Heat, Hops, Hallertau – Exploring Implications of Climate Change for the German Beer Sector

In the past decades, the beer sector has faced many changes, among them the rise of global beer corporations, the declining demand in many industrialized nations, growing thirst for beer in Africa and Asia, numerous crop failures of hops and barley and the rise of craft beer breweries. While some of these trends might not last, one of them is here to stay, according to the Intergovernmental Panel on Climate Change (IPCC): even if greenhouse gas emissions are reduced drastically, with the changing climate there will be more droughts and extreme weather events in many regions of the world in the coming decades. This affects the productivity of agriculture and will impact the financial bottom line of the actors in the beer sector. Economic research shows that the impacts of climate change will have dire consequences on the global economy if adaptation to those changes is not undertaken (e.g., Stern Report 2006; Tol 2009). However, little is known about the consequences of extreme weather events and climatic changes for the beer sector. Anecdotal evidence and data for prices of barley and hops suggest that prices for both products, especially hops, are sensitive to droughts, hail, and heavy rain events. Using time series on temperature and precipitation, soil moisture and crop yields, in this article we investigate how climatic conditions in one of the world’s most important hop growing regions, the Hallertau in Germany, have changed over the last decades. Focussing on two specific extreme weather events, we investigate how they affect hops output. Furthermore, we analyze how farmers have responded to the changes.