Economic Development and Food Service & Agriculture

Hop growers expanding

Michigan production blooms from 320 acres last year to 650.

October 21, 2016
| By Pat Evans |
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With private equity entering the Michigan hop industry, the state’s top growers are positioning themselves for the future.

Hickory Corners-based Hop Head Farms recently announced David Sipes as executive vice president, signaling a commitment to add management connected to the nation’s largest beer producers. Sipes spent 17 years with Boston Beer Company, best known for its Sam Adams beers, most recently as senior purchasing manager.

Hop Head Farms, approximately 30 minutes northeast of Kalamazoo, was founded in 2011 and purchased by Indiana-based agriculture private equity firm Ceres Partners in 2014. The hop grower and processor recently completed a $4 million investment campaign and will continue to grow, with 500 acres in the ground or in development.

“Dave’s incredibly profound knowledge about hops and ingredients and how they express themselves in beer lends deep credibility to our team,” Hop Head Farms CEO Perry Vieth said in a release. “Dave will be instrumental in helping Hop Head continue to meet the growing demand from our customers for premium, quality hops and outstanding customer care.”

Sipes said as a purchasing manager, hops were always the romantic ingredient because of their impact and influence on how a beer is produced. He said when he was offered the opportunity to join Hop Head Farms, he was extremely interested because of the improving quality of Michigan hops and the state’s emergence as an alternative region for the plant.

“I really liked what the group was doing but really interested in Michigan from a risk perspective,” Sipes said. “A vast majority of hops are coming from the Pacific Northwest, but with climate change, we don’t know where that ends up. It’s interesting to see another region popping up with significant infrastructure behind it.”

Michigan is the top hop-growing state outside of the Pacific Northwest, with 650 acres, as the state’s hop farmers continue to creep toward 1,000 acres. Last year, Michigan had 320 acres.

The Pacific Northwest currently accounts for 96 percent of the nation’s hop production with more than 37,000 acres, and the United States produces 40 percent of the world’s hop supply, according to the Hop Growers of America. Washington produces more than 73 percent of the nation’s hops, with Oregon and Idaho producing a majority of the rest.

The U.S. has approximately 53,200 acres of hops in production, according to the Hop Growers of America.

This year, hop production grew 18.5 percent in the U.S., including a 17-percent growth rate in the Pacific Northwest.

Hop Head Farms isn’t the only Michigan hop operation to be growing significantly. New Mission Organics and Michigan Hop Alliance received a controlling investment by Detroit-area Streetcar Partners in early 2016.

Brian Tennis, the founder of New Mission and MHA, retired from his job at Herman Miller to take a full-time role with the hop growers following the investment, as the operations were poised for growth.

“We just think the hop industry will explode in Michigan,” Streetcar Partners Principal Michael Collins said at the time of the deal. “As the craft beer industry continues to grow, we are poised to be a player in the hop industry.”

The lack of investment in the Michigan hop industry, until recently, was the reason many brewers avoided Michigan hops. Sipes said with growers and processors inexperienced and lacking knowledge, hops out of Michigan weren’t up to the quality of the Pacific Northwest and Germany.

Among Sipes’ responsibilities as executive vice president will be to improve quality assurance throughout the operation. He also will look to expand the customer base, not just in the United States, but in growing European beer markets, such as the Scandinavian countries and Italy.

He said the improvement in quality “really has just been over the last few years, but now the quality is really good.”

The initial interest in the Michigan hop industry for Sipes was its risk mitigation in the nation’s overall market, but as Hop Head Farms began providing him with higher quality hops, he took further notice.

“There’s a unique terrior to them,” he said of the state’s hop characteristics. “There’s a juicer, luscious character. It’s fantastic and unique.”

While many brewers often are enamored with experimental and new “it” hops, the “C” type hops of Cascade, Centennial and Chinook still are the majority of hops used in the growing craft beer segment. There was more than 7,000 acres of Cascade hops grown this year.

Sipes said while there’s a long list of hops with more panache to their name, the “C” hops still are in the top 10 grown globally and will not be going anywhere, meaning brewers will want to get creative with what’s available.

“It will be important for craft to continue to differentiate beers with the hops they use,” Sipes said. “One way to do that is use more conventional hops with unique terrior.”

Sipes also is responsible for helping determine what hops will be grown at Hop Head Farms.

He said the hops industry is much more than just growing, and the initial concern regarding Michigan hops is waning, as experienced beer professionals are becoming involved in the industry.

While craft growth has slowed the past year, Sipes said, it’s still growing — as opposed to the declining overall beer market. The growth among the nation’s 4,000-plus breweries still is pushing demand for hops, especially ones with unique characteristics, which is where Sipes believes Michigan’s long-term potential lies.

He also believes the growth of Michigan’s hops industry can help facilitate Midwest breweries’ cost efficiencies while adhering to the local farm-to-table movement.

“It is true, as the industry was emerging, there wasn’t even a scale to provide enough hops of a variety to support the growth of a major brand for larger breweries in the region,” Sipes said. “As we’re getting more acreage in the ground and infrastructure, we do have the volumes to support significant growth in regional and craft breweries.”

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