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Hopgarden (Photo: André Klimke on Unsplash)
22 October 2020

BarthHaas: 2020 global beer output may decline up to 14 percent

Germany | Per its modelling, the global supplier of hop products, BarthHaas, estimates that this year global beer output could drop between 8 percent and 14 percent over 2019 because of the covid-19 pandemic.

In 2019, around 1.9 billion hl beer were produced in 170 countries. If BarthHaas’s forecasts are realistic – and there is no reason to doubt them – brewers across the world could lose between 150 million and 260 million hl in beer sales this year. For comparison: in 2019, South American breweries churned out 230 million hl beer.

For the hop supply chain, this could spell trouble. Its major customer, the craft brewing industry, is suffering disproportionally due to craft brewers mostly depending on taproom and on-premise sales. The on-premise was most affected during the lockdowns and the continuing restrictions.

Big impact from craft brewers’ loss of sales

On average, craft brewers tend to use ten times as much hops as the big brewers. If you put craft brewers’ share of global beer output at, say, 3 percent to 4 percent, this means they account for 30 percent or 40 percent of global hop sales.

That is why Stephan Barth, one of the owners of BarthHaas, reckons that the “structural oversupply” of hops since the 2019 harvest could lead to painful adjustments – both in terms of acreage and price. So far, hop prices have held up well, he said.

Although hop pellets can be stored for up to five years and hop extracts for up to ten years without suffering in quality, he thinks that adjustments are necessary. “No brewer will want to buy hops that has been in storage for years while fresh hops from a recent harvest is available,” he explained.

Beer prices won’t fall

To the question if the oversupply of hops will lead to lower beer prices, he replied that he doesn’t think this will happen. Hops’ share of the beer price is miniscule – only 1 percent to 2 percent on average.

What he didn’t say was that brewers will probably do everything to maintain prices or even raise them to cover their painful losses this year.

On a positive note: BarthHaas believes that beer sales will pick up again next year. But it could take until 2022 or 2023 for global beer output to reach the 2019 level.