Pressures on the industry due to the growing demand for different varieties of hops mean suppliers have to adapt fast, said Owen Johnston, sales and marketing manager at Hop Products Australia.
Speaking at HPA’s Global Hop Industry Update for Australian Brewers presentation yesterday at BrewCon 2019, he said that the consumer demand for a greater diversity of beer styles and trends was having a ripple effect through the supply chain.
As you might expect, the growth in craft beer has meant that the demand for different hops to create more and different beers, but this puts unique stresses on the hop farming and supply industry.
“The hopping rate is increasing due to these new trending beer styles and it’s having a significant impact on the hop farm and why we can expand” Johnston said.
To help keep up with this demand, HPA are moving forward with their $35 million Buffalo River Valley expansion (pictured below) and HPA are anticipating an 50 per cent increase in total production, and launching their as-yet unnamed HPA-016 hop variety next year.
“Craft is here to stay and consumer preferences are in our favour.
“The thing that craft has done to the supply chain is put immense pressure on it due to the rate of which their offerings to the consumer are innovated, changed, or deleted,” Johnston told Brews News.
“Breweries pivot their portfolios fast nowadays – the days of multi-generation, long-run lagers is diminishing.
“What that does to us is to make traditional instruments like longer-run contracts and surety on the farm and steady pricing under pressure. So breweries need to balance their attitude to procurement around ingredients that have scarcity.”
Breweries in Australia have largely been insulated from hop shortages, but it’s a close call currently with in-demand hops like Galaxy.
“The take home here is that it’s more challenging than ever to balance this long run risk management in raw material supply without giving up your ability to pivot your portfolio.”
One of the things Australian brewers are looking into to perhaps a greater degree than before is the locality of their ingredients.
“Valuing the region that ingredients come from isn’t new. The question here is how are these trends influencing what we do on the farms.
“We’re aware of these things, but we are guided by overall demand and the restrictions and restraints on our varieties and where they will grow.”
HPA countered perceptions that it preferences the USA more than supply to Australian brewers.
Johnston said that HPA has been able to increase its placement of Australian hops in Australian breweries in the last four to five years “dramatically” – with 68 per cent of the company’s expanded capacity going to Australian brewers.
“If you look at the past several years, exports to the States have been flat, whereas the Aussie placement has just gone through the roof.
“We set ourselves two challenges, to make ourselves more accessible and make our hops more available.
“What we did was take away barriers and make ourselves more visible to the industry and the adoption and support we’ve enjoyed from Aussie brewers has been astounding.”
The Aussie craft beer market has been changing rapidly, and this means that hop consumption and the breadth of hop offerings required by Australian brewers has increased.
Alphas are declining, he told the room at the IBA’s BrewCon, with aromas taking their place.
The acreage of traditional aroma varieties like Cascade, Centennial and Willamette is in decline, he explained, offset by the growth of Citra, Mosaic El Dorado Pahto and Sabro, amongst others.
Johnston explained that brewers should take into account the demands of their consumer and their own brand values.
“It’s how you perceive customer expectations. If you think they value consistency in your brew you should produce the same beer you produced yesterday, but if your brand is built around diversity you’re at liberty to choose.”
He said brewers should be looking at hop supply for 2021 now.