The USDA has released its annual acreage report breaking down hops strung for the 2023 harvest. Earlier in the year, it was predicted that we could see up to a 30% reduction in acres. Instead, the United States is looking at an 8% reduction, intending to balance an oversupply of hops in the market. 2021 and 2022 were banner years for hop production, but tough economic factors have prevented the beer industry from keeping up its growth rate.The hop industry has been increasing production year over year, although in 2020, Yakima Chief Hops cutback by 10% when many of our brewers were on pause with the pandemic. That year, the Brewers Association reported that the craft segment took a 10% growth hit¹. 2021 showed a bit of recovery for craft brewers (8%), while 2022 went flat for the first time ever. The beer industry overall is in a downturn.

Reduction in United States acreage strung by popular variety.

2023 acres strung with their respective reduction percentage by state.

Yakima Chief Hops is taking this reduction as an opportunity to replant fields with virus-free cultivars. It’s a tricky business, timing these field replacements. The plants take years to mature, but the payoff is healthier plants with higher yields. When switching to virus-free material, depending on variety, the incremental increase in production can be upwards of 40% per acre. “It means down the line; we will be able to produce more on less acreage. This is valuable from a sustainability standpoint but also from a financial perspective. If the future holds higher yields in those acres, it could have a rippling effect. More efficient crops in the same amount of space could lead to greater price stability,” says Jason Champoux Vice President of Crop Production for Yakima Chief Ranches. “It comes down to pounds produced, not acres strung. Acres don’t go in your brew kettle; pounds do”.

2022 acres strung vs. pounds harvested.

When forecasting how many fields to string, there must be a correlation between production and sales. Traditionally, acres have been strung using contract volume as the data point. In recent years, it has become more complicated than that. For a multitude of reasons, some pandemic related, not all contracts are collected completely. “We want to make sure what we are producing has somewhere to go.We used to base these forecasts more on our contracting rates with brewers, and that is still a valid data point, but our other focus at present is what’s shipping,” says Champoux. “What is actually leaving the barn and going to customers? And is the customer utilizing those hops or just building up inventory?”

“We’re trying to stay in tune with supply and demand and find new ways to understand it and make better decisions, which will ultimately be better for brewers.” Says Pete Venegas, Vice President of Grower Relations for Yakima Chief Hops, “Managing our existing inventory is a priority right now”.

Making planting decisions based on the health of the beer industry is a challenge. With nearly 10,000 breweries in the United States alone, the market isn’t exactly growing. Ready To Drink cocktails (RTDs), Hard Seltzers, and other alternative beverages have claimed a portion of traditional craft beer spaces, and breweries are feeling the squeeze. The Brewers Association stats and data² reports show that while dollar sales in the craft beer segment have grown, the beer industry overall has taken a 3% decline.

Despite the rising costs of labor and goods, it is worth noting that hop prices have not seen a notable increase in years. Brewery owners are exhausted by rising costs of materials, labor, and goods; hops have remained stable. Will that hold? Well, we don’t know yet. Reducing acres has a direct negative impact on our farmers, but we are hopeful that having more productive fields in the future can keep prices sustainable.

Our primary message is this: We are in this together. We are invested in the long-term success of our brewery partners and customers. Acreage reductions hurt growers, but it is necessary at this time for the overall health of our industries.

We are a grower-owned company, and we do not take the decision to cut back acreage lightly. To be very clear, we would never jeopardize the livelihood of our growers for the possibility of leveraging future hop prices on brewers. We aim to achieve industry balance. We do not want to create scarcity; we want to be responsible for our actions. We are here to support our brewery partners and are invested in your success. Please reach out to your sales representative if you have any concerns about contracts, or drop us a line at hops@yakimachief.com

¹(2023, June 1). Overview. The New Brewer, 40(3), 117. https://mydigitalpublication.com/publication/frame.php?i=791743&p=&pn=&ver=html5

²Brewers Association. (2023, April 26). National Beer Sales & Production Data – Brewers Association. https://www.brewersassociation.org/statistics-and-data/national-beer-stats/