Discerning US millennials are driving demand for New Zealand grown premium hop varieties with their preference for premium priced craft beer.
Speaking at the 2019 MyFarm Investments Symposium, Hop Revolution CEO Jason Judkins said among those surveyed in a US study, 91% preferred the taste of hoppy craft beer over big brands like Budweiser and Heineken.
This finding is well represented in the overall trends in US beer category sales. US premium brands including Bud Light, Miller Lite and Coors Light fell 4.2% last year, while craft beer sales were up 2.5%.
Underlining the growing attraction of craft beer in the US, the Chicago-originated survey found millennials are spending more on craft beer every month than they do on their phone and utility bills.
In partnership with MyFarm Investments, Hop Revolution has planted 116cha at its Tapawera Hop Farm and is expecting its first harvest in March 2020. In preparation, Hop Revolution has invested in brand new harvesting equipment and kilns.
Judkins noted there are two elements to the growth in US demand for New Zealand hops that make the investment compelling. Firstly, craft beer uses four times the volume of hops as traditional beers, and the craft beers that are rising in demand – IPAs, Pale Ales and Pilsners - are being positioned as 'hoppy beers'". Secondly, craft breweries are doing everything they can to create points of difference, which includes adopting new styles and using 'rare' hops.
New Zealand hops are highly regarded but to date have been difficult to source. The hop quality is based on an ideal growing climate, unique varieties and flavours and being spray free.
Changes in the industry's structure also appears to be shifting in favour of specialty hop growers, with the 'big hop' broker model weakening and more spot buying with short-term contracts.
The fast pace of change in the US brewery sector also shows the only way demand is going is up. Judkins says in 1979 there were 44 craft breweries in the US. In 2014 there were 3,400, and just four years later that number had more than doubled to 7,300.
The Hop Revolution business model is based on growing exactly what craft brewers want and supplying direct to market. "We are brewer-focused and market-led." He also noted Hop Revolution is not standing still. "We continue to innovate, trialling hops in other New Zealand regions, undertaking breeding programmes and developing nursery partnerships."