Turning Hops Into South Africa Wine?

Posted: Mar 01, 2018

It's almost impossible to grow hops in South Africa. The hot, dry climate is a killer.

But some of the beer-loving nation's farmers are beating the odds and rapidly cultivating a reputation as suppliers of the highly flavored varieties that craft brewers need.

The prospects are so good that Anheuser-Busch InBev (BUD), the world's biggest brewer, believes the country could become a net exporter of the flowers by 2021.

"We believe hops can be the next wine from South Africa," said John Rogers, director of raw material procurement and agricultural development for Africa at AB InBev.

South Africa is currently the 7th largest wine producer in the world, according to the International Organization of Vine and Wine, making roughly 11 million hectoliters per year -- about 4% of global production. It's also the 6th largest exporter, with total volumes ahead of the US.

In contrast, South African hops constitute just under 1% of global production due largely to the tough growing conditions.

The hops it manages to grow, however, are highly sought after for their flavor. Local aromatic varieties such as African Queen and Southern Passion are used, for example, by California's Faction Brewing Company to make its 2Hop Pale Ale.

Rogers says 424 hectares of land in South Africa's Western Cape province is the only place in the world where these distinctive aroma flavors can be grown on a commercial basis.

Through its mammoth takeover of SABMiller in 2016, Budweiser-brewer AB InBev acquired a significant presence in the country. (SABMiller began life more than a century ago as Johannesburg's Castle Brewery.)

Following the deal, the "King of Beers" pledged to spend more than $500,000 from 2018 to 2020 on hop farming and broader agricultural development in South Africa.

The program is focused on improving yields, which currently lie below the global average, by investing in better irrigation technology. They also plan to add more acreage to production.

It's an uphill struggle.

There was a 20% drop in South African hop production in 2017 due to a severe lack of rainfall.

Rogers says the 2018 crop is looking healthier, but the prospects for this year's harvest remain uncertain as the Western Cape remains gripped by the worst recorded drought in its history.

Hop farms in South Africa have had to battle the worst drought on record.

Changing global market dynamics could generate another headwind. In the US, South Africa's largest export market, growth in craft beer sales slowed sharply in 2017. At the same time, hop supply is increasing -- total US hop acreage has almost doubled in the past five years.

However, AB InBev's Rogers remains confident of turning South Africa into a net hop exporter as it accounts for such a small proportion of the global crop and demand continues for this "high-quality, niche product."

AB InBev's South African Breweries Hop Farms and their contracted private growers produce on average 850 tonnes of hops a year. AB InBev hopes to increase this to 1,000 by 2021 and channel all of the additional crop into the export market.

South African hops are used in local beers like Castle, but also exported to 20 countries around the world.

By Mary McDougall and Eleni Giokos
February 28, 2018
Source: Money.cnn.com

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