Skip and a jump for hop growers
Kiwi hop growers are expected to invest $20m into an expanding industry in the next three years, as it responds to surging global demand for craft beer ingredients.
The growth of craft beer has transformed the niche industry, which has 19 New Zealand growers.
Last year, trade reportedly delivered around $20m a year in turnover and $14m a year in export returns.
The growers belong to the New Zealand Hops Co-operative. Its chief executive Doug Donelan, expects the group to increase to 25 growers after expansion.
The grower-owned cooperative harvested about 750 tonnes from 389 hectares in 2015.
About 85 per cent of the hops, which are largely grown in the Motueka and Riwaka areas west of Nelson, are exported.
The industry is in the midst of an historic growth period that will see both record acreage and production volume increase, Donelan said.
Brent McGlashen of Macs Hops in Motueka is a fourth generation grower.
He said the family business is going to build a new facility, and acquire another couple of farms with about 70 hectares to grow more hops as part of expansion plans.
‘‘There has been a huge change in the past 10 years. It’s been a rollercoaster, but now with world confidence, the industry is in a good patch. It’s the time to put money into an upgrade.’’
Quite a few growers had other crops. ‘‘They might look at their portfolio and see what is not looking good and plant more hops instead.’’
The expansion is driven by the global popularity of ‘‘hopforward’’ beers, which major breweries have started creating, Donelan said.
Consumer preference was for beer styles such as India Pale Ale.
The total expected production volume increase is expected to be about 200 metric tonnes during the next 3 years, which will come from an estimated $20m of investment.
The expansion is taking a staged approach to ensure the correct mix and volume of varieties are grown, supported by sustainable long term contracts that serve to protect grower investment, while guaranteeing supply and meeting demand, he said.
The strategy is also focused on ensuring the burgeoning domestic demand was managed.
The new investment is coming from existing members and new growers who are moving into the industry from other crops and dairy.
‘‘A high proportion of this new capital will be committed by new entrants to the industry, where not only land and farming infrastructure is required but also large investments on harvesting and kilning facilities.’’
Even with the planned increase in production volume, New Zealand hop growers production still remains at less than 1 per cent of
"A high proportion of this new capital will be committed by new entrants to the industry, where not only land and farming infrastructure is required but also large investments on harvesting and kilning facilities." New Zealand Hops chief executive Doug Donelan.
the world crop. The global harvest is also expanding rapidly and is estimated to be in excess of 100,000 metric tonnes this year up 20 per cent from 2014.
Donelan warns that investment in hop growing came with a level of risk. Supply and demand scenarios can shift rapidly in the cyclical market. and while forward contracting can mitigate some levels of risk, an oversupply on the international hop market is not uncommon.