Hop and barley shortage may cause brewers problems

The demand for hop has never been higher than in 2015, particularly because of craft beers’ increased popularity. The harvest dropped 40 % however, which means prices have skyrocketed.

Investments required

Hop is not the only problem facing brewers, as malting barley may also be hard to come by in the next few years, Rabobank’s report “A revolution in brewing” states. The bank names three reasons for a possible malt barley shortage.

“First of all, the current tightness in the market and the projected 14% rise in demand. Many farmers regard malting barley as a risky crop and one with highly volatile premiums, which inevitably means that they will only grow if the premiums are high enough. Craft brewers increasingly look for malt with distinctive flavours and aromas in order to distinguish their products in a competitive market. Currently the production of and demand for barley are almost equal, meaning that there is no room for crop failure”, Rabobank analyst Ciska van den Berg said.

The bank expects malting barley demand will grow 14 % over the next 5 years, because of an increased population and because more people can afford craft beers. Their popularity leads to an increased malt barley demand, as these beers require five to seven times as much malt as a regular beer. The market has also become increasingly fragmented. 

Rabobank feels worldwide investments in the malt industry will be required to meet the increased demand and to avoid future shortages. Brewers will also have to sign good contracts with manufacturers to guarantee their supply.