The U.S. Hops Business Is in Bad Shape. Here’s Why.
In his memoir of a life spent selling Heineken for his family’s eponymous importer, Philip Van Munching describes the challenge of hiring brand managers from beyond the industry. “The one candidate who impressed me suggested her first order of business if she got the job would be a self-education on the various legal restrictions placed upon beer marketing,” he writes in 1997’s “Beer Blast.” “The other two lacked not only the first’s MBA, but also failed to give any indication to me that they recognized any differences between different packaged goods. This worried me because one was currently working for a cigarette manufacturer and the other was working on dish soap.”
If everything you knew about the beer business came from LinkedIn, you could be forgiven for wondering what Van Munching’s concern was. After all, to the casual observer (then, and especially now), packaged beer looks a lot like the other shelf-stable stuff sold alongside it at the supermarket. Soda, candy bars, mayonnaise… you name it. But this elides trickier realities that challenge the category. It’s more closely tied to specialized agricultural outputs than much of the mass-market consumer packaged goods (CPG) market. The national toothpaste supply does not rise and fall on harvest yields; the national beer supply, to varying extents, kinda does.
We discussed this just a couple weeks ago with regard to the American brewing industry’s reliance on Canadian barley, access to which was then being threatened by the Trump administration’s currently suspended 25 percent tariff on our neighbors to the north. Today, I want to highlight an inverse agricultural problem: one happening stateside due not to the scarcity of a key crop, but its surplus. That’s right, folks. For the first time in my two and a half years helming Hop Take, I’m actually writing a column about hops.
The LinkedIn-friendly version of this story is that we’ve got way too many of them. The U.S. hop market is teetering on the verge of a gutting glut. (Everybody needs to make more hop water pronto, thank you.) The real version is, of course, more complicated. But it’s important stuff, and to the extent that the beer business is exceptional, its close relationship with the hops market is part of the reason why. Now that we’ve cleared out the MBA-brained toothpaste jockeys, let’s get into it.
Nobody really disagrees that the U.S. hop market has a surplus. The United States Department of Agriculture’s 2024 National Hop Report, published in late December of last year, found that farmers across the country harvested 87.1 million pounds of the bright green cones, which was actually down 16 percent from 2023, when the haul was around 104 million pounds. Still, wrote Hop Growers of America’s Maggie Elliot in the November/December 2024 edition of The New Brewer, a trade magazine published by the Brewers Association: “Full canopies of bines remained hanging in some yard … in an unorthodox twist to the season, there were hops left behind.”
You’re not an MBA-brained toothpaste jockey, so you can probably guess the reason growers had to leave crops — and, effectively, cash — to wither on the vine bine. Demand for beer, particularly hop-heavy craft beer, has slowed significantly in the past half-decade. Hops can be used to make other products, but brewers are by far the biggest customers for the industry, so as they go, so go the growers. “It’s not that there isn’t any other use for hops,” says Stan Hieronymus, the prolific journalist behind Appellation Beer and Hop Queries and the author of several seminal books on hops, in a recent phone interview. The alternate applications are “minimal,” he says, but the bigger issue is that hops don’t grow like hothouse tomatoes. Bines grow for decades, so farmers are constantly trying to match future supply with future demand. In the ‘10s, as the craft-brewing industry boomed, they rushed to plant popular varietals like Citra and Mosaic, betting that those bines would produce in-demand hops for years to come.
The surge in demand called for more processing equipment, which is specialized, expensive, and only in use for five or six weeks each year. “It’s inefficient, and when it’s not used, it’s even less efficient,” says Hieronymus. Now, with craft brewery closures outpacing openings for the first time since 2005, craft beer volumes down annually for most of this decade, and drinker preference starting to shift from massive hop-forward beers, much of that infrastructure is idle. Those bets — some speculative, others made based on contracts with brewers that have since reneged, or rolled them forward — haven’t paid off. Now, the bill is coming due.
As unfamiliar as this problem may be for the broader CPG market (where products tend to rely on commodity inputs with a variety of uses by design), it will be painfully familiar to anybody in the U.S. wine business, which is desperately trying to get rid of grapes as demand for wine declines. Mother Nature offers one potential solution, should she so choose. For example, the 2024 harvest in California is shaping up to be low in tonnage and high in quality, a counterintuitive godsend for glut-panicked wine-grape growers.
If only hop farmers could be so lucky. “The joke I made with farmers is that it’s a good year for a bad year, and for the last couple years, that bad year hasn’t come,” Eric Sannerud, president of Sannerud Hop Consulting and publisher of the Hop Notes newsletter, tells Hop Take. (Though, Yakima Valley, home to three-quarters of the U.S. hop crop, did have a down year in 2024, which helped stave off a more severe oversupply.) “It would actually be good for the market in general if a bunch of stored hops went up in flames,” he says, laughing. A major warehouse fire actually did crater hop supply in the late aughts, sending prices soaring, albeit briefly. “Cascade went from $2 a pound to $30 a pound,” recalls Hieronymus. But the industry is much bigger now, to the point where one catastrophe can’t move the market. Besides, arson is generally frowned upon, so that’s not really a strategy per se.
The only other real solution for reducing supply, as wine-grape growers well know, is industry-wide coordination to rip out planted acreage. Here, things get very complicated very quickly. Because in addition to your basic prisoner’s dilemma, hops aren’t created equal, and neither are hop growers. To avoid getting stuck in the weeds (that’s a little agricultural joke for you), the major challenges are three-fold. They’re not made equally across geographic regions or varietals, because different parts of the industry are muddling through this glut differently. Applications vary: Effective cuts must match separate demands for alpha and aroma hops, and account for how advanced products (oils, Cryo Hops, etc.) are influencing the market. Trickier still, in the case of the 63 percent of acreage nationwide growing proprietary bines, hop varietals and the land they’re grown on are often owned by two different parties.
Unlike public hops, which anybody can grow or not grow at their discretion, proprietary hops — your Citras, your Mosaics, your Simcoes — are the intellectual property of the firms that develop them. A contract between farmer and owner dictates their cultivation. “If you build your farm around significant acres of a [proprietary hop] variety owned by Eric’s Hop Company, that is going to make you pretty good money” so long as that variety is in demand, explains Sannerud. Eric’s Hop Company markets and sells contracts for this proprietary hop, the farmers put acres under wire to fill them, everybody’s happy. So it went in craft brewing’s salad days, with the hottest haze-canneries (Other Half Brewing Co., for example) doing serious business in part by putting trendy proprietary hops front and center on their labels.
The era of neckbeards waiting in line for limited releases of India Pale Ales made with this or that designer hop is largely gone, but the bines that fed that boom remain. With demand on the wane, the incentives of the farmers and owners of those proprietary varietals no longer closely align. The former wants to cash out her crop for whatever she can get; the latter would rather she didn’t, because that would flood the market and drive prices down for that varietal. And so: “Whenever I see fit, I can tell you that you can’t grow them anymore, or that I won’t buy them from you anymore, or that I’ll pay you a [lower] sum for them,” says Sannerud.
Farmers tend to lack leverage in this situation. Like so many other aspects of beverage alcohol, the hop industry has consolidated tremendously over the years, from 250 farms half a century ago to “fewer than 70” today, as Hieronymus recently noted in Beer & Brewing. The market is shaped by its biggest players, Haas and Yakima Chief Hops; Sannerud calculates that the two control 40 percent of the country’s hop acreage. Regardless of whether individual farmers or the companies they work with (and in the case of Yakima Chief Hops, partly own; it’s a cooperative) are responsible for overestimating hop demand, proprietors tend to have the whip hand. “Your question is who’s getting screwed,” Hieronymus tells me when I ask how cuts get meted out. “In the case that somebody else has [your] plant rights,” you are.
If there’s good news on the horizon, it’s that the U.S. hop industry may have found the bottom. In a surprise to some observers, the big players did not call for more double-digit acreage cuts at the 2025 USA Hops Conference in late January like they have for the previous two years, suggesting that supply and demand are a few tactical cuts and a couple “good” bad harvests from equilibrium. That’s if beer sales hold to trend, of course. But in the longer term, Sannerud hopes the current hop quagmire pushes farmers to reconsider public hops as an option to balance out the excesses that have come with specialization and privatization of America’s hopyards — and craft brewers, to seek them out directly.
“This is my Hail Mary,” he says. “It would be better for most farmers, and it’d be better for most brewers. I would just love to live in that better world.” You just don’t hear people say that sort of thing about dish soap.
🤯 Hop-ocalypse Now
The modern American craft brewing business has always had a “long tail” — a vast majority of breweries that each produce a small amount of beer on their own. The same is true of the craft beer aisle, and it’s a bit of a problem these days, given the segment’s plateaued growth and new competitors for shelf space. Put another way: The craft beer market has a shitload of stock-keeping units (SKUs) doing very little sales volume. How many? According to Lagunitas’s head of sales, of the 19,000 SKUs active in the segment, the bottom half contribute less than 1 percent of its overall volume. Whoa. I’ll leave you all to make your own jokes about how many of those SKUs are in the Heineken-owned craft brewer’s own portfolio.
📈 Ups…
Brooklyn Brewery bid a bittersweet farewell to its Williamsburg brewhouse as it heads for new digs in the next neighborhood north… Happy 15th birthday to the New Belgium Brewery beer that became its Voodoo Ranger juggernaut… Berkshire Hathaway has amassed a $1.24-billion stake in Constellation Brands, new disclosures showed last week…
📉 …and downs
A Sapporo-Stone Brewery investor is big mad at the firm’s “destr[uction of] shareholder capital through acquisitions,” including the $91 million it just wrote down on Stone… Sierra Nevada Brewing Co. laid off a “small number” of workers last week… On-premise spending was up just 1 percent year-over-year in Bank of America’s new annual report, a far cry from the 26 percent growth of January 2023…
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