Seed-to-Spirit: Growers and Distillers are Changing the Craft Beverage Market

By: Kimberly Fontenot

Ten years ago, an organic sweet cherry farmer, Brian Tennis, was looking for a new way forward—one that would differentiate him from other farms and would grow, develop and sustain his growing operation. He found what he was looking for in growing hops, and becoming part of the seed-to-spirit movement in the craft beverage market.

“Our farm is right on the 45th Parallel, the sweet spot for growing hops, so it was an easy decision despite never having farmed hops before,” said Tennis.

Tennis knew he needed to find a way to diversify and financially grow. “The immediate benefits to our changes were that it gave us an immediate crop to harvest, instead of waiting five to seven years, we could plant hops and have a crop the same year. It gave us a unique plant to grow for our region, as well as something that was relatively easy to grow and not overtly impacted by climate change,” he said. “The hurdles were the startup costs, the learning curve, equipment needs, and the fact that no one else in the state was growing hops on a commercial scale, so there was very little support or knowledge leveraging. It was also an untested market here in Michigan.”

Tennis is now President of the Michigan Hop Alliance and one of the many growers and distillers leading the craft beverage movement. He has learned a lot about the process along the way, and it was often not easy.

“Idiot tax is not cheap,” he said. “Hops were the first crop we tried to grow on a commercial scale and really had no background with this plant whatsoever. We had to purchase or build everything from the ground up — tractors, sprayers, water wells, a hop picker, as well as a hop dryer and pellet line. All this equipment was expensive and specialized. All this on top of trying to source hop plants and pick which varieties to select. Unfortunately, we purchased plants were supposed to be ‘clean,’ and they were found to be infected with viruses. This really set us back financially and pushed back our timelines. We also had a few business partners, not a good long-term fit. More importantly, the learning curve was steep especially for a first-generation farmer with no background in agriculture. The first several years were like going to school for another degree. Even after 10 years of growing hops, there is still a great deal of knowledge we acquire each season. The learning never stops.”

Farm-to Craft Beverage Market

What was learned and implement successfully by Tennis has become pretty standard for many growers experimenting with or changing in their growing operations. Many consumers are aware of or participate in, the farm-to-table movement every time we go to a local farmer’s market, however, some may not be familiar with the farm-to craft beverage market. However, it is here, it is growing, and it is a boon for hops and grain growers, brewers and distillers. Thanks to the loosening of Prohibition-era laws in many states, the number of craft distillers has grown from 21 in 2000 to 1,835 as of August 2018, according to The Craft Spirits Data Project research initiative.

The whole movement has inspired some growers to implement changes in their operations, making them part of the seed-to-spirit market. They are taking bold new steps and changing the current end user of their corn, wheat and rye crop and beginning to create their own spirits.

Why Isn’t Every Grower Creating Craft Beverages?

Some farmers haven’t jumped on the craft beverage and distilling bandwagon because of time, effort and cost. Growers who make the dive into both growing and distilling learn that while the two businesses work hand-in-hand, there is an abbreviated and harsh learning curve. Researching and implementing state and national requirements for farm distilleries as well as training in proper, legal and successful distilling practices doesn’t come quickly or cheaply — all of this to create a business that may not necessarily be successful. The risk is real.

Yet, the dream endures for many farm distilleries regardless of the steep learning curve or unexpected upfront costs. Seed-to-spirit growers want to create something unique that tells a story about their crop, their business, and their authenticity. What better way to do that than through craft beer or spirits?

Craft Beverage Statistics

The Fort Worth Business News reported in August of 2018 the global craft spirits market was valued at $6.13 billion in 2016 and is expected to grow at an impressive compound annual growth rate of 33.4 percent from 2017 to 2025, owing to increasing consumer tastes and preferences towards unconventional and experimental alcoholic beverages.

According to the Brewer’s Association, in 2017, overall beer volume sales were down by one percent, but craft beer sales continued to grow at a rate of five percent by volume and totaled 12.7 percent of the U.S. beer market by volume. As the craft-beverage craze continues to grow today’s market is more competitive than ever. In response, some brewers are beginning to shift gears and are implementing craft distilleries side-by-side with brewing operations.

Benefits of Tourism

The seed-to-spirit movement offers yet another revenue source for growers when they provide visitors with guided tours or samples of craft beverages made with their crops. This source of revenue is considered by some to be the one sure thing farmers can count on year-to-year even when the weather adversely affects their yield. No matter the size of their harvest, tourism keeps them steady and stable until the next growing season.

For craft beverage producers, tourism has benefits for both their business and the communities where they reside. No matter where they are, craft beer and spirits lovers seek out breweries and distilleries to have a taste. For farm distillers and brewers, in particular, tourism can sometimes help farmers withstand the economic pressure that comes from larger competitors. So next time you pass a small grower distilling craft beverages, stop and see if you can sample or purchase. You will be happy with the quality and taste, and what’s more, you have been a part of the unique movement momentously impacting the adult beverage market forever.

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