×

Craft beer brewers caught on the hop by soaring temperatures

Hops-loving hipsters watch out. The craft beer industry is on high alert as blistering heat is hitting key growing areas in the U.S. and Europe, threatening this year's hop harvest.

The state of Washington's Yakima Valley, the top producer of "aroma" hops used to flavor craft beers, experienced sustained temperatures above 100F over the past month. Germany and Slovenia, which are also large hop growers, have also been hit by hot weather.

"The heat is causing the plants to wilt," says Paul Corbett, managing director at Charles Faram, an international hops trader based in the U.K.

The extreme heat comes as producers are increasing the acreage of aroma hops to keep up with demand from the booming craft beer industry, prompted by a craze for beers made by small independent brewers.


Inside the Brooklyn Brewery, maker of Brooklyn beers.
Getty Images
Inside the Brooklyn Brewery, maker of Brooklyn beers.

Craft beers use between four to 10 times more hops than an average lager produced by multinational beer companies. India pale ale has been brewed by the British for centuries, but in the U.S., where the current craze was born, it has become one of the best-selling craft beer styles.

With the $20 billion craft beer sector growing at double-digit rates every year for the past few years, so has the price of the specialist aroma and flavor hops favored by craft brewers. For sought-after varieties, prices have jumped from £10-£15 per kg to £25-£30 in recent years, Mr Corbett says.

The craft beer sector is the only bright spot in the brewery industry at the moment as beer production in 2014 fell for the first time since 1992, according to data from hop trader Barth-Haas Group.

Consumption in fast-growing markets such as China, Brazil, and Russia has been hit by financial austerity, slowing economic growth, and geopolitical turmoil, says Stephan Barth, managing partner of the company.

More from the Financial Times:

Cocoa price rise eats into chocolate bars

Britons work up an appetite for venison

Tokyo falls out of top 10 costliest cities

Hop growers have taken their cue from the high prices, increasing acreage of the aroma varieties. Overall acreage for hops in the U.S. north-west rose 16 percent this year from 2014, with the aroma acreage jumping 26 percent, according to the U.S. Department of Agriculture.

The hot temperatures could affect the expanded areas, say some experts. There is a concern that the young plants will not produce yields, and owners of the expanded acreage may not have access to water, says Bart Watson, economist at the U.S. Brewers Association.

A relatively dry winter with less-than-average snowfall has meant that reservoirs are low in the U.S. north-west, limiting the amount of irrigation that can be used to cool the plants.

"Hops just don't like extreme heat," says David Streit at weather consultancy Commodity Weather Group, who warns that there is "more heat to come in August".

Mr Watson says the hops industry needs to diversify regionally. At the moment, because the bulk of U.S. hops are grown in just three states — Washington, Oregan and Idaho, "[the market] is much more vulnerable to shocks", he says.