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4-2017

Global hop market

A local alternative to mass beer suggested by independent brewers has been successful and is now altering the global market. Beer is becoming more diversified, so transnational companies have to accept the new game rules and to switch focus to young and fast growing markets. All these processes increased the demand for aroma and bitter hop as well as their acreage expansion on two continents. However now there appeared a downward trend of alcohol consumption in the world, so even special sorts can soon turn to be sufficient. In this connection the dynamic American hop market is already facing some problems. EU hop producers have become more cautious, they are not racing to exceed the demand and look forward with more confidence, judging by the contract terms. 

Hop Market in Russia

Germany still dominates the Russian market, yet over the recent two years one has been able observe a continuous success of Czech hop suppliers. Their expansion and growing popularity of hops from the United States became the drivers of supplies growth in 2016 despite the preceding modest harvest crop in the EU, as well as the factor of relative stability in 2017. In this connection, in 2017, the ratio of the varieties continued to shift towards the aroma ones, and the supplies of Magnum hop and other alpha varieties were reduced. However, the import of bitter hop pellets is partially replaced by extracts, especially from the major beer manufacturers. Total volumes of alpha acid supplies, according to our estimation, decreased by approximately 5% and returned to the level of 2015. Barth Haas Group continues dominating the hop products market; HVG also increased its weight. At the same time, Morris Hanbury significantly reduced the supplies in 2017.

The Weekly Brew: Beer of all shapes and sizes

Last week I ended the column with the seemingly innocent comment that "your favorite six-pack won't be going anywhere soon." With a little more thought, it looks as if I should have clarified this sentence. With so many new startup microbreweries in the recent years, many of them look for the fastest, easiest way to get their product to customers. Aside from kegs, this is most often in the form of 22 oz. bottles, or "bombers," a single bottle displayed prominently on the shelf that holds many advantages for the brewer. But what are the effects on the consumer?
From the brewer's perspective, the bomber is great. It's a much more efficient package from a production standpoint-it requires fewer bottles, fewer caps, fewer labels, and fewer manpower to bottle when compared to six-packs. This correlates to less labor hours required to package the beer as well as lower unit packaging cost. Most 22oz beers come 12 bottles to a case, as opposed to four six-packs per case-because of this, the bomber format results in more units of product per case, theoretically enabling the brewer to reach more potential customers with their brew. Additionally, bombers (and all larger bottle formats) tend to have longer shelf lives and aging capability due to a higher ratio of beer-to-air inside the bottle, resulting in a lower oxidation rate.
The effect on the consumer is much different, however. For the average beer-drinker, their go-to six-pack may be between $8 and $10. While most bombers are priced under $10, many specialty brands and limited offerings can reach above $20. Some brewers, like local favorite Berkshire, offer their beers in the 22oz format at $3.99 for most styles. Sure, this may seem like a bargain in comparison to the $10 bottles it sits next to on the shelf, but if you break it down and compare it to your favorite $10 six-pack, even these $4 bombers correlate to a $13 six-pack price. If this rubs you the wrong way, don't even think about those 22 oz. bottles with a $10 or $15 price tag, converting to the equivalent of buying a $32 or $49 six-pack, respectively. I think it's safe to say that these production cost savings aren't always passed onto the customer.
While local brewer Berkshire and California brewer Lagunitas keep their 22 oz. prices around $4-6, the cost is still substantial for the buyer. These single bottles have a lower "try" cost (for those just wanting to sample the beer) in comparison to the six pack, but the unit cost is still substantially higher than most six-packs. Much of the mentality behind these special single bottlings is that they are meant to be shared and are brewed (and consumed) for special occasions. But, many breweries break this mind set by bottling all of their offerings in the 22oz format.
Ultimately, the craft beer industry will always have Sierra Nevada and Sam Adams, but the next tier of microbrewers emerging may lead into some different packaging options that will have a lasting effect on the market and the customer. Is the single bottle format the next wave of the future? It's definitely more profitable for the brewers, but the impending backlash from the customer may leave them questioning their packaging decisions. There will always be room for different packaging formats, but supporting your favorite six-pack now is more important now than ever. Cheers!
7 Feb. 2011

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