Brewers from all over the world with a nose for hops head straight for the trellised fields of the Pacific Northwest of the United States, where the hop growing industry is a global leader. The vast majority of these brewers wind up in Yakima Valley, Washington, which grows approximately 75% of the nation’s hop plants. What is also growing in Yakima Valley and elsewhere in the U.S. is a craft brew tourism industry, bringing in revenue using the aroma of locally grown hops and the taste of full-flavored craft beers to lure travelers near and far.
According to the Brewers Association, a non-profit trade group representing breweries in all 50 states and the District of Columbia, the craft brewing industry contributed $76.2 billion to the U.S. economy in its most recent reporting year. By the association’s count, there are more than 7,000 breweries in the U.S., which another 1,000 slated to open this year. That translates into more than 500,000 jobs, including not only brewery jobs but also; indirect jobs generated by tap rooms, pubs, restaurants, shops, entertainment venues and local hotels.
While the numbers are impressive, the craft brewing industry has matured, and according to experts, there is no expectation of the same kind of explosive growth it has enjoyed in years past. In order to stay competitive, craft breweries must constantly look for ways to keep their existing clientele, while staying in the hunt for new business.
Bart Watson, PhD., Chief Economist of the Brewers Association, describes the industry adjustments he believes are needed. “I think the biggest ones are innovating, right sizing their distribution, and trying to find new ways to connect with beer lovers in a crowded market. On the first, brewers need to be brewing new beers and re-thinking their portfolio more than ever. On the second, that’s a mix of geography, often focusing more closer to home, and SKU mix. Distributors can’t focus on everything. Finally, I think we’re seeing brewers really re-focusing on marketing and customer experience in their breweries to try to stand out in a crowded field and elevate their brands.”
The U.S. Department of Agriculture noted that last year, American farmers harvested 107 million pounds of hops, up by one percent from the year before. At the same time, the 2018 value of hops production, which the USDA pegs at $583 million, was down by one percent. Although the change is subtle, growers are paying attention to any sort of hiccup in the market, adjusting output to match demand and, just like craft breweries, hop farms are looking for different ways to engage new business.
Many of the obvious deterrents to hop farming have nothing to do with anything farmers can control. In any given growing season, hop fields can be subjected to threats of bad weather, poor climate, menacing pests and crop disease. Couple that with fickle markets, rising input prices and tightening regulations, it is easy to see why some growers pool resources and form alliances as one way to combat adverse change. The Hop Breeding Company in Washington is one such example.
It is a joint venture formed in 2003 between John I. Hass, Inc., and Yakima Chief Ranches, LLC. John I. Hass, Inc., part of the Barth-Haas Group, is considered the world’s largest supplier of hops, hop products and services. The company owns and operates hop farms, warehouses, pellet and extraction plants as well as isomerization facilities throughout the Northwest. Yakima Chief Ranches, LLC includes the multi-generational hop growing farms of Washington’s Carpenter, Smith, and Perrault families, world renowned in their own right, along with an amalgam of allied hop growers from throughout Washington, Oregon and Idaho.
HBC invests in research to create new hops varieties that are resistant to pests and diseases. That research proves invaluable in addressing ever-changing consumer demands for food safety, quality and product innovations. Consider also the hops breeding powerhouse that HBC represents, in that it is able to take advantage of combined resources from both companies through integrating their breeding efforts. Hops brands from the breeding program are all released jointly to a worldwide market. Craft brewers have the benefit of knowing that the HBC product they buy results from the expertise of science combined with the intuitive, creative knowledge of those who have hop growing in their DNA.
Generational hop farms, some dating back as far as the late 1800s, have risen from their modest beginnings, ballooning into multi-faceted enterprises. While their main focus is on growing and harvesting hops, they have also begun to tap into the offshoot industries focused on craft brew tourism. It is big business in hops country.
One of the largest growers for the craft beer industry is B.T. Loftus Ranches in Washington’s Yakima Valley. Established in 1932, four generations have been a part of its growth, including the opening of Bale Breaker Brewery, located right alongside one of the family’s hop fields, #41. Although it is a separate business entity from the farming enterprise, the marketing strategy of placing a brewery with its own tap room, next to a hop field, is an aggressive, direct pitch to consumers who relish the “farm to table” or, in this case, what the brewery calls a “ground to glass” experience.
These ancillary businesses allow hop farmers to benefit from their industry from seed to harvest. During the busy harvest season, generally beginning in the last week of August through the end of September, brewers come from every corner of the world to hand-pick their hops. Enter Morrier Ranch, another multi-generational, major player in Washington’s hop farming industry. The family owns two hotels in Yakima, ready to accommodate the overflow of out-of-town brewers as well as tourists visiting the area.
Neighboring Oregon touts its hop farms in Willamette Valley, the nation’s second largest hops producing region. Latest statistics from the Oregon Brewers Guild show that Oregon supplies some 300 breweries with aromatic hops used to make the beers that, in turn, create the craft brewing jobs servicing some 369,000 customers, who visit an Oregon pub, brewery or tasting room each week. Tony Roberts, Co-Executive Director of the Oregon Brewers Guild says that the relationship between brewers and hop farmers in his state is interdependent.
“Oregon’s hop farmers and brewers enjoy a very close relationship. For instance, Crosby Hop Farm just released 18 collaboration beers, each featuring an American and international brewery. Those types of relationships are pretty common between our hop farmers and brewers. It’s hard to imagine either of them being caught flat footed by a sudden change in the craft beer industry.”
Although Oregon is traditionally the second largest U.S. hops producer, Idaho sneaked by in 2017 to the number two ranking, producing 13,759,000 pounds of hops for that year. Idaho’s Canyon County is home to 75% of its hop farms, with the rest in Northern Idaho. The state is just as serious about drawing business from craft brew tourism, winning the bid to host this year’s Beer Marketing and Tourism Conference.
The same 45th parallel of the northern hemisphere, traditionally known as the ideal spot for growing hops, runs not only through the Pacific Northwest but also through the state of Michigan, which produces more hops than anywhere else in the country except for its Northwest Pacific competitors. According to the Brewers Association, Michigan craft breweries pack an economic wallop to the tune of $2 billion, ranking the state’s industry 9th overall in the U.S.
A symbiotic relationship exists between Michigan hop growers and craft breweries, similar to the partnerships in the Pacific Northwest. For example, Michigan growers and breweries have an affinity for the natural resources provided by the Great Lakes, which makes the climate, water and other factors ideal for both industries. In carving out their unique competitive niche, Michigan’s brewers and growers have ideas exclusive to the region. Some craft breweries, for example, have turned to Michigan casinos to introduce their products to new customers through tasting events.
Michigan hop growers have challenged themselves to grow varieties normally reserved for states like Washington, Oregon and Idaho. In 2017, Michigan’s Hop Head Farms beat out 26 other competitors in the national Cascade Cup competition, taking fourth place and competing with the likes of first place winner, Morrier Ranch from Washington’s Yakima Valley.
Future expansion for both hop growers and craft breweries feeds on the success of each knowing their respective markets. Hop farmers are challenged to keep pace with breweries working to capture new clientele with new products brewed from new hops products. Craft breweries are competing with each other to stave off sameness and attract new clientele. The challenge for both industries will be who can do the most to help build their markets where there is room for everyone to grow.