There has been growing alarm amongst US craft breweries resulting from AB InBev’s intention not to sell hops from its South African farms to the US market.
Despite accounting for only around one percent of the global hop supply, these South African hops are well known for their strong flavor and are increasingly used and in high demand among craft beer breweries.
As a background to this, following AB InBev’s 2016 merger with SAB Miller, the conglomerate now owns the entire South African hop supply.
Previously the businesses had each sold off excess hops through independent distributors to the US market; however this year they have announced their intention to keep 100 percent of the hops themselves.
As AB InBev legally own this supply and said the move comes as the result of a reduced yield for 2017, combined with the growing needs of its breweries.
Supporting this, AB InBev has stated:
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This year, South Africa suffered from low yields. 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. This means that less than five percent can be allocated to other Anheuser-Busch InBev breweries outside of South Africa.
Despite this, independent craft breweries who had been planning to use these hops, as well as industry figures, have cried foul.
San Francisco based brewery Cellarmaker tweeted: “Supporting AB InBev’s fake craft brands fuels this fire. Cutting off ingredient supply to indie brewers is wrong.”
A memo released by ZA Hops, a distributor which has previously sold on excess hops produced by AB InBev, said:
I was informed by SAB Hop Farms (part of ABI’s purchase of SAB-Miller) that ABI are commandeering all the hops that were to be allocated for distribution to North American craft brewers. The goal is to sell the hops internally to their acquired (former) craft breweries, even though they have not been able to sell all the hops as of yet. Regardless, they refuse to let US craft brewers buy any CY 2017 hops believing this will afford them a competitive advantage in an increasingly competitive marketplace.
With a growing share of the craft beer market, and the resources to push on with acquisitions, this is being seen by many US craft brewers as a power-play to muscle competitors out of the market.
However, as previously stated, this is completely legal and whilst it has been treated with scepticism, a reduced yield of hops would give a completely reasonable motive for AB InBev not to sell on their hops.