New hops company gears product to small breweries
By MATEUSZ PERKOWSKI
A nascent hop processor in Oregon's Willamette Valley aims to reverse the industry's decline in the region.
Indie Hops, a fledgling company based In Portland, Ore., is working to revive the industry's outlook by marketing to craft beer makers.
"We're happy we're putting in acreage while the industrial side is taking acreage out," said Jim Solberg, the company's co-founder and general manager.
Overall hop acreage has fallen as the industry struggles with an oversupply of the crop and faces an uncertain demand from major brewers.
However, Solberg said the industry has primarily overproduced alpha varieties used for bittering -- Indie Hops doesn't see the same problem with aroma hops that are used to convey flavors and smells.
"We hope it's another avenue to sell hops," said John Coleman, who supplies the company with hops.
The idea for the company originated three years ago during a conversation at a brew pub.
Solberg's longtime friend, attorney Roger Worthington, said he wanted to invest in a company devoted to hops grown in the Willamette Valley, his boyhood home.
"He had discovered craft beer and was enamored with it," Solberg said.
Within a year, they had begun building a hop pellet mill in Hubbard, Ore., with a capacity to process about 3 million pounds of the crop a year.
The facility opened in the spring of 2010. Though Indie Hops was contracting with farmers for hops, it did not yet have any customers.
"At the time people thought we were nuts," Solberg said.
The company's willingness to build infrastructure first showed brewers that it meant business and would develop a product specifically geared toward them, he said.
"The craft brew industry has become so much more sophisticated now," said Gayle Goschie, a farmer who partners with Indie Hops.
Farmers also understood the pellet mill was a sign the company was serious, said Coleman, on whose farm the facility is located. "I think they're really committed."
Indie Hops sent out samples of its hop pellets to brewers and quickly won many over -- Solberg estimates the company sells to about 200 breweries, with about 60 to 70 of those entering into multiple-year contracts.
The company's hop sales represent about 200 acres of production but Solberg said he expects partnering farmers to grow to 500 to 1,000 acres in the near future. Oregon farmers strung about 4,400 acres of hops for harvest this year.
Indie Hops' strategy for winning customers is to slow down processing to minimize damage to hops while they're being made into pellets.
Running the mill at a slower rate prevents heat buildup and better preserves the hops, he said. "We've done less physical damage to the oils by not grinding it into a powder."
Though reducing throughput does result in slightly more expensive pellets, Indie Hops customers are more willing to absorb that cost than highly price-competitive major brewers.
"We wanted to come out with a unique product," said Solberg. "The craft industry is a completely different product."
Over the long term, the company also expects to develop unique hop varieties aimed specifically at craft brewers.
In 2009, the company invested $1 million on a five-year contract with Oregon State University to begin breeding work.
The decision put Indie Hops in the middle of a controversy, since some hop farmers were unhappy that a public university would develop proprietary cultivars.
However, Solberg said he doesn't expect the situation to affect the company's relationship with Oregon farmers.
"They sense the world is changing, he said.