Brewers Association 2019 Hop Industry Update Hop Survey Results Inventory and National Hop Report Federal Affairs

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Kristina Lester
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1 Brewers Association Hop Industry Update Hop Survey Results Inventory and National Hop Report Federal Affairs

2 There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that moment - and you start to decline" - Andy Grove, Intel

3 Objectives Brewing & Hop Industry Updates Annual BA Hop Usage Survey Results USDA-NASS Hop Stocks Report Analysis Federal Affairs Update Grants & Research Support Public Breeding Sensory Update st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr

4 Brewing Industry Update Total U.S. beer sales down ~.% Imports grew, but U.S. domestic volume was off ~.-% Craft volume growth rate remained positive at ~%, landing at around MM barrels st Qtr nd Qtr rd Qtr th Qtr Total number of U.S. breweries tops, for first st Qtr nd Qtr rd Qtr th Qtr time ever (, one year ago)

5 Brewing Industry Update % US Craft Beer Volume Change YOY % % % % % % % % % % st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr % % % % % %.% Production Year % est % % % % % % % % % % %

6 .. st Qtr nd Qtr rd Qtr th Qtr Brewing Industry Update.. US Craft Beer Production Volume (MM US BBL) Production Year st Qtr nd Qtr rd Qtr th Qtr... est

7 Hop Industry Update Ttl U.S. acres increased from, to, (+.%), an all-time high PACNW acres increased by, (.%) Non-PACNW acres decreased by from to (.%) The proportion of aroma acreage actually decreased in Ttl U.S. production increased from. MM to. MM pounds (~% vs CY: %). Non-PACNW production decreased % PACNW yield down slightly from to pounds per acre (~%) Non-PACNW yield decreased to (%) Idaho acreage surpassed Oregon as the number st Qtr U.S. nd Qtr hop acreage rd Qtr and th Qtr production state st Qtr nd Qtr rd Qtr th Qtr Citra acreage surpassed Cascade (, vs,)

8 Hop Industry Update st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr Chart Courtesy HGA Stat Pack

9 Millions Hop Industry Update $ $ $ $ $ $ $ $- U.S. Hop Crop Farm Gate Values, - (Millions of Dollars) st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr Hop Crop Value

10 Millions $, $, $, $, $, $ $- U.S. Barley vs Hop Crop Farm Gate Values, - ($$MM ) -% to Beer Industry st Qtr nd Qtr rd Qtr th Qtr U.S. Crop Values Hops: $ MM (, acres) Barley: $ MM (. MM acres) st Qtr nd Qtr rd Qtr th Qtr Barley Crop Value Hop Crop Value % to Beer % to Beer

11 Brewers Association Hop Survey Results Annual Survey in July & August Years of Data collected - Look back to production years Survey = Beer Production ~= Crop Yr Only includes craft volume as defined st Qtr nd Qtr rd Qtr th Qtr st A Qtr SURVEY, nd Qtr rd so Qtr the th Qtrresults shown are NOT totals: Actual Mileage May Vary

12 Hop Survey Results Summary Number of Respondents at an all-time high () Top Ten varieties shifted significantly in beer production Licensed varieties continue to become more important Variety Usage increased to an all-time high of varieties st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr Hop Usage Rate: increased +.% over rate from. to. PPB year

13 Hop Survey Results Summary (Con.) U.S. craft brewers remain loyal to U.S. varieties at % of total pounds Shortfalls measured In in different varieties from Galaxy repeats as highest Impact imported variety Hop Cost Per Barrel Continues to Increase Sharply Proportion of US crop consumed by craft decreased st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr % overall, and % among brewers <, bbls Contracting rates have declined to pre- shortage levels:

14 Hop Survey Results Number of Survey Respondents st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr

15 Hop Survey Results Average Craft Hopping Rate (Pounds per Barrel) st Qtr nd Qtr rd Qtr th Qtr. st Qtr nd Qtr rd Qtr th Qtr......

16 Hop Survey Results % % % % % % % % % -% -.% st Qtr nd Qtr rd Qtr th Qtr Year on Year Change in Average Craft Hopping Rate (Pounds per Barrel).%.%.%.%.%.%.%.%.% st Qtr nd Qtr rd Qtr th Qtr

17 Hop Survey Results st Qtr nd Qtr rd Qtr th Qtr Cascade Cascade Cascade Cascade Cascade Cascade Cascade Centennial Centennial Centennial Centennial Centennial Centennial Centennial Chinook Chinook Simcoe Chinook Chinook Chinook Citra Willamette CTZ Chinook Simcoe Simcoe Simcoe Mosaic Simcoe Simcoe CTZ Citra Citra Crystal Simcoe CTZ Amarillo Amarillo Hall Mitt (Ger) Amarillo Citra Chinook US Golding Crystal Crystal Amarillo Mosaic Nugget Amarillo Crystal Willamette Willamette Crystal Crystal Amarillo CTZ st Qtr nd Qtr rd Qtr th Qtr Amarillo Saaz (CZ) Citra Magnum (Ger) Hall Mitt (Ger) Mosaic Crystal Ahtanum US Golding Saaz (CZ) CTZ CTZ Magnum (Ger) El Dorado Survey Yr Production Yr

18 Hop Survey Results Total Number of Varieties Used By U.S. Craft Brewers st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr

19 Hop Survey Results.%.%.%.%.% Imported Hop Usage as % of Total Pounds Consumed.%.%.%.%.%.%.%.%.%.%.% st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr.%

20 Hop Survey Results % of Respondents Reporting Shortfall in Variety % % %.%.%.%.%.%.%.% st Galaxy Qtr (AU) nd Qtr Nelsonrd Qtr Citra th Qtr Mosaic Amarillo Simcoe Tettnang Sauvin (NZ) (US).%.%.% st Qtr nd Qtr rd Qtr th Qtr Cascade Centennial E Kent Goldings (UK)

21 Hop Survey Results Variety Impact (Rank of pounds + frequency) Production year st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr Cascade Centennial Citra Mosaic Simcoe Chinook Amarillo CTZ El Dorado Galaxy (AU)

22 Hop Survey Results $ $ $ $ $ $ $ $ $ $ $ Average Craft Brewer Hop Cost $$ per Barrel $.. $. st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr Survey Year $. $.

23 Hop Survey Results.%.%.%.%.%.%.%.%.% st Qtr nd Qtr rd Qtr th Qtr.%.% % TTL US Crop Consumed by Craft (Crop Year).%.%.%.%.%.% st Qtr nd Qtr rd Qtr th Qtr.% est

24 Hop Survey Results % % % % % %.%.%.%.%.%.% Craft Brewer Contracting Rates.%.%.%.%.%.%.%.%.%.% all brewers <, bbls.%.%.% st Qtr nd Qtr rd Qtr th Qtr.% st Qtr % nd Qtr rd Qtr th Qtr

25 Hop Stocks Analysis + Craft and Medium User Growth in (assume all aroma, % craft volume growth) st Qtr nd Qtr rd Qtr th Qtr acre (assume mix of aroma and alpha exports, no yield change) + Net Export Growth of +. MM pounds at pounds per - Surplus Acres Carried Into (assume all aroma) - Total Net New Acres Needed ~?? Potential Planned New Acres (assumes ID, OR, WA) Surplus Acres (alpha AND aroma) st Qtr nd Qtr rd Qtr th Qtr

26 Hop Stocks Analysis + % craft volume growth acre (assume mix of aroma and alpha exports, no yield - Total Net New Acres Needed st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr + Net Export Growth of +. MM pounds at pounds per change) - Surplus Acres Carried Into (assume all aroma) New US Acres Surplus Acres (alpha AND aroma)

27 Hop Stocks Analysis st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr Source: USDA-NASS Hop Stocks Report

28 % % % % % %.% Hop Stocks Analysis September Total Stocks (Carryout) as Proportion of Prior Year Crop Pounds.%.%.%.%.%.%.%.%.%.% st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr % Data Source: USDA-NASS Hop Stocks Report.%.%.%.%.%.%.%.%.%.%.%

29 Hop Stocks Analysis % % % % % -% -% -% -% -.% -.% September Dealer & Grower Stocks Less Brewer Stocks As A Proportion of Prior Year Crop -.% -.% -.% -.% -.%.% -.% -.% -.% st Qtr nd Qtr rd Qtr th Qtr -% st Qtr nd Qtr rd Qtr th Qtr -.% -.% -.% -.% -.%.%.%.% -.%.% Dealer Held Net Inventory Era (Since ).% Data Source: USDA-NASS Hop Stocks Report

30 Fiscal Year Public Hop Research Program Support $. MM Discretionary Public Hop Researchers. FTE. FTE st Qtr nd Qtr rd Qtr th Qtr $. MM Appropriated Farm Bill Items None None Excise Tax Reduction: Craft Beverage Modernization & Tax Reform Act Federal Affairs Policy Efforts $. MM Appropriated. Perm FTE /. Temp Crop Insurance; PM & DM Research Bill Law Law st Qtr nd Qtr rd Qtr th Qtr??. Perm FTE /. Temp Crop Insurance; PM & DM Research Permanent? Tax Increase? Hops As Produce Continued outreach with congress

31 Federal Affairs Outreach st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr

32 Federal Affairs Outreach st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr

33 Federal Affairs Outreach st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr

34 International Ag Policy st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr

35 Grants and Research Funding Update Years - Competitive Research Grants $, HGA Sponsorships and Projects $, HRC Dues & Growout Funds $, USDA Breeding Program $, Total Hop Industry Support st Qtr$,, nd rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr

36 Public Breeding Sensory Update st Qtr nd Qtr rd Qtr th Qtr st Qtr nd Qtr rd Qtr th Qtr

37 CHEERS!

Market research. Hop production practices from hop producers. Market demand of hops: current and desired from brewers

Market research. Hop production practices from hop producers. Market demand of hops: current and desired from brewers Market research Part of 3 year Ontario Ministry of Agriculture and Food study of Hop Varieties, Growing Techniques, Market Demand and Value Chain design. Objectives: Hop production practices from hop producers