Has Craft Beer Peaked?

For the first time in over a decade, American farmers harvested fewer acres of hops in 2022 than the previous year.  This year, USDA projects hop acreage to decline further. 

Hop acres doubled from 2012 to 2021, driven by the rapid growth in craft breweries and the popular IPA style. As I wrote in 2020, "an IPA from your favorite craft brewery uses up to 50 times as much hops per pint as America's leading beer, Bud Light.  As craft brewing has grown, hops have become a booming crop even as total beer consumption declines."

So, is the craft beer boom over?  Or, at least, is the IPA boom over?

The number of craft breweries in the US continues to increase, although the pace has slowed in the last few years. There are about five times as many craft breweries in the US now as in 2010. 

Source: Brewer's Association

Production by craft breweries, which make up 13% of beer sold, has been relatively flat since 2015. Most craft production comes from regional breweries such as Sierra Nevada. Until 2019, a growing share came from microbreweries and taprooms, defined as breweries producing 15,000 barrels annually. Microbrewery and taproom production has been flat since 2019. 

Source: Brewer's Association; Description of market definitions

If demand for hops were dropping, then we would expect hop prices to decline. Lower prices would cause farmers to plant less hops. Hop prices remain high, so there's no sign that hop demand has dropped. 

Hop inventories are high and were increasing through 2022. In March this year, growers, dealers, and brewers held 186 million pounds in storage, which is almost double annual production. US hop farmers produced 101 million pounds in 2022.

Coupled with stable demand, high inventories necessitate a decline in production, as noted by Bart Watson of the Brewer's Association.

Source: USDA NASS Hop Stocks Report

The main hop varieties used in IPAs are Citra, Mosaic, Simcoe, and CTZ. Popular older varieties such as Cascade are commonly used in American pale ales.

The biggest declines in 2023 acreage are in Citra, Mosaic and Cascade. USDA does not report data on which varieties are in storage, but I take these declines as evidence that significant quantities of these varieties are in storage.  CTZ shows a dramatic increase in acreage in 2023, but this is mostly a return to 2020 and 2021 acreage after low plantings last year.

I concluded my 2020 article by writing: "The cool kids may think the hoppy-beer trend is out of hand, but there are few signs of a reduction in demand for hops." This remains true. Craft beer may have peaked, but demand appears to be stable. Lower 2023 acreage appears driven by a need to draw down inventories. 

I made the graphs in this article with this R code. 

PS: Since 2013, NASS has reported production for 55 different varieties of hops. For no other commodity do they report more than a few varieties. I have no idea why NASS provides such detailed hops data, but I'm glad they do.