical reaction of this blind tasting?  Brewers overwhelmingly preferred the taste of Hopzoil to pellets.  Talk about validating our efforts!  Yes, we’re already contemplating something for Nashville to expand on these findings. 

The Brewers Association has been incredibly supportive of our efforts, and we in turn are quite loyal to the BA.  The BA membership has been and continues to be innovative, responsive and most recently, survivors.   

It’s nice to get a glimpse of “normal” again. 

Question: What is one of the biggest disadvantages for breweries in Florida?   

HINT:  It’s about 3,000 miles from Yakima to Tampa. 

Wouldn’t it be great if there were a cold storage hop warehouse centrally located in Florida?  And better yet, wouldn’t it be great if a Florida brewery could get FREE SHIPPING from that warehouse? 

Well, hang on to your flip-flops.  Keg Connect and eLease in St. Petersburg, Florida just announced that they are partnering with Glacier Hops Ranch to establish the first cold storage warehouse for hops in Florida. 

Here were the official quotes announcing the partnership:  

“The cost of freight from the main hop cold-storage warehouses in the Pacific NW is a significant hurdle for brewers to do business in our primary service area in the SE United States,” said Tom Williams, CEO of eLease. “Our goal is to help brewers reduce their operating costs by offering free shipping of hops from our St. Pete keg warehouse when they take shipments of kegs from Keg Connect.  

He added, “this is especially timely because of the increased operating cost pressures for everything from aluminum to labor and fuel.  This is a direct reduction in cost through exploiting efficiencies.” 

So how can this possibly work?  Isn’t this just some sleight of hand pricing gimmick? 

No.  The “Free Shipping” offer allows Keg Connect to take advantage of dead air space on top of its keg pallets, to simply be able to stack boxes of hop pellets destined for the brewery customer.  Shipping of these boxes of hop pellets is at no additional cost for the keg customer, as long as they fit on the keg pallet, and in the truck. 

It’s not rocket science, really.  eLease and Keg Connect are simply exploiting an opportunity to offer more value to their keg customers.  Breweries need kegs, and they need hops.  Keg Connect has dead air space in their trucks.  It made too much sense, they told us over a beer. 

Breweries can also stop by the keg warehouse and pick up hop boxes, with no freight cost or pickup charge. There are, after all, 88 breweries within 45 miles of this keg warehouse in St. Pete.  Plus, if a brewery doesn’t need kegs when they need a shipment of hops, hops can still be shipped to them via the most cost-effective means, with the notable exception that they will be originating from that St. Pete warehouse, instead of from the Pacific Northwest, 3,000 miles away.   

eLease and Keg Connect told us that they were looking for an innovative partner in the hop supply business.  One who could provide them with a wide variety of quality hops suited to the range of beers produced by Florida and other SE brewers.  In the end, they chose GHR as their hop supply partner.   

It’s a win-win for everybody. 

Sure, at GHR we pride ourselves in offering a wide variety of competitively priced, high-quality hop pellets, but hop pellet boxes are bulky, heavy, and have to be stored properly at predictable cold temperatures for optimal quality.  The bugaboo in Florida and the Southeast U.S. has always been the high cost of freight from the main cold storage hop warehouses to this region. 

We’re happy to be a real part of a serious solution.

I remember when I first heard of this new virus…COVID-19?  It seemed like it was so distant, and like Ebola, SARS, the Avian flu and so many others…it was going to be much about nothing. 

I couldn’t have been more wrong.  It changed our life and everyone else around the world. 

By mid-March 2020, we were all locked down.  Are you an “essential” business?  You can stay open.  You’re not?  Work from home, if you can.  Boy was that confusing! 

Craft breweries suffered tremendously.  The two primary distribution channels for most small Craft breweries were either taproom distribution or cans/bottles.  If you were in the taproom-only camp, you were screwed.  This pandemic had winners and losers, and they were primarily separated by your distribution channel. 

Craft quickly reacted…partially out of desperation.  By April, the Brewers Association was predicting that as many as 85% of all U.S. Craft breweries could be shuttered permanently if this pandemic wasn’t over in a few months. 

Fortunately, the PPP program was launched here, and it was a lifeline to many.  An estimated 80%+ of Craft breweries in the U.S. were able to take advantage of it, and it was largely credited with keeping a massive volume of the Craft breweries afloat.   

You also saw rapid pivoting in the business model.  I’d never heard of “pivot” used so much in any industry outside of irrigation.  You don’t package in cans or bottles?  Find a mobile canner, quickly.  Don’t do growlers?  Rally your legislators and get drive-up growler sales or home delivery approved in your state.   

However, the pandemic interrupted much innovation, particularly with new hop varieties, specifically Triumph, which was launched in 2019…months before the pandemic hit.  The industry focus was on survival, not innovation, and the results showed.  The industry survived.   

But innovation with new hop varieties?  Innovation in many facets of brewing suffered as R&D budgets were slashed and production centered around tried-and-true. 

Well, it’s time to get back to innovating. 

I’d like to suggest you start with evaluating Triumph, that new Public variety that was launched in 2019.  Its noble genetics are definitely present, making it the perfect lager hop, but Triumph has also found a home in fruit-forward ales and IPAs, due to its bright aromas of orange, lime, and peach, yes, Peach.   

Intended as a higher-alpha (approx. 9-12%) aroma variety with high myrcene and humulene and low cohumulone, Triumph adds secondary notes of spice and pine to its sensory profile. 

It’s true that Triumph slipped through the cracks of hop innovation due to the pandemic, through no fault of its own.  But now that the world is emerging from the pandemic, you should consider adding this new variety back into your brewing spice rack. 

Craft brewers around the world are always in search of something new, something different, something to create the next fantastic beer. What’s going to be the next Citra? But where do these new varieties come from?

Many of them come from highly sophisticated and methodologically-planned breeding programs, that can take up to ten years to develop and launch commercially. You can include the Hopsteiner and HBC proprietaries in that bucket, along with just released Vista™, developed by the Hop Research Council.

And honestly, some of them are also accidents or “found” varieties. Good examples include Amarillo and Idaho Gem. The Amarillo story is a great one (and I can definitely see how it can happen). It was accidentally discovered by Virgil Gamache Farms in 1990 when they found it growing alongside their Liberty field. They began cultivating it then patented it as a new variety. It was originally patented under the identifier of VGXP01.

You can add to that group, the origin of the new proprietary variety from Glacier Hops Ranch, Ahhhroma™. When our original research hopyard was established back in 2013, we had as many as 44 different varieties being grown there.

We planted exclusively female plants, like any commercial hopyard. But the first few years, we did find some hermaphrodite plants (both male and female flowers on a single plant). That’s a bad situation, because a pollinated hop flower will produce 60% less lupulin resin, and you want to yank those bad boys out. The energy that normally goes into producing high levels of lupulin resin, is diverted instead to producing seeds. Every commercial inventory lot of hops is graded for seeds and stems today because they are both undesirables.

But what happens when those hops go through the harvesting machine, and the “chop” blows the excess out the back as waste, to eventually go back in the fields as compost? Occasionally, you get a cross-bred seed, a “volunteer”, usually likely of unknown origin, and definitely of unknown origin in the case of Ahhhroma, because it could have been a cross between 44 different varieties. We have no real idea.

So we can safely say that it came out of the Research Hopyard at Glacier Hops Ranch, but that’s about all we can say about the origin.

We can also say that the result was surprising and has been worth pursuing over the past several years. We had a small amount of Ahhhroma acreage in our early years, and it all went into Hopzoil™. The harvest of 2021 was the first year we had enough to put into pellets, and the initial lot came in at a pretty awesome 16.6% Alpha Acid content, to complement the high oil levels with notable mango, pineapple, pear, piña colada sensories, with notes of stone fruit, lime, watermelon and hints of cinnamon and nutmeg.

Give it a try. I think you might like it.

When we first launched Hopzoil back in 2016, the concept seemed simple enough. Extract the oil from fresh hops via steam distillation and voila! Put it into beer and you have all the aroma and flavor without the pellets or biomass. It made sense to someone who had never done it before (yours truly) because the same oils are steeped from pellets and are completely dissolved and suspended in beer via dry-hopping. A funny thing happened on the way to innovation. Steam-distilled oil in its native format is pure essential oil, and as such…, it floats on water. Brewers tried it and while it smelled great in a glass, being able to replicate it in a brewed beer with consistent aroma and flavor, proved elusive, to say the least.

In 2017, one of our brewers said “I know how to fix that. I just blend it with ethanol and it will be water-soluble.” “Ethanol? You mean like high-test Everclear grain alcohol?” “Yup”. Well in hindsight, it sorta worked for a while. Pure oil can be soluble in high-proof grain alcohol, but that was an imperfect solution at best. Ethanol mixed with a hop extract has an exemption in the U.S. by the TTB, but the imperfect solution went further. Ethanol is still not allowed in many other countries, in any amount. For a Non-Alcohol beverage (NA beer or soft drink), it is verboten. But most importantly, there are some compounds in the pure oil that simply will not emulsify with ethanol. Finding the Holy Grail, it seemed, was the equivalent of an oxymoron: water-soluble oil. Pre-emulsified Hopzoil, to be specific.

Three promising technologies emerged from 2019 to 2020. Out of those three, one kept improving through literally hundreds of reformulations and led to what is now our MAJIK and HAZY fully water-soluble Hopzoil. What do customers think? Well, it seems there’s more to it than just water solubility. Clean-up is a snap. It’s more consistent. The dosing rate is the ballpark the same as PURE Hopzoil (although some use a bit more, some use a bit less to suit their recipe sensory). But by and large, the oxymoron has worked. Certainly better than Jumbo Shrimp.

Having just returned from the annual American Hop Convention, I must say it was nice to get back together in person after a year in virtual hell. Conventions are known for their formal presentations, but the whole reason that people “convene” is for the informal discussions that are often as important, or even more important than the formal presentations.

Things that were wide-eyed, forward-thinking innovations in the hop industry three to five years ago are now mainstream. People move around, get promoted, have new responsibilities, and enjoy a few beers together. Prepare for hops to get more costly over the next few years, particularly in Washington state, as their state legislature passed mandatory increased wages and overtime restrictions to be phased in over the next few years. The angst directed by Yakima Valley hop growers toward the Seattle/metro legislative majority…is putting it mildly. Harvest time for any farmer around the world knows no clock.

As my mother used to say “you make hay when the sun shines”, and when the hops are ripe, the harvest window is narrow. All hop growers operate 7 days a week for the roughly 30-35 day harvest window, with some large growers operating 24/7. That means that some 80-90 hour work weeks, (which had traditional agriculture exemptions because they are balanced with time off work), will be subject to overtime after 40 hours each week, phasing in fully by 2025. The positive news was the new public varieties developed by the Hop Research Council, if for no other reason than to reduce the costs associated with certain high-cost proprietary varieties. Public varieties that any hop farmer can grow without royalties is one of the objectives, to ultimately benefit the brewer.

The Experimental variety previously known as 074 has been officially named “VISTA”, the first new public US variety in about three years. It was pointed out that one in five hop plants in the Pacific Northwest last year was Citra, underscoring the brewing industry’s dependence on private varieties. One of the more notable presentations was the first-ever Lifetime Growth Cycle assessment of hops. A fascinating look at the complete Greenhouse Gas Emissions from farm to brewer, coming out of the UN Climate Change Conference last November in Glasgow, Scotland, underscoring an urgency for strong climate action. Good on ya, hop industry. And one of the points made in the presentation was a statement by Anheuser-Busch to reduce the environmental impact “from seed to sip”, whereby their stated goal is to reduce CO2 emissions across the value chain will be reduced by 25%. A leadership position from the largest beer company in the world is duly noted.