USA: Niche marketing opportunities exist for malt barley producers in Wyoming

The United States craft beer industry continues to grow, creating niche marketing opportunities for malt barley producers in Wyoming's Big Horn Basin and elsewhere, The University of Wyoming released August 16.

Custom malting Wyoming barley provides an opportunity to create a brand identity for Wyoming-produced malt, which could result in a higher price, according to a University of Wyoming College of Agriculture Department of Agricultural and Applied Economics study.

"Our analyses indicated that the potential premiums for custom-malted Wyoming products returned a commodity price to Wyoming malt barley producers on par with contract prices received from the major breweries at the time of our study in 1997," says Chris Bastian, assistant professor in the department. "As contracts from major brewers become less lucrative, these potential premiums may be more attractive compared to our 1997 results."

He says pursuing this niche market opportunity would require producers to spend more time marketing and developing relationships with maltsters and craft brewers.

The Boulder, Colorado-based Brewers Association reports craft beer industry production grew again last year as it has for 36 consecutive years.

The industry produced more than 7 million barrels in the U.S. in 2005, up from 6.5 million the previous year, according to the association. A barrel holds 31 gallons, twice that of a standard keg.

The UW Department of Agricultural and Applied Economics study reveals that craft breweries overwhelmingly prefer two-row malting barley to six-row.

"If you look at the head of barley from the top, six-row barley has six rows of kernels and two-row just has two rows," Bastian says. "What you find in the six-row barley is more variability in the kernel size. Because of that variability, the yield in fermentable sugars from six-row may be less or at least more variable than two-row. When you are producing small batches of beer, like the craft brewers do, that smaller yield in fermentable sugars is less desirable."

Craft brewers look for a minimum amount of foreign matter and broken or damaged kernels, and the amount of extract yielded from malt, according to the survey. They also look for consistent kernel size, uniform grind, low-moisture content, unique color, availability of technical support, an accurate malt analysis, recourse for poor malt, and malts unique to their industry.

Among marketing alternatives is selling malting barley directly to a malt house catering to craft brewers that would market the malt as its own premium product. This would reduce the operation complexity by placing the bagging and delivering responsibilities on the malt house. It also would have lower risk than building a malting plant or selling a custom-malted product, according to the UW study.

18 August, 2006