July 16th, 2019

Business Beat: Craft malt and hops opportunities ready for the taking in Medicine Hat

By Medicine Hat News on January 16, 2019.

At last count, Alberta was home to 80 breweries and 24 distilleries, with many more in various stages of planning and commissioning.

As the province’s brewers and distillers look to differentiate their offering, they are turning to local ingredient suppliers to help their product stand out on crowded store shelves.

“We try to get as local as we can,” says Kaiden Vancuren, general manager of sales at Medicine Hat Brewing Company. “It’s nice to get ingredients from a couple hundred kilometres away instead of a couple thousand.”

Indeed, the rise of Alberta’s craft alcohol industry presents entrepreneurs with two new business opportunities worth considering: malt and hops.

First, let’s look at malt.

Brewers call malt the soul of beer. And for good reason. Malt lends personality to beer, whether it’s a dark, rich stout or a light, friendly lager.

Because beer is only as good as its malt, the industry is dominated by big companies with the budgets and expertise to ensure consistent quality.

But the growing grain-to-glass movement has created an opportunity for small maltsters to gain a toehold in the industry.

“Craft maltsters have the flexibility to pivot and collaborate in a way larger malthouses can’t,”says Jen Blair, executive director of the Craft Maltsters Guild of North America. “Consumers are looking for local flavour and a taste of place.”

At the moment Alberta is home to three small maltsters — Hogarth Malt northwest of Olds, Origin Malting in Strathmore, and Red Shed Malting in Red Deer County — supplying a mere fraction of total demand.

Blair sees the market expanding in coming years, with potential for consolidation down the road. Which suggests there’s room for more craft maltsters to join the fray.

The investment to start a malting operation depends on process and method. A basic floor malting setup can cost less than $200,000. A turn-key malting system, meanwhile, can run into the $1 million range.

Entrepreneurs with an interest in craft malting can attend the 2019 Craft Malt Conference, taking place on Feb. 2-3 in Bozeman, Mont.

Hops is another opportunity presented by Alberta’s robust brewing industry.

A key ingredient in craft beer, hops add balance and depth to the flavour of the finished product.

“Hops grow very well in Alberta,” says Jason Altmiks, president of the Alberta Hops Producers Association. “Tests show Alberta hops have the alpha acids sought after by brewers.”

Alberta is currently home to 21 small hops operations, including Pair O’ Dice Hops in Vauxhall, located not far from Brooks.

Southeast Alberta’s long sunny days and well-established irrigation systems provide a potentially good growing environment for hops, which is an established crop south of the border in Washington, Idaho and Oregon.

The cost to start a hops yard varies widely depending on budget and ambition.

In Alberta, most hop yards start out on an acre or less of trellised land, and grow organically as profits permit.

Those looking to compete directly with the massive hop yards of the Yakima Valley are looking at a much more significant investment in trellising, equipment and labour.

Big money or small business, entrepreneurs looking to learn more about hops can attend the 2019 American Hop Convention, taking place from Jan. 23-25 in Monterey, Calif., or contact the Olds College Centre for Innovation, which is actively researching the topic.

Jon Sookocheff is director of business development with Invest Medicine Hat. He can be reached at http://www.InvestMedicineHat.ca.

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