The Hop

Market:

Feast or

Famine

KEVIN RIEL

Marketing History

1940’s-1960’s

• new to industry

• building customer relationship(s).

1970’s-1980

• initial success – branching out cust.

• establishing a brand

1981-83• it all comes undone...

1984-1986

• zero production (lesson)

Marketing History

1987-2000

• rebuilding phase

2001-2006

• struggles, but success

2007• alpha shortage

2008-2011

• depressed market

2012 to Present

• craft beer boom, followed by…???

Know Your Market(s)

• Food to fork or hops to glass.

Local

• Both alpha and aroma/flavor users.

Domestic

• Both users, but heavily dominated by alpha users. Commodity market. Exchange rates apply!

Global

Where do you fit in?

• How much can you market locally?

• Do the actions of your neighbors impact your ability to market locally?

• Where do you “cross over” to the domestic market?

• Do you want to compete in the global market?

– Products start to lose their individuality (all are green!)

We should be so lucky!

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Inelastic Demand

History of acres vs. average price

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Acres

Ave. Price

Barth Report

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152016

(est)

Alpha Production 8020 8646 8749 6772 8103 7903 6993 7610 10424 10952 9477 10378 9139 8171 9224 7760 10350

Brewing Demand 7794 7834 7649 7916 8013 8313 8580 8469 7495 7733 8063 8969 9369 9818 10191 10311

Hopping Rate 5.6 5.5 5.3 5.2 5.1 5 4.9 4.8 4.6 4.3 4.1 4.3 4.5 4.7 4.9 5.2

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Alpha Production and Demand

Behavior of Growers

• Dedicated hop farms versus diversified

• Alternative crops - geography/location of farm

• Large capital expenditures for harvest equipment

• True cost of idle acreage

• Fixed costs versus variable costs

• Weekend/lifestyle growers

Ex: Germany

How Can You Respond?

• Alternate crops

• New markets

• New uses for existing assets

(trellis, harvest equipment)

• New/different varieties

• Broaden your market

Questions?