InBev and the hop market

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They bought a hop farm previously owned by SABMiller/Coors. The hops were proprietary by SAB/Miller anyway, now they are proprietary for ABInbev. They aren't buying up hop farms in Yakima Valley. They bought a previously owned hop farm from another megaconglomerate for their beers in South Africa. The percentage of hops in S. Africa used in American beers are less than 1%.

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“This year, South Africa suffered from low yields,” wrote Willy Buholzer, A-B InBev’s global hops procurement director. “Previously, SAB has sold a small surplus of locally-grown hops to the market. Unfortunately this year we do not have enough to do so given the poor yield. More than 90 percent of our South African-grown hops will be used in local brands Castle Lager and Castle Lite, beers we’ve committed to brewing with locally-grown ingredients. In support of the local industry, we additionally sell hops to South African craft breweries.” He went on to explain that less than five percent would be allocated to other A-B InBev breweries outside of South Africa.

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But this isn’t quite accurate. What every article has overlooked is that while American brewers, for now at least, can’t get their hands on South African hops, there are microbreweries that can—in South Africa. The country now boasts almost 200 microbreweries, a number that has increased from just 50 in 2013.

While some brewers utilize imported ingredients, many rely heavily on SAB—and now A-B InBev—for both malt and hops. The question of ingredients was of particular concern to South African microbrewers when the takeover was in progress last year, but their fears were somewhat assuaged by a clause in the agreement stating that “the Merged Entity shall continue to supply hops that are currently supplied by SABMiller to Small Beer Producers on the same terms and conditions as currently offered by SABMiller or otherwise on reasonable commercial terms.” The supply of malt was similarly protected, albeit only for five years.

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Just why the allocations seem to be so hit or miss is not known, although A-B InBev’s statement does seem to hold some water. The southern region of South Africa has been suffering a serious drought since late 2016, with major water restrictions in place in some areas. One local hop farmer —a supplier to SAB Hop Farms who asked not to be named —said that the weather has had a serious effect on this year’s crop, which was harvested in February.

“This year we had the worst yields in many years because of the drought,” he says. “I was down over 50 percent in one field and not much better in my others. Our industry was down a lot this year, so it’s to be expected that there would be a huge shortage of hops.

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In March 2017, as the South African harvest drew to a close, A-B InBev hosted its annual hop workshop among the hop fields of the Outeniqua Valley, the only region of South Africa with a suitable climate for hop production. During the event, A-B InBev announced it would be expanding the hop farms by 100 hectares and upping production from 850 metric tons to 1,000 metric tons. Most interesting though, was the announcement that 250 metric tons per year would be reserved for export.

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When all is said and done, this furor was never really about South African hops. Few international breweries use them and even then only in one-off or occasional beers. Of course, craft brewers are always looking to innovative, but I doubt anyone will be truly mourning the loss of their Southern Passion Pale Ale or African Queen IPA when there are so many other great hops out there.

The fallout is more a matter of principle—the principle of A-B InBev attempting to control the supply of ingredients to the industry, a question that some posed after the company recently announced plans to acquire Wicked Weed Brewing of Asheville, North Carolina. And as worrying as this is to small brewers in the U.S., it’s infinitely more of a concern to South African brewers, whose remote location and weak currency make at least a partial reliance on these ingredients a key part of their survival.

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We get a unique mixture of guava, red berries, & melon. T

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We actually do get a lot of locally brewed beers using South African, New Zealand, and Australian hops.

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