Country Special Belgium 23. World Market Key Data

Transcription

1 The BARTH Report Hops 2012/2013

2 Contents World Market Key Data 2 Foreword 3 Cover Picture 3 Political Situation 4 European Union 4 Economic Situation 6 Key Data of the USA, China, Japan and Germany 6 World Beer Production 2011/ Beer Output Development 8 Market Analysis 8 Hop Forward Contract Rates 9 Hop Alpha Acid Production 9 Hop Alpha Acid Balance 10 Hop Acreage and Crop 2011/ Development Country Reports 2012 Crop/Europe Germany 14 Czech Republic 18 Poland 19 Slovenia 20 England 21 Spain 21 France 22 Country Special Belgium 23 Country Report 2012 Crop/America USA 23 Country Report 2012 Crop/Asia China 27 Country Reports 2013 Crop/Australia/Oceania Australia 28 New Zealand 29 Hop Plant Development Outlook Currency Exchange Rates 30 Conversion Table 30 Publishing Details 30 Members of Barth-Haas Group 31 Dry Hopping 32 World Market Key Data Hop area under cultivation in ha Hop production in mt Hop alpha production in mt Beer production in mill. hl 100,604 1,951 1,929 89,090 48,529 46,971 10,378 9, % -3.2% 0.7% -11.4% 9.5% -11.9% 3.5% 1.2% 2

3 ForeWord decided to find out just how each hop variety smells, what aromas it has and what effects these aromas can have in the finished beer. No other raw material used in brewing has such a great influence on the aroma, flavour and bitterness of the beer as hops. And no other raw material has as many aromas as hops. In the past, hop varieties were divided into aroma varieties and bitter or high alpha varieties and the hops were used in the brewing process accordingly. In comparison to earlier production processes which were mainly orientated towards hop bittering, US craft breweries focus their attention solely on the flavour profiles of their beers. Over the last few years this has resulted in a different view being taken of the hop as a raw material and of its potential for many aromas. For that reason we Therefore, in close cooperation with two world champion beer sommeliers and a perfumist, Joh. Barth & Sohn has so far itemised the aromas of 87 hop varieties and provided a detailed description of them in the Hop Aroma Compendium (48 varieties in Volume 1 and 39 in Volume 2). Unique aromas were discovered in each hop variety. As the original hop aroma can only give an indication of the ultimate hop aroma in the beer, the team developed a hop evaluation process using cold extraction, thus enabling them to arrive at an approximate aroma prediction for dry hopping. In view of the current interest being shown by the brewing industry, we have dedicated a separate article to this special brewing process on the last page of this report. Joh. Barth & Sohn is currently working on volume 3 of the Hop Aroma Compendium. This will feature further hop varieties from countries including Germany, the Czech Republic, Poland, Slovenia, England, China and New Zealand. The book is due to be published at the end of Volumes I to III will then catalogue approx. 130 hop varieties. Join us in discovering hops and their incomparable aromas in the interests of beer and of your customers! The Hop Aroma Compendium Volumes 1 and 2 are available in German and English and can be ordered from the publishing house Hans Carl. Source material from all over the world was required to produce this report. We would like to thank all those who provided us with information. About the Front Cover Beer flavour through dry hopping. The picture shows a fully loaded hop kiln with freshly harvested hops in the process of being dried. The title is a word play with Hop drying which is the necessary process to prevent hops from spoiling, being turned into Dry hopping the process of imparting wonderful flavour into great beers. 3

4 Political Situation The unstable situation in the Middle East and on the Arabian Peninsula continued to dominate the daily headlines. For two years president Bashar al-assad of Syria has been trying to put down a rebellion against his regime with unrelenting force. According to reports by the United Nations in April 2013, over 70,000 people have been killed and a quarter of the population have had to flee their homes since the outbreak of the civil war. The war in Syria also heightened tensions in Iraq and led to an increase in acts of terrorism there, mostly committed against Shiite Muslims and the security forces. After more than four decades of authoritarian rule, democratic elections took place for the first time in Libya in July In October 2012, Mustafa Abushagur, who had been elected prime minister, was dismissed by the Libyan parliament after only four weeks in office. The national assembly subsequently elected the former diplomat Ali Zeidan as his successor and approved the cabinet proposed by him. In Egypt, Mohammed Mursi was confirmed as the new president in June 2012 after winning a run-off. There were repeated, often violent, protests against the Islamic president who vastly extended his powers by amending the constitution. In a referendum in December 2012, a majority approved the highly controversial new constitution. The break-up of the grand coalition in Israel led to early elections. In March 2013 the formation of a new alliance resulted in a new government. Benjamin Netanyahu remained prime minister. In November 2012 and April 2013 Israel responded to rocket attacks by militant Palestinians with military measures in the Gaza Strip. In Africa, a new trouble spot appeared on the map. After a military coup in Mali in March 2012, Islamic fundamentalists conquered the north of the country. In December the UN Security Council authorized the deployment of peacekeeping forces in the crisis-stricken country. After France began a military operation in support of the government troops in January 2013, other countries gradually joined in the fight against the Islamists. In the longer term it is planned to have an African peacekeeping force to safeguard peace in Mali. In February 2013 under its new dictator Kim Jong Un, North Korea carried out a third nuclear test following those in 2006 and In March the regime declared a state of war with South Korea. Although already isolated and subjected to tough sanctions, the country also provoked the West with rocket tests and threatened the USA with a nuclear attack on several occasions. Barack Obama was re-elected for a second term in office as president of the United States of America in the elections in November The Republicans retained their majority in the US house of representatives, the Democrats theirs in the senate. Xi Jinping, who had been elected chairman of the Communist Party in China in November 2012, was declared the new president of the People s Republic in March 2013 as expected. He is also the head of the armed forces of the world s most populated country. In politically crisis-ridden Italy, in April 2013 the electoral assembly re-elected the 87-year-old retiring president Giorgio Napolitano as president. He was the only one trusted to break the deadlock after the parliamentary elections. Only ten days later, Enrico Letta of the Democratic Party was sworn in as prime minister. His cabinet replaced the 15-month government of the independent prime minister Mario Monti. For the first time since independence in 1947, in Pakistan a civilian government survived an entire period in office and handed over power to a democratically elected successor. In May 2013 the country elected the religious conservative politician Nawaz Sharif as prime minister. After 33 years on the throne, Queen Beatrix of the Netherlands, abdicated on 30 April Her eldest son Willem-Alexander succeeded her to the throne. He is the first male monarch of the Netherlands for 123 years. European Union (EU) European Currency Union (ECU) Political and economic stability were the focus of activity for the ECU. Associated with this was the safeguarding of peace within the Community and in Europe as a whole. The escalation in the banking crisis necessitated further political intervention in 2012 in order to placate nervous financial markets. The European Stability Mechanism (ESM) came into effect on 27 September The ESM constitutes an important element in an overall package designed to permanently strengthen the European Economic and Monetary Union, and will supersede the European Financial Stabilisation Mechanism (EFSM). The ESM s authorised capital amounts to 700bn EUR, of which 500bn EUR can be made available for loans. In addition to the 80bn EUR of paid-in capital, it has been provided with guarantees of 620bn EUR. 4

5 European Union (EU) On 13 December 2012, the EU finance ministers agreed upon a common supervisory authority for banks for the euro zone. Apart from the monitoring of banks, the establishment of supervision (expected 2014) is considered to be a prerequisite for direct ESM aid for banks. These funds will not be charged to national budgets, and will therefore have no effect upon demands for budget cuts pertaining to the respective country. Exceptions have been allowed to help distressed banks that require aid before direct ESM aid is available. Spain has already applied for 40bn EUR of aid for its financial institutions. The Spanish state will assume liability for any payment defaults. Spain s financial sector is suffering under the consequences of the property bubble that burst in late 2007/early Furthermore, severe austerity programmes and high unemployment are depressing economic development. In December 2012, Greece was granted further tranches of already appointed loans from the EU. An additional aid package was launched to counteract new shortfalls in the national budget up until Furthermore, due to the desolate economic state of the country, banks are having to contend with large loan defaults. In an effort to rescue Cyprus, in March 2013 EU ministers agreed upon a loan of more than 10bn EUR for the country. Cyprus must put up a further 13bn EUR itself, whilst complying with strict demands for budget cuts. The Euro Group elected a new president. In January 2013, European finance ministers elected Dutchman Jeroen Dijsselbloem as successor to Luxembourg s Jean-Claude Juncker. The EU is seemingly prepared to allow countries with excessive budget deficits more time to comply with the EU s self-imposed ceiling of 3 % of the respective country s gross domestic product (GDP). Crop Protection On 26 and 27 September 2012, representatives of all hop-growing EU member states met at the Hop Research Institute in Hüll. The objective of this meeting was the establishment of the Commodity Expert Working Group (CEG) Hops within the framework of the Technical Working Group Minor Uses. This transnational working group has the task of improving coordination among all participants involved in licensing plant protection products on the basis of Article 51 of EU Regulation (EC) No. 1107/2009 concerning the placing of plant protection products on the market. This working group is made up of 17 members from nine EU countries and the USA, and met for the first time in Brussels on 21 February 2013, in order to discuss further procedures and to set initial joint projects in motion. The Common Agricultural Policy (CAP) CAP reform from 2013 After the European Commission published the legislative proposals for the reform of the Common Agricultural Policy (CAP) in October 2011, EU institutions and interest groups entered into a debate on these proposals. In June and December 2012, the European Council published proposals for technical and political changes in two progress reports. In four reports, the European Parliament proposed approx. 8,000 amendments to the Commission s texts. Among these was a motion by members of the European Parliament from Germany calling for the support scheme for hop growers organisations in Germany to be maintained at the current level of 2.28m EUR per year. They also called for the attestation of equivalence for the import of hops from non-eu countries likewise to remain unchanged (Directive (EC) No. 1295/2008). Out of these proposed amendments, the European Parliament s Committee on Agriculture drafted 279 lines of compromise. These were voted upon by the Committee on Agriculture at the end of January 2013, and a preliminary negotiating mandate was granted. On 14 March 2013, the European Parliament accepted most of the Committee s resolutions by a majority, and therewith granted a final mandate for negotiations with the European Council and the Commission. On 19 March 2013, the European Union s agricultural ministers finally agreed upon outlines for further development of the Common Agricultural Policy. They also spoke out in favour of upholding the specific support measures for the hop growers organisations in Germany. On the basis of the results obtained by the EU Agricultural Council, the Irish council presidency is striving for political accord with the European Parliament by June To this end, the council presidency, the European Parliament and the European Commission have been holding talks since April 2013 in the hope of reaching compromise on the issues that are dividing the council and Parliament. Formal adoption of the CAP legislative package is planned for Autumn Delays in achieving political accord on the long-term financial framework of the EU mean that the new CAP regulations will also be late in coming into force will see transitional regulations in place, which taking into consideration the financial ceilings of the long-term financial framework will otherwise more or less constitute an update of existing regulations. The new agricultural policy regulations are to come into force from

6 Economic Situation There was a further decline in world economic growth. From a global perspective, the euro zone remained the greatest economic trouble spot. While the economies in other regions of the world recovered, Europe lagged behind. Following an increase of 3.9 % in 2011, the gross domestic product (GDP) of the global economy as a whole fell back to 2.6 % in The four most important economies in global terms developed differently (see key indicators). There was an increase in GDP in the USA and in Japan. China and Germany, on the other hand, saw their GDP decline. After achieving growth of 1.6 % in 2011, the countries of the European Union closed the year 2012 with a decrease in GDP of 0.3 %. By far the highest negative growth figure among the euro states was registered by Greece, with 6.4 %. The decisions of the world s major central banks reflected their continuing efforts to support the economic development of their respective countries. In July 2012, the Governing Council of the European Central Bank (ECB) lowered its benchmark interest rate to 0.75 %. The continuing recession in the euro zone prompted the ECB to further reduce the interest rate to 0.5 % in May The economies of Europe s crisis-stricken countries (Greece, Italy, Portugal and Spain) in particular failed to come to life. The benchmark rate had never been below one per cent since the currency union was established. The US Federal Reserve (Fed) extended its zero-interest policy and provided additional money supply by means of billion-dollar purchases of bonds (known as quantitative easing). In addition, it continued to exchange shortterm US treasury bonds for bonds with longer maturities. In June 2012 the People s Bank of China (PBC) also lowered its benchmark interest rate, fixing it at 6.31 % (-0.25 %). This was followed by a second reduction, to 6.00 %, in July The interest rate had been steadily increased from 2010 in order to prevent the economy from overheating. It had not been reduced since Regardless of the slowdown in economic growth, the international stock markets saw their leading indices rise significantly to reach a new all-time high. The rally began in early June Germany s leading share index (Dax), which had closed at 6,264 points on 31 May, reached an all-time high of 8,558 points on 22 May In similar fashion, the Dow Jones, which had closed at 12,393 points on 31 May 2012, also climbed to an all-time high on 22 May 2013, closing at 15,542 points. In July 2012, as a result of the debt crisis, the euro fell below the level of 1.22 USD for the first time in two years. During the period from June 2012 to May 2013, the highest exchange rate was noted at 1.37 USD on 1 February The decline in the price of crude oil continued in the second quarter of The lowest oil price was reached on 22 June 2012 when a barrel of Dated Brent FOB Sullom Voe crude oil was quoted at slightly below 89 USD. From August 2012 to March 2013 the oil price ranged between approx. 110 and approx. 119 USD. The downward trend that had already begun in mid-february led to a price of 101 USD on 31 May. The national debt of the USA has grown to more than 16 trillion dollars. In the US Congress, the Democrats and the Republicans failed to reach agreement on the budget. Therefore, on 1 March 2013 automatic spending cuts came into force, imposing massive mandatory savings on the state. On 21 March the Senate passed a budget proposal for the coming six months, thereby securing the USA s current state spending up to the end of the budget year on 30 September Key Data GDP growth (real) in % Balance of Payments in USD bn Balance of Trade in USD bn Inflation Rate Ø in % Interest Rate Ø in %*) Unemployment (as of ) in % The figures for 2010 and 2011 have been revised according to the latest statistics *) Interest rate for 10-year bonds. China: Lending rate for long-term loans. USA China % % 3.19% 9.6% % % 2.76% 9.0% % % 1.78% 8.1% % % 6.01% 4.1% % % 6.86% 4.1% % % 6.78% 4.1% Japan % % 1.18% 5.1% % % 1.13% 4.6% % % 0.86% 4.4% % % 2.78% 7.7% 6 Germany % % 2.65% 7.1% % % 1.56% 6.8%

7 WORLD BEER PRODUCTION 2011/2012 Europe America Africa Country Russia 98,140 97,400 Germany 95,545 94,618 United Kingdom 45,694 42,049 Poland 36,000 37,800 Spain 33,573 33,000 Ukraine 30,510 30,050 Netherlands 23,647 24,272 France 19,110 19,000* Belgium 18,571 18,500* Czech Republic 17,776 18,265 Romania 16,900 17,900 Italy 12,510 12,791 Turkey 9,800 9,980 Austria 8,917 8,927 Ireland 8,514 8,197 Portugal 8,299 7,500 Denmark 6,590 6,600* Hungary 6,241 6,159 Serbia 5,523 5,418 Bulgaria 5,020 5,240 Sweden 4,491 4,500* Belarus/ 4,690 4,285 White Russia Finland 3,978 3,784 Switzerland 3,546 3,515 Greece 3,700 3,500* Croatia 3,589 3,400* Slovakia 2,975 3,022 Lithuania 2,922 2,900* Norway 2,348 2,308 Slovenia 1,973 1,878 Estonia 1,360 1,443 Latvia 1,533 1,405 Moldavia 1,071 1,135* Bosnia- Herzegovina Georgia Macedonia Albania * Montenegro Cyprus Luxembourg Iceland * Malta Armenia TOTAL 549, ,168 Australia/Oceania Country Australia 17,380 17,350 New Zealand 3,000 2,800 Papua New Guinea Tahiti 187* 187* Fiji Islands New Caledonia 137* 137* Solomon Islands 63* 63* Samoa Vanuatu 9* 9* TOTAL 21,717 21,591 Country USA 226, ,314 Brazil 133,000* 132,800* Mexico 81,500* 82,500* Columbia 21,000* 22,550* Venezuela 23,500* 21,470* Canada 19,515 19,525 Argentina 17,000* 16,700* Peru 11,500* 13,200* Chile 5,960* 6,000* Ecuador 5,500* 5,925* Dominican 3,300* 3,400* Republic Cuba 2,660* 2,600* Panama 1,800* 2,050* Costa Rica 1,500* 1,660 Paraguay 1,500* 1,500* Guatemala 1,500* 1,400* Bolivia 1,300* 1,300* El Salvador 800* 1,100* Nicaragua 950* 1,000* Jamaica 950* 950* Uruguay 900* 950* Honduras 900* 845* Puerto Rico 700* 750* Trinidad 420* 430* Belize 300* 320* Guyana 260* 260* Bahamas 140* 140* Dutch 140* 140* Antilles Suriname 90* 90* Barbados 80* 80* St. Lucia 70* 70* Martinique 60* 60* St. Vincent 45* 45* Grenada 30* 30* St. Kitts 23* 23* Haiti 20* 20* Antigua 18* 18* Aruba 16* 16* Dominica 12* 12* Cayman Islands 4* 4* TOTAL 565, ,247 Asia Country China 489, ,200 Japan 56,000 55,465 Vietnam 27,800* 29,800 Thailand 20,600 23,700 India 18,500 19,500* South Korea 18,497 18,875 Philippines 15,700 15,800* Taiwan 5,132 5,461 Kazakhstan 4,250 4,801 Cambodia 3,100* 4,000* Uzbekistan 3,125 3,325 Malaysia 2,600 2,700* Indonesia 2,250 2,650 Laos 1,937 2,196 Iran 3,300 2,000 Sri Lanka 950 1,200 Singapore 1,100 1,100 Israel 1,020 1,100* Myanmar (Burma) 1,000 1,100* Mongolia Aserbaidjan Nepal Hongkong Tajikistan 300* 310* Kirgisistan Libanon * Turkmenistan 180* 200* Pakistan Jordan 80 85* Bangladesh Syria 79 0 TOTAL 679, ,214 Country South Africa 30,870 31,500* Nigeria 19,596 24,000* Angola 8,200* 9,500 Cameroon 6,000 6,900 Kenya 4,900 5,188 Dem. Rep. of the 4,800 5,000* Congo (Zaire) Ethiopia 3,264 4,400 Tanzania 3,500 4,000* Uganda 3,020 3,546 Congo 1,837 2,800* (Brazzaville) Namibia 2,300 2,500 Ghana 1,834 2,200* Simbabwe 1,946 2,121 Mozambique 1,830 1,993 Burundi 1,765 1,900* Ivory Coast 1,600 1,800 Tunisia 1,419 1,500* Gabun 1,100 1,200 Sambia 1,040 1,154 Madagascar 1,239 1,147 Rwanda 1,100 1,100* Burkina Faso 900 1,100 Algeria 1,015 1,000* Egypt 1,000 1,000 Benin Morocco Botswana Tschad Togo Mauritius Lesotho Sudan Réunion * Swaziland Malawi 210* 210* Eritrea Guinea (Conakry) Equatorial Guinea Central African Republic Liberia Senegal Sierra Leone * Mali Niger Seychelles Guinea-Bissau 45* 45* Gambia Cape Verde 8* 8* TOTAL 112, ,061 World total TOTAL 1,928,865 1,951,281 figures in 1,000 hl in italics: corrections for 2011 as stated in last year s report. * estimate A list of the Top 40 Countries according to ranking can be found in the Beer Production Market Leaders Report. 7

8 Beer output Development ,000 hl ,000 hl /- % rel /- % rel. The output volumes for 2011 quoted in last year's report have been revised in some cases. European Union 386, , % -0.7% Rest of Europe 162, , % -1.1% Europe total 549, , % -0.8% North America 327, , % 1.2% Central America/Caribbean 16,018 16, % 4.5% South America 221, , % 0.6% America total 565, , % 1.0% Asia 679, , % 1.2% Africa 112, , % 11.3% Australia/Oceania 21,717 21, % -0.6% WORLD TOTAL 1,928,865 1,951, % 1.2% Due to subsequent corrections to the beer output volumes for 2011, production volume was in fact 3.7 m hl higher than stated in last year s report. Based on the updated 2011 output figure, beer production in 2012 rose by 22.4 million hectolitres, or 1.2 %, worldwide. The five most important beer-producing countries are still China, the USA, Brazil, Russia and Germany. Europe failed to match the previous year s result. A decrease in beer output volumes was registered both in the European Union states and in other European countries. Great Britain recorded by far the greatest decline (-3.6m hl). In contrast, Poland and Romania achieved an increase in production of 1.8m hl and 1.0m hl respectively. The development in North America was also on the positive side. The USA posted an increase of 2.8m hl. South America s total volume was significantly reduced by the fall in output in Venezuela of 2.0m hl. America increased overall output by 5.8m hl. For many years China had been the outright leader in the list of countries with the highest growth in beer output. In 2012, in Asia it was led by Thailand (+3.1m hl), Vietnam (+2.0m hl) and India (+1.0m hl), with China increasing output by only 0.3m hl. With an increase of 12.7m hl, Africa kept up its vigorous growth in beer production which has been maintained since In 2012, Nigeria (+4.4m hl) was the country with the highest growth in output volume worldwide, recording the greatest increase amongst the African countries for the third year in succession. Angola (+1.3m hl) and Ethiopia (+1.1m hl) also contributed to the good result in Market Analysis Crop year 2012 illustrated that the years of market imbalance between supply and demand are now approaching an end. After four years in which an annual surplus of between roughly 1,400 mt and 3,200 mt alpha was produced, the surplus sank considerably to only approx. 460 mt alpha. This improvement in market balance was due entirely to a further reduction in world acreage for the 2012 crop, amounting to 1,558 ha less than for the 2011 crop, as well as the unrelenting growth of the US craft beer movement and its enthusiastic imitators throughout the world. Craft brewers in the USA, for example, required about a quarter of the local hop production for the manufacture of their stronglyhopped beer creations with their wide spectrum of flavour characteristics. Thus this segment, with its many small players, required almost the same amount of hops from the 2012 crop as the rest of the US brewing industry with its market share of over 93 %. As further strong growth in the US craft sector is to be expected, it is likely that, in the USA, this segment will require more hops from the 2013 crop than needed for the production of the mainstream US beers. This brings with it a wide range of consequences, which have already been noticeable during the 2012 crop marketing period and which must be carefully monitored in the future. The USA was the only major hop-growing country in which hop acreage significantly increased. An increase of approx. 1,400 ha for aroma and flavour varieties faced acreage clearance of approx. 500 ha in the category of high alpha varieties. With a total of 55 hop varieties, the USA has cultivated by far the widest spectrum of varieties in the world, followed by Germany with 27 varieties. In both countries, the range of varieties has increased meteorically in the last few years; in the USA this was particularly due to the demand from craft brewers who, when buying, are more concerned with quality and aroma diversity than with price. At the moment, growers in the United States are reducing the high alpha segment in favour of cultivating aroma and flavour varieties. Up until 10 years ago, it was presumed that the US hop industry would be exporting approx. 80 % of its predominantly high alpha hop production. However, in the meantime 8

9 Market Analysis this figure has been reduced to just 50 %, due to the rapid growth of the US craft beer segment with its demand for aroma and flavour hops. The remaining 50 % is equally divided between US craft brewers and the US mainstream brewers. As a result, Germany has inherited the leading role as most significant supplier of alpha acids to the world market. However, where prices are concerned, this market share leadership has not yet been particularly valuable, as past surpluses are still depressing the market. On the whole, the international brewing industry will be increasingly dependent upon the supplier countries USA and Germany, in particular upon the Yakima Valley and Hallertau growers. US and German share of the world market: Crop Acreage Volume Alpha acid % 70% 78% % 67% 77% Due to the continued weak spot and forward contract prices for almost all high alpha varieties in Europe, and due to the far from excessive spot and forward contract prices for many European aroma varieties, the number of growers in Germany and other European countries is simultaneously dwindling from year to year. The situation can definitely be described as complex. On the one hand, due to past surpluses, world hop market prices are at rock bottom, particularly where the high alpha segment is concerned. The warehouses of hop marketing companies are full to the brim with sold but still undelivered goods. On the other hand, the market is witnessing a boom in demand for hop varieties required by the US craft industry - a boom that has been barely noticed by the international brewing industry. In order to escape the price malaise that is affecting the entire hop market, all hop-growing countries and hop growers are increasingly trying to produce varieties that can be sold in this segment. The market is swaying between the euphoria of those who are supplying the brewers for whom hops are the grapes of beer and are thus prepared to pay accordingly, and the depression affecting the majority of growers. Against this background, further reductions in acreage are clearly to be expected in the future. Ultimately, it will be down to the brewing industry to determine the path the world hop industry will take in the future. If the US craft beer industry continues to grow as it has done, and should similarly stronglyhopped beers continue their positive development in other countries, the much larger mainstream brewers may well find themselves in a genuine purchasing race in the future. This will initially relate to specific varieties, but may well then spread to include hop acreage in general. HOP FORWARD CONTRACT RATES Forward contract rates (as per spring 2013) Country Germany 80% 70% 55% 35% USA 100% 90% 75% 60% Czech Republic 100% 100% 95% 90% Poland 75% 75% 80% 85% Slovenia 65% 45% 40% 40% England 70% 40% 30% 20% Due to insufficient availability of official data, the forward contracting rates are based on estimates and have been calculated on the basis of the acreage expected for 2013 and the long-term average yield. HOP ALPHA ACID PRODUCTION Alpha acid production world-wide has been divided into variety groups: GROUP I: Fine aroma hops GROUP II: Aroma hops GROUP III: Bitter hops/ High Alpha hops such as Hallertau Mittelfrueh, Hersbruck Spaet, Klon 18, Lubliner, Saazer, SA-1, Spalt, Savinjski Golding, Styrian Golding (Celeia), Strisselspalt, Tettnang. such as Aurora, Bobek, Cascade, Cluster, First Gold, Fuggles, Golding, Hallertau Tradition, Mount Hood, NZ Hallertau, Opal, Perle, Saphir, Smaragd, Spalt Select, Sterling, Willamette. such as Admiral, Chelan, Chinook, Columbus/Tomahawk/Zeus (CTZ), Galena, Hallertau Magnum, Hallertau Merkur, Hallertau Taurus, Herkules, Kirin Flower, Marco Polo, Marynka, Millennium, Northern Brewer, Nugget, NZ Pacific Gem, Phoenix, Pride of Ringwood, Super Pride, Target, Tsingtao Flower, Victoria, Warrior. Varieties with a long-term average alpha of up to 4.5% Varieties with a long-term average alpha of over 4.5% 9

10 HOP ALPHA ACID PRODUCTION Group I - Fine aroma hops Germany 41.9 % (previous year 39.8 %), Czech Republic 36.6 % (previous year 43.2 %) Group II Aroma hops Germany 46.2 % (previous year 53.7 %), USA 34.2 % (previous year 24.0 %) With the world hop crop divided into these groups, alpha acid production was as follows: Group Crop share Crop mt Alpha Ø Alpha mt Alpha share Crop share Crop mt Alpha Ø Alpha mt Alpha share I 10.9% 10, % % 10.5% 9, % % II 28.2% 28, % 2, % 30.1% 26, % 1, % III 60.9% 61, % 7, % 59.4% 52, % 6, % TOTAL 100.0% 100, % 10, % 100.0% 89, % 9, % Group III Bitter hops/ high alpha hops USA 40.9 % (previous year 41.5 %), Germany 38.5 % (previous year 36.9 %) Minor corrections have been made to the 2011 figures for crop and alpha volume quoted in last year s report. Although the alpha acid content averaged 10.3 %, as in the previous year, alpha production fell by 1,239 mt year on year as a result of the lower world hop production volume in Comparing the 2012 crop year with 2011, the share of the bitter and high alpha variety group in total production volume dropped by 1.5 %. At the same time, the average alpha acid content increased and so, despite the lower hop production volume, did the share of the alpha produced. With the global growth in the craft brewing segment, consideration of the hop market purely in terms of alpha acid is becoming increasingly less important. There was no change to the ranking of the top alpha producers. Germany was again in first place with 40.2 % (2011: 40.5 %), followed by the USA with 38.2 % (2011: 36.3 %) and China with 7.6 % (2011: 8.7 %). The alpha acid values upon which the calculations are based are recorded using the method of EBC analysis 7.4 % as is at the time of processing (ToP). Hop Alpha Acid Balance Alpha supply Crop year 11, Brew year Surplus/Deficit ,929 mt a / ,219 mt a / ,414 mt a / 10,500 10,000 9,500 9,000 10,424 mt a 10,952 mt a 9,477 mt a 10,378 mt a 9,139 mt a ,909 mt a / 2013* mt a / Alpha demand (Brew year) Alpha production (Crop year) * Estimated demand 8,500 8,000 7,500 7,000 6,500 Brew year Hopping rate 7,495 mt a g a/hl 7,733 mt a g a/hl 8,063 mt a g a/hl 8,469 mt a 8,682 mt a* * 4.34 g a/hl 4.35 g a/hl The growing craft beer sector is increasingly influencing the way in which the alpha acid balance is determined. This has made it necessary to establish a new basis for calculating alpha demand. The alpha acid balance shown here is based on this new method. The 2008 brewing year (2007 crop year) represents the zero point for the calculated hop surplus. As in the past, these statistics do not take into account the alpha degradation that occurs during the time between processing the hops and their actual use in the brewing industry or the approx. 200 mt of alpha required for use outside the brewing industry. The alpha surplus produced in the crop years 2008 to 2012 for the brewing industry thus amounts to almost 9,000 mt of alpha. Estimated alpha demand for the 2013 brewing year is based on an assumed increase in beer output volume of approx. 2 %. 10

11 HOP ACREAGE AND CROP Acreage ha Production mt Ø-Alpha % Alpha mt Acreage ha Production mt Ø-Alpha % Alpha mt Germany Hallertau 15,229 32, % 3,699 14,258 29, % 3,238 Elbe-Saale 1,392 2, % 347 1,284 2, % 319 Tettnang 1,222 1, % 106 1,215 1, % 84 Spalt ,7 6.8% ,2 6.2% 30 Other 20 43,4 9.0% ,4 8.5% 4 Total 18,228 38, % 4,199 17,128 34, % 3,674 Czech Republic Saaz 3,516 4, % 196 3,400 3, % 134 Tirschitz ,9 4.5% ,8 4.1% 22 Auscha ,8 4.3% ,3 4.2% 22 Total 4,632 6, % 263 4,366 4, % 178 Poland 1,564 2, % 219 1,510 1, % 157 Slovenia 1,379 2, % 190 1,160 1, % 103 England 1,114 1, % 104 1,054 1, % 118 Spain ,5 12.8% , % 118 France ,6 5.5% ,9 5.3% 40 Austria ,1 8.5% ,9 7.9% 35 Romania ,0 9.4% ,0 10.2% 12 Slovakia ,8 4.7% ,0 4.2% 9 Belgium ,7 9.4% ,4 9.7% 23 Bulgaria 150* 180,0* 8.8% * 160,0* 8.0% 13 Portugal 17 26,6 9.5% ,5 9.5% 2 Hungary 6 11,4 11.7% 1 0 0,0 0.0% 0 Netherlands 3 2,6 10.0% 0 3 3,6 9.6% 0 European Union 29,009 53, % 5,243 27,226 46, % 4,482 Ukraine ,0 7.0% ,0 6.2% 28 Turkey ,7 9.6% ,0 9.2% 30 Russia ,0 4.9% ,0 4.7% 7 Belarus/White Russia 53 55,0 10.0% ,0 9.5% 5 Switzerland 18 37,4 8.8% ,8 7.9% 3 Croatia 6 8,0 9.6% 1 0 0,0 0.0% 0 Rest of Europe 1,301 1, % 91 1,104 1, % 73 EUROPE 30,310 54, % 5,334 28,330 47, % 4,555 in italics: corrections for 2011 as stated in last year s report. * estimate Hungary and Croatia stopped hop growing in USA Washington 9,438 23, % 3,062 10,133 22, % 2,857 Oregon 1,701 3, % 374 1,809 3, % 384 Idaho 916 2, % , % 249 Total 12,055 29, % 3,767 12,923 27, % 3,490 Argentina ,1 9.2% ,5 10.6% 30 Canada 42* 37,8* 8.5% 3 63* 55,0* 8.0% 4 AMERICA 12,285 29, % 3,791 13,184 28, % 3,524 China Xinjiang 2,725 8, % 526 2,536 6, % 411 Gansu 1,733 4, % 374 1,453 3, % 282 Total 4,458 13, % 900 3,989 10, % 693 Japan ,0 6.5% ,7 6.2% 21 India 35 19,1 12.0% ,8 12.0% 2 ASIA 4,674 13, % 924 4,187 10, % 716 South Africa ,0 15.4% , % 138 AFRICA ,0 15.4% , % 138 Australia 454 1,044,0 12.1% , % 140 New Zealand ,0 9.8% ,0 9.5% 66 AUSTRALIA/OCEANIA 804 1, % , % 206 WORLD 48, , % 10,378 46,971 89, % 9,139 11

12 DEVELOPMENT HOP AREA UNDER CULTIVATION in HA 70,000 60,000 58,903 57,297 56,787 50,000 56,237 53,500 50,639 50,273 49,466 50,455 52,029 48,529 46,971 40, HOP PRODUCTION in MT 120, , , , ,000 99, ,932 94,385 99, ,604 90,000 92,266 91,584 80,000 87,056 85,585 89,

13 ,000 HOP ALPHA PRODUCTION in MT 10,952 * not taking into consideration the quantities destroyed in warehouse fires 10,000 10,424 10,378 9,000 8,646 8,749 9,477 9,139 8,000 8,103 7,903 7,663 7,000 6,000 6,722 7,103* BEER PRODUCTION IN MILLion HL 1,929 1,951 1,900 1,863 1,800 1,700 1,696 1,787 1,819 1,833 1,600 1,552 1,603 1,500 1,479 1,400 1,424 1,443 1,300 1,

14 Germany Alpha production in mt 4,500 3,984 4,000 3,500 3,244 3,000 4,199 3,674 3,419 2, Rounding differences of the acreage may cause differences in addition. 14 Area Variety Development of acreage Acreage ha Development of production Ø Yield mt/ha Production mt / Hallertau Perle 3, , , , Hallertau Tradition 2, , , , Hersbruck Spaet , , Hallertau Mittelfrueh Spalt Select , Saphir Other Aroma Total Aroma 8, , , , Northern Brewer Other Bitter Total Bitter Hallertau Magnum 3, , , , Herkules 2, , , , Hallertau Taurus , , Nugget Hallertau Merkur Other High Alpha Total High Alpha 6, , , , Other Total Hallertau 15, , , , Elbe-Saale Perle Hallertau Tradition Other Aroma Total Aroma Northern Brewer Total Bitter Hallertau Magnum , , Herkules Other High Alpha Total High Alpha 1, , , Other Total Elbe-Saale 1, , , , Tettnang Tettnang Hallertau Mittelfrueh Perle Other Aroma Total Aroma 1, , , , High Alpha Other Total Tettnang 1, , , , Spalt Spalt Spalt Select Hallertau Mittelfrueh Other Aroma Total Aroma High Alpha Other Total Spalt Rhen.-P./ Bitburg Aroma High Alpha Total Rheinpf./Bitb Total Aroma 9, , , , Total Bitter Total High Alpha 7, , , , Total Others GERMANY TOTAL 18,228-1,100 17, , ,475.21

15 Germany Farm Structure There were 1,294 hop-growing farms in Germany in the reporting period. The downward trend thus continued, with 83 (or 6 %) fewer than in the previous year. In the Hallertau region alone, 73 producers stopped farming hops (-6.5 %). Hop acreage also decreased by the same percentage. The average acreage cultivated by hop farms in Germany was 13.2 ha, with farms in the Hallertau region averaging 13.6 ha. In both cases, these figures remained unchanged. Growth, Crop Estimate and Weights The winter of 2011/2012 began with mild conditions and plentiful rainfall in December. These mild and humid conditions continued into January, with the result that the water supply in the soil was fully replenished. In early February 2012 a 14-day cold period began, with temperatures falling to below 20 C. While the hop plants in the Hallertau and Tettnang regions survived this period unscathed thanks to the protection of the snow cover, severe black frosts in the eastern Elbe-Saale region caused extensive winterkill damage. As in the previous year, a period of unusually warm and dry weather conditions in March caused the soil to dry out rapidly, allowing the spring work to be carried out in perfect conditions from the middle of the month. However, in the last week of April, rising temperatures accelerated the development of the hop plants and led to rapid vertical growth which made it necessary to train the shoots under considerable time pressure in some cases. Most of the plants had been strung by the second week of May, without any additional delay. In the second half of May, growing conditions were favourable, with isolated thundery showers and otherwise only a slight amount of rainfall. This was followed in June by abundant rainfall which provided the hop plants with a sufficient supply of water. By mid-month most of the hop varieties had reached trellis height. Plant development was therefore well within the long-term average. Due to rising temperatures towards the end of June there were widespread cases of infestation by common spider mites. From early July initial symptoms of wilt could be observed again this year, but the extent of infestation was in most cases significantly lower than in the previous two years. One reason for this was the above-average incidence of rainfall in August. This provided a sufficient supply of water, but at the same time created favourable conditions for downy mildew infection, which made it necessary to take intensive measures to protect the hop plants. On 23 August, a thunderstorm with gale-force winds and hail caused damage in the northern part of the Tettnang region. Hop plants covering an area of approx. 250 ha were affected to varying degrees, with approx. 40 ha suffering severe damage. Towards the end of August, the development of the hop plants was still within the long-term average and picking of the early-maturing varieties began from 25 August. Thanks to optimum weather conditions, the hops could be brought in with high visual quality. The volume harvested in 2012 was 34,475 mt, which was very close to the official estimate of August Compared with the previous year, the volume produced was 3,635 mt, or 9.5 %, lower. In the last five years the acreage developed as follows: Variety 2008 ha Perle 3,297 3,380 3,403 3,396 3,203 Hallertau Tradition 2,503 2,605 2,624 2,757 2,748 Hallertau Mittelfrueh 2,034 1,150 1,069 1,065 1,012 Tettnang Hersbruck Spaet Spalt Select Saphir Spalt Other Aroma ) Total Aroma 10,502 9,866 9,800 9,895 9,530 Northern Brewer Other Bitter ) Total Bitter Hallertau Magnum 4,277 4,266 4,202 4,039 3,509 Herkules 1,868 2,388 2,542 2,614 2,642 Hallertau Taurus 1,140 1,106 1, Nugget Other High Alpha ) Total High Alpha 7,686 8,145 8,152 7,924 7,231 Other ) GERMANY TOTAL 18,695 18,472 18,386 18,228 17, ha 2010 ha 2011 ha 2012 ha Percentage per variety group in 2012: Aroma varieties 56 % Bitter varieties 2 % High alpha varieties 42 % Rounding differences of the acreage may cause differences in addition. 1) Other aroma varieties include: Hersbruck Pure, Opal, Saaz, Smaragd 2) Other bitter varieties include: Brewers Gold 3) Other high alpha varieties include: Hallertau Merkur, Target, Zeus 4) Others include: Record, others/breeding selections 15

16 Germany Variety table page 15 Acreage and Variety Development Acreage in Germany fell for the fourth year in succession. Compared to the previous year, the reduction amounted to 1,100 ha, or more than 6 %. The total hop acreage of 17,128 ha in 2012 represents the lowest level since Germany was reunified in The decline in acreage was mainly caused by clearances among the high alpha varieties Hallertau Magnum (-530 ha = 13 %) and Hallertau Taurus (-132 ha = 14 %) as well as among the aroma varieties Perle (-193 ha = 6 %) and Spalt Select (-181 ha = 25 %). In total, the decline in acreage was 365 ha (3.7 %) in the aroma variety group, 52 ha (14.1 %) among the bitter varieties and 693 (8.7 %) among the high alpha varieties. Contract Market After the close of hop year 2011, the growers in the Hallertau region received their first offers of contracts in March The hop traders were interested in forward contracts for the varieties Hersbruck, Herkules and Hallertau Taurus. In May and again in August the prices for high alpha varieties were raised, depending on the term of the contract. Price adjustments and a widening of the variety range in September proved highly successful in encouraging growers to sell. The traders took out contracts on significant quantities. Purchasing of limited quantities of Hallertau Mittelfrueh hops continued throughout the winter in the Hallertau region. Selected growers were offered a contract price of 6.00 EUR/kg for crop years 2014, 2015 and In February 2013, new prices were offered for Hersbruck and Saphir hops. There were no changes in the remaining contractual offers for the varieties Hallertau Tradition, Perle, Hallertau Magnum, Hallertau Taurus and Herkules to the terms offered in autumn One hop trader offered selected growers purchase contracts for their total harvested volume in crop year 2013, with specified minimum and maximum prices. These terms were offered for the following varieties: Hersbruck (min EUR/kg, max EUR/kg), Perle (min EUR/kg, max EUR/ kg), Hallertau Tradition (min EUR/kg, max EUR/kg), Hallertau Taurus and Herkules (min EUR/kg alpha acid, max EUR/kg alpha acid). The prices for the varieties Hersbruck, Spalt Select, Hallertau Tradition, Perle and Nugget were adjusted again in April. The prices for Hallertau Magnum and for Herkules and Hallertau Taurus were the same as those offered at the end of September In the Tettnang region, forward contract negotiations also began in March In autumn 2012 traders were primarily interested in the Tettnang variety. The terms offered for Herkules hops were the same as those offered in the Hallertau region. The Tettnang growers were offered the opportunity of forward contracts for the Hallertau Mittelfrueh variety from crop year Contractual offers an overview Area / Time Variety Price basis Variety names: Hallertau Magnum (HM) Hallertau Mittelfrueh (HA) Hallertau Taurus (TU) Hallertau Tradition (HT) Herkules (HS) Hersbruck (HE) Nugget (NU) Perle (PE) Saphir (SR) Spalt Select (SE) Tettnang (TE) Hallertau March 2012 HE EUR/kg HS/TU EUR/kg α Begin. of Sept HS/TU EUR/kg α End of Sept HE EUR/kg SE EUR/kg SR EUR/kg HT EUR/kg PE EUR/kg HM EUR/kg HS/TU EUR/kg α February 2013 HE EUR/kg HE EUR/kg SR EUR/kg April 2013 HE EUR/kg SE EUR/kg HT EUR/kg PE EUR/kg NU EUR/kg α NU EUR/kg Tettnang March 2012 TE EUR/kg HA EUR/kg Sept./Oct TE EUR/kg HA EUR/kg

17 Germany Spot Market 2012 Purchasing of non-contracted hops began with offers for all varieties in the first week of September. At the same time, as in previous years, the major hop trading companies offered growers the opportunity of placing their unsold hops in their marketing pools at advance payment prices. Within only a few weeks most of the hops had been sold or had been consigned to the various marketing pools. Purchasing terms at fixed prices on a stable price basis were as follows: Hallertau Mittelfrueh 5.00 EUR/kg, Spalt Select 2.50 EUR/kg, Hallertau Tradition 1.80 EUR/kg, Hersbruck 1.80 EUR/kg to 2.50 EUR/kg, Perle 1.50 EUR/kg, Saphir 3.10 EUR/kg, Opal 1.80 EUR/kg, Northern Brewer 2.00 EUR/kg EUR/kg of alpha acid was offered across the board for the high alpha varieties. In the Tettnang region, the Tettnang variety was purchased at a price of 6.50 EUR/kg from early September In early October the price offered rose to 6.80 EUR/kg. No fixed prices were offered to the Tettnang growers for the Hallertau Mittelfrueh variety. Depending on the trader, the advance payment prices paid for this variety within the framework of the purchasing initiatives and pools were between 2.00 EUR/kg and 3.00 EUR/kg. At the time of going to press, these hop purchases had in most cases not yet been settled. The prices for contracted and non-contracted hops reflect the extent to which overproduction in recent years has affected the hop market, particularly in the high alpha segment. Alpha Acids The average alpha acid levels in the hops harvested in 2012 were mostly above the mean value of the last 10 years, although for a considerable number of varieties the figure was below the average of the last 5 years. Allowing for the production volumes per variety, the alpha yield amounted to 3,674 mt. The volume of alpha produced was therefore 525 mt, or 12.5 %, lower than in crop year 2011, which was a very good year in terms of alpha acid values and yields per hectare. Details of the alpha acid levels of the main German varieties: Alpha acid values as is, as per EBC 7.4, in freshly harvested hops. All other alpha acid values mentioned in the Barth Report were recorded on the basis of % as is, EBC 7.4 ToP (Time of Processing). Area Variety Ø 5 Years Ø 10 Years Hallertau Hallertau Mittelfrueh Hersbruck Spaet Saphir Opal Smaragd Perle Spalt Select Hallertau Tradition Northern Brewer Hallertau Magnum Nugget Hallertau Taurus Hallertau Merkur Herkules Elbe-Saale Hallertau Magnum Tettnang Tettnang Hallertau Mittelfrueh Spalt Spalt crop with good average alpha acid levels Values in % The alpha acid table shows the average alpha acid values measured in freshly harvested hops by members of Arbeitsgruppe Hopfenanalyse (AHA) on the fixed date of 15 October. The members of AHA are the in-house laboratories of the German hop-processing plants, the Bavarian state institute of agriculture's hop department (Hüll), BLQ Weihenstephan, VLB Berlin and Labor Veritas (Zurich). These values constitute the basis for any adjustments of supply contracts containing alpha clauses between the brewing industry and the hop industry. The alpha clause was devised jointly by the German brewers' association and the hop industry association and was applied for the first time as a result of the 2003 harvest. It is a contractual provision used solely in forward contracts for aroma varieties. The average values serve as the basis for parties concluding new supply contracts containing an alpha clause. 17