Thirst for craft beer brews opportunities

Thirst for craft beer brews opportunities

Highlights

  • One of the largest craft brewers in B.C. and only brewery in Canada with malting plant
  • Available equipment, high land values, smaller fields a barrier for Island growers
  • Craft brew 12% of U.S. market, similar in Canada, and more than 20% in B.C.
  • Growth in craft brewing also fueling demand for hops

Three flags fly proudly over Saanichton Farm – one for country, one for tractor and one for beer. For Bryce Rashleigh, they are visible reminders of what keeps the farm growing, and what they are growing for.

“The whole local food movement is huge on Vancouver Island,” he says. “People are more supportive of my farm and what I do when they see the connection to what they eat and drink.”

Rashleigh is one of four farmers on Vancouver Island growing barley on contract for Phillips Brewing and Malting. A leader in the craft brewing industry in British Columbia, the company built a malting plant in 2015, and is working with local farmers to increase barley acreage on the Island.

“It’s a growing part of our business,” says Rashleigh, who has more than doubled his barley acres since the malt plant was built. “It’s exciting to be part of starting something new for Vancouver Island. Phillips has put $1 million into building this malting plant, and it’s up to us farmers to help them out.”

People are more supportive of my farm and what I do when they see the connection to what they eat and drink.

Brewery with its own malting plant

Matt Phillips is something of a legend in craft brewing circles, and is not averse to taking risks. In 2001, the young brewer financed his start-up with credit card debt and started brewing beer in a windowless apartment in Victoria. Fifteen years later, Phillips Brewing and Malting is one of the largest craft brewers in B.C., and the only brewery in Canada with its own malting plant.

“When you’re brewing you are intimately aware of your raw ingredients,” Phillips says. “I love the idea of bringing local barley into our system. It’s a great way to give more of a signature to our beer, and we’re able to take more control over that part of the supply chain.”

Sourcing local raw ingredients

Vancouver Island growers are currently producing 40 per cent of the 1,200 tonnes of barley that the brewery uses each year; the rest is sourced from the B.C. Peace River region. The company is actively pursuing new growers on the Island and promoting barley as a rotational crop to get more acreage into production.

“It’s not like there’s a shortage of malt barley in Canada, but there’s a shortage of Vancouver Island barley,” Rashleigh says. “With the local market right now, they basically can use anything producers can grow. It doesn’t necessarily pay a lot more, but it feels good to be part of the food and beverage industry.”

 

One of the barriers for farmers has been the availability of equipment. High land values and smaller fields require Island growers to get resourceful to make it work.

“Fortunately I’ve been able to make it work with some landowners who are supportive, and by bringing in good used equipment from the Prairies,” Rashleigh says.

The simultaneous development of infrastructure for brewer and barley growers is creating a unique opportunity and market in the region.

More barley needed for craft beer

“There’s going to be an increasing demand for barley again because craft beer uses so much more barley than big breweries,” Phillips says. “We would love to be 100 per cent Island barley; hopefully it’s just a matter of time before we get there.”

The Canadian brewing industry sources 300,000 tonnes of malt barley from Western Canada each year. Up to 25 per cent of domestic malt barley will be used by craft brewers, despite the fact they only produce six per cent of the total volume of beer.

According to Beer Canada, the national trade association for brewers, there are more than 500 brewing facilities across the country, double the number 10 years ago.

“The growth in craft beer has been phenomenal since I started Phillips Brewing, especially over the last five years," Phillips explains. "Craft brew is now 12 per cent of market in the U.S. That statistic is similar in Canada, and more than 20 per cent in B.C."

Hops needed too

The growth in craft brewing is not just fuelling demand for malt barley, but hops as well. Hops were originally added to beer as a stabilizer. Adding International Bittering Units (IBU), a measure of the iso-alpha acids, makes beer last longer.

Over the past 20 years, craft brewers have come to demand more from their hops. Far more than a stabilizer, they are using hops to add bitterness, body and aroma to the beer, fuelling an explosion in hop varieties: from fewer than 50 to over 200 in only two decades. Many of the varieties are proprietary and grown under license.

Joey Bedard is the founding partner in Hops Canada in Kamloops, B.C. The company started importing and selling hops in 2014, and has expanded through a partnership with the Kamloops Indian Band to become the biggest hop farm in Canada.

“The Kamloops Indian Band put up most of the capital and land, and we put up the business, contracts and distribution network,” Bedard says. “We are now a year into the partnership and have 240 acres of hops in the ground.”

At $15,000 per acre in set-up costs, starting a hops farm of this size is a bold undertaking, particularly since it takes up to four years for plants to achieve full production and hop trends are fickle.

“Hop trends change all the time as you get better varieties to work with. We have to decide today what we think people are going to want four years out,” Bedard says. “We sell on five-year contracts, and we only put in the ground what we’ve already sold.”

Small brewers sweet spot

Once the plants hit full production, they expect to produce 350,000 to 400,000 pounds of hops per year. Hops Canada currently sells to 170 breweries across Canada and the U.S., as well as India, South Africa, Chile, Columbia, Spain, Poland and Europe.

“We don’t sell any hops to big-five brewers right now – 90 per cent of clients are small breweries that brew under 150,000 litres per year. That’s our sweet spot,” says Bedard, adding that their customer base ranges from home brewers to super-wholesale. 

While the growth in craft brewing has pushed up the demand and prices for hops, Bedard remains cautious about rapid growth in hops production.

“There’s an illusion that there’s a hops shortage right now,” Bedard says. “In Canada, we have six to 10 new breweries opening per month. It takes two months to open a brewery, but four years to get hops to grow.  Once the beer industry stabilizes, the hop world will catch up and tighten up quickly.”

Hops Canada is focusing on opportunities in the international market for the next phase of expansion. They’ve signed an agreement with Thompson Rivers University to manage quality testing for export to the European Union, where demand is growing for North American-style hops.

I feel like this industry has the potential to become much bigger than craft beer,” Bedard says. “We’re hoping to get another $5 million in contracts and then we’ll put in another field.” 

From an AgriSuccess article (Sept/Oct 2016) by Tamara Leigh (@Shiny_Bird).

Related

Hops: Small acreage with high potential

Hops: Small acreage with high potential

Hops: Small acreage with high potential

Hops: Small acreage with high potential

The Canadian hops market is about small-scale production. Multiple varieties suit Canada’s growing conditions and each creates a different tasting beer.

Hemp and faba beans

Hemp and faba beans

Hemp and faba beans

Hemp and faba beans

Growing emerging crops can be a very successful venture. Before committing, read these tips from a successful grower of hemp and faba beans.

Kelowna Fruit Stand: Building a nine-acre  dream

Kelowna Fruit Stand: Building a nine-acre dream

Kelowna Fruit Stand: Building a nine-acre dream

Kelowna Fruit Stand: Building a nine-acre  dream

Lakhwinder Brar grew up farming in India. He now owns a 9-acre orchard in Kelowna and plans to expand within the farming industry so he can help grow the local market for local farmers.

Watch fixed costs when increasing acres

Watch fixed costs when increasing acres

Watch fixed costs when increasing acres

Watch fixed costs when increasing acres

Expanding your seeded acreage may not be as beneficial as you might think. Many factors play into whether expansion is a good business move. Sometimes, fewer acres will be more profitable, depending on equipment operating costs and manpower.

Add a Comment
Add a Comment Close
characters remaining
There are no comments.