AB InBev Cuts Off South African Hops From Craft Brewers
This marks a change in policy from as recently as last year.
One of the recurring narratives when debating the differences between true craft breweries and big beer conglomerates is that craft brewers operate as a supportive community whereas the big boys are run like cutthroat businesses. In a week where Anheuser-Busch InBev really could have benefited from improving its optics following the fallout from their acquisition of Wicked Weed, news has emerged that the world’s largest brewing company is perfectly happy to stick to old stereotypes. The global conglomerate has decided to stop supplying South African hops to all but its own brands, a change in policy from as recently as last year when American craft brewers were able to buy these rare hops on the open market.
Admittedly, brewing beer is a business, and from a business standpoint, AB InBev’s move makes sense on the surface. SAB Hop Farms, previously owned by SABMiller (“SAB” used to stand for South African Breweries, just to help draw the connection), came under AB InBev’s control when it bought out SAB Miller last year.
South Africa isn’t a native hop-growing region, meaning a lot of research and development has been poured into this project to harvest a relatively small amount of hops: AB InBev put the number at “less than 1 percent” of global production. Add to that AB InBev’s assertion that the most recent season resulted in “low yield,” and it’s not hard to see why the massive brewer would want to keep this harvest to themselves.
But some outside of AB InBev’s walls are calling foul. Greg Crum, founder of ZA Hops, the brokerage that was selling SAB Hop Farms’ excess stock in the US, believes the move is “anticompetitive.”
“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,” Crum told his customers. “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.”
Part of Crum’s frustration is that he believes some of these hops will simply end up in cold storage, even though he says he showed AB InBev it could make more money by selling them on the open market. “They don’t want craft brewers to have them,” he claimed according to Brewbound.
Some brewers echoed Crum’s general sentiment. “Don’t think macro brew acquisitions matters? Today we learned AB InBev is cutting-off all indie breweries from buying South African hops,” San Diego brewer Modern Times Beer posted to Twitter.
Still, the amount of South African hops sold in the US last year was small, under 45,000 pounds by one estimate (compared to the 89 million pounds grown in the US in 2016). And even Brewers Association director Paul Gatza went on the record as saying what AB InBev does with the hops they grow is up to them.
“They can do what they choose to with those hops, assuming that they didn’t have contracts out with those hops to other brewers through brokers,” he told Brewbound.
Meanwhile, in announcing its decision, AB InBev even left the door open for next year. “Depending on the 2018 crop outcome, we may once again be able to sell more hops to breweries outside of South Africa,” ABI global hops procurement director Willy Buholzer said.
So what’s the big deal? Well, regardless of the reasoning, all of this reinforces the original debate point: Despite its continued interest in craft beer, AB InBev doesn’t seem to want to play with the craft beer community. Brewers were using these hops to make some interesting, experimental beers, and now, that ball will be entirely in AB InBev’s court. There’s nothing inherently wrong with running their business this way, it’s just not… let’s just call it, “not fun.”