Niche marketing opportunities exist for malt barley producers

The craft beer industry in the United States continues to grow, creating niche marketing opportunities for malt barley producers in Wyoming’s Big Horn Basin and elsewhere.

The craft industry includes regional brewers, microbreweries and brewpubs.

“The craft beer industry continues to be an important sector of the brewing industry, and therefore it offers a potential niche market for malt barley producers in the Big Horn Basin and other parts of Wyoming,” said Dale Menkhaus, a professor in the University of Wyoming College of Agriculture’s Department of Agricultural and Applied Economics.

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 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,” said 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,” Bastian noted.

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

The Boulder, Colo.-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 United States 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 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 said. “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.”

Bastian added, “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 reduces the complexity of the operation by placing the responsibilities on the malt house of bagging and delivering the malt. It would also have lower risk compared to building a malting plant or selling a custom-malted product, according to the UW study.

Others involved in the study were Associate Professor Don McLeod in the agricultural and applied economics department, Debbie Oakley, former graduate assistant, and Dan Alsup, former research assistant.

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