Russian Brewers Are Facing A Shortage Of One Key Ingredient
Economic pressure on Russia continues to grow as the war in Ukraine carries on, and soon it will be impacting locally manufactured beer.
Reuters shared that the Russian Union of Brewers requested government assistance to increase hops production in the country in order to help replace the potential loss of the imported plant. Russia reportedly imports 98% of the hops used in the country every year to make beer, and brewers are now projecting that they could soon run out of the ingredient. Hops are one of the four main components of modern beers, in addition to malt, water, and yeast, according to Allagash Brewing Company. While you don't need the ingredient to brew beer, it is responsible for much of the flavor and smell you likely expect when you crack open a cold one.
Since Russia began its invasion of Ukraine on February 24, The New York Times reports over 50 companies — including fast food chains like McDonald's, clothing brands, banks, and media organizations — have halted or drastically reduced business in the country. That list includes beverage giants Heineken and Carlsberg, which could potentially exacerbate the Russian hops shortage. According to Fortune, Danish-owned Carlsberg accounts for 27% of the Russian beer market as the owner of the country's largest brewery, Baltika. Netherlands-based Heineken is the third largest beer producer in the country, owning three local brands. Both companies plan to sell their Russian businesses.
An expensive proposition
With major foreign players leaving the country, demand for locally brewed beer could significantly increase. However, Reuters reports Russian brewers only have a few months' worth of hops stockpiled.
Russia's imports of hops come primarily from the United States, Germany, and the Czech Republic, all of which have imposed economic sanctions on Russia. While the White House has yet to impose sanctions limiting agricultural or food exports to the country, that could change if the war continues. Trade relations between the countries have already soured as the U.S. and G7 suspended Russia's "most favored nation" status in March, a measure aimed at increasing import tariffs on Russian-made goods (per USA Today).
As stated above, the Russian Union of Brewers has asked for government assistance in increasing local production of hops to make the industry self-sufficient, much as Papa John's Russian franchise owner has done. However, this is no small ask: Russian hops farmers estimate they would need about $6.4 million annually in subsidies for the next three to five years. It's unclear if the government will be willing or able to accommodate the request.