Blog

The Brewers Association (BA) Supply Chain Subcommittee comprises industry members who convene monthly to evaluate the status of the craft brewing supply chain and generate resources for brewers. These updates, created by brewers for brewers, aim to apprise BA members of the most recent developments in the brewing supply chain. Our purpose is to ensure that craft brewers stay informed about ongoing and urgent supply chain issues, while also keeping up to date on emerging future concerns.

As we enter the peak of summer, the winter storms and continued rains have offered some relief from drought conditions. However, as the wildfire seasons continue to intensify in North America, understanding the impact of smoke on flavor remains valuable. In this update, we highlight the current situation in Yakima, Washington, where hop growing conditions have been favorable, yet the industry awaits the volume implications, particularly in light of news regarding hop stock oversupply. You can find initial planting reports below.

Additionally, we address the persistent challenges surrounding the tight supply of CO₂ and shed light on localized issues arising as a result.

Finally, we present a user-friendly tool to assess your brewery’s water supply and quality, and provide initial reports on per- and polyfluoroalkyl substances (PFAS) and their implications for can production and water supply, along with relevant resources to comprehend the chemicals associated with PFAS.

Barley and Malt

The overall acreage of seeded barley in the U.S. has experienced a significant increase (+14%) compared to last year. The top five states in terms of barley acreage—Montana, North Dakota, Idaho, Wyoming, and Washington—all reported increases. This is noteworthy considering earlier reports had predicted a decline in acreage, possibly due to competition from corn, soybeans, and other commodities. As of June 27, 2023, approximately 12% of barley acreage was affected by drought conditions, showing a slight increase from previous weeks but still significantly lower than the 56% recorded at the same time last year. The substantial snowfall during the previous winter in the Mountain West and Pacific Northwest regions has provided temporary relief from dry conditions experienced in previous years. While winter precipitation will help support irrigated acreage, the escalating heat and dry weather conditions still pose a risk to dryland acreage.

You can access the June 30, 2023 United States Department of Agriculture National Agricultural Statistics Service Information (USDA NASS) barley acreage and stock reports, along with other historical acreage, production, and stock reports, from the American Malting Barley Association (AMBA) website. You can find additional barley data on the NASS website.

Canadian barley acreage has also seen an increase compared to the previous year (+3.6%). However, yields may remain stable or experience a decline depending on drought conditions. The Canadian barley crop holds significance for U.S. brewers as Canada is a major exporter of malting barley with 20% of its exports being directed to the U.S. In Europe, the situation varies, with positive reports emerging from France, Germany, and the United Kingdom. However, drought conditions and anticipated yield reductions are expected in Spain and Scandinavia. The ongoing uncertainty surrounding the Russia and Ukraine conflict further adds to the instability in the European market.

Amid concerns raised after Canadian wildfire smoke engulfed the Midwest and Northeast regions, questions have arisen regarding the potential impact of smoke taint on barley. Currently, there is no evidence suggesting that barley in the field is prone to absorbing smoke compounds. Brewers who are concerned are advised to utilize the hot steep method to assess any suspicious malt.

In other notable news, Skagit Valley Malting, a significant craft-malting company, has abruptly closed its operations. This maltster had contracted acreage in western Washington, which is an emerging region for malting barley production.

Hops

According to the USDA’s NASS report released on June 9, 2023, the overall acreage of hops strung for harvest has decreased by 8% (5,067 acres) this year. This marks the second consecutive year of decline, with a 12% decrease observed in 2022 compared to 2021. The primary cause appears to be an excess stock of hops at the grower and dealer levels, coupled with breweries holding reduced inventory in-house. The decline in acreage predominantly affects aroma hops, with Citra experiencing a 28% decrease, Mosaic down by 21%, and similar declines seen in Cascade, Chinook, and Comet. This trend is anticipated to persist into 2024. Conversely, high-alpha hops have seen an increase in acreage, with approximately 2,500 additional acres compared to the previous year. Germany is also observing a rise in high-alpha hop varieties, including Herkules, Polaris, and Titan.

The top hop varieties strung for harvest in 2023 are Citra, Mosaic, Cascade, Simcoe, and Columbus/Tomahawk/Zeus (CTZ). Several new hop varieties are gaining traction in the market, such as Helios, Lorien, Luminosa, McKenzie, Tango, YQH-1320, and Amira. Growing conditions have been favorable to ideal in Washington, Oregon, and Idaho from late May to mid-June, positively contributing to the overall hop production.

CO₂ and Gasses

Domestic CO₂ supply faces challenges due to increasing demand, especially during peak months like summer when industries such as beverages, food harvesting, and storage experience high CO₂ demand. Limited storage and back stock exacerbate the situation, with some suppliers at risk of customer allocation if unexpected plant closures or maintenance occur.

Another factor impacting supply is the availability of government incentives for manufacturers. A significant portion of U.S. commercial CO₂ supply comes from factories producing ethanol or ammonia, but now these producers are incentivized to sequester the by-product instead of selling it to refining companies. The full extent of the impacts of these incentives on the CO₂ supply chain is yet to be fully understood but has the potential to have a negative effect on the availability of beverage grade CO₂.

CO₂ supply in the US is highly regional, and the associated risks vary accordingly. Currently, only one region in the US has been placed on allocation, but this situation may change during the summer. Breweries should engage in discussions with their CO₂ suppliers to understand sourcing locations and associated risks. Implementing on-site CO₂ storage and exploring technologies to reduce CO₂ consumption or recapture it during the brewing process can help mitigate supply risks. The full extent of the impacts of these incentives on the CO₂ supply chain is yet to be fully understood; however, preliminary evidence suggests that they are exacerbating complications within the supply chain.