June 14, 2018

Top of the hops: the growers dominating Australia’s beer

If you like a schooner of beer, it’s likely you’ve sipped a brew made with hops from Hop Products Australia. Having weathered this boom-bust industry, and as Australia’s largest hops grower today, the team at HPA is passionate about these little cone-like flowers – and about bringing distinct fresh flavour to every glass.

Hop Products Australia (HPA) has a colourful history of riding out extreme highs and lows to survive and dominate the Australian industry.

Australia planted its very first hops – the key ingredient in beer – in 1803. Almost two centuries later, in the 1980s, a group of German families (the Barth-Haas Group) purchased growing assets to create the modern business. Today, HPA owns 90 per cent of the hops grown in Australia.

A niche product, specifically grown for beer production with “wildly varying crop yields”, the hops industry tends to have a significant supply and demand imbalance.

“Either the brewers are demanding low pricing from the farmers because they have no other market except for the brewers, or the brewers can’t get enough of the hops they need and the farmers are demanding high prices from the brewers,” explains HPA Sales and Marketing Manager Owen Johnston. “This is traditionally the boom and bust nature of the hop industry.”

Johnston also emphasises the high yield variance.

“Hops is a crop with some challenges in terms of the stability of its yield… we get wild fluctuations in yield. It’s also got quite a substantial barrier to entry due to the high cost of establishing new fields.”

Climbing to the top

For a period in Australian history, these extreme industry characteristics drove brewers to attempt to own the supply chain, integrating hops and barley farming, value-adding through processing or malting and then producing feed stock for brewing operations.

“It was the period of ‘Fosterisation’ of the world,” Johnston explains, “with large breweries dominating the industry, and owners John Elliot and Alan Bond pursuing the vertical integration of their supply chain. When that was coming to an end, and they were divesting the brewing business, the Barth family first bought into hop farming assets here in Australia, in the north-east of Tasmania.”

It was a move that helped HPA secure Australia’s dominant hops growing position.

HPA also gained the benefit of the Barth-Haas group’s experience, global distribution network and hop-growing and breeding assets, inheriting a long-run breeding program that’s helped them pursue completely differentiated hops flavours.

A spectrum of flavour

To smooth the instability and create consistent demand throughout most of the last 10 years, HPA has moved away from undifferentiated, commoditised hops that are easily substitutable and now seek to create flavours that will set them apart.

“What we’ve done is try and create an offering that is focused around unique flavours, and create some value in the end beer that the brewer makes,” Johnston says. “So, they say, ‘I must have that.’ Let’s say our lead hop Galaxy, ‘You know, I must have that Galaxy in this beer.’ It’s what makes the beer unique, or different or appealing.”

The team at HPA has released a full range of unique flavours, which they call their ‘HPA Flavour Spectrum’, featuring flavours such as Galaxy, Ella and Vic Secret.

In particular, HPA enjoys working with brewers to develop their own unique taste. According to Johnston, anything that stops a downward spiral towards commoditisation of what they make, that helps them establish a personality and a unique input into the beer profile, is worth pursuing.

“What I love doing is helping a brewer after they communicate a vision for where they want to pitch a beer profile,” he says. “Then we go to work establishing what ingredients can go into that recipe to achieve that profile. That’s the art and the science of hops.”

Draft draughts

While their flavour spectrum has met with high acclaim from brewers large and small, the strategy to differentiate hasn’t been without its challenges.

“It hasn’t been all plain sailing,” Johnston says. “Over the last 10 years we’ve released varieties that have been commercialised and deemed not successful, or have been churned for new varieties. It’s not without risk, introducing a new variety. In commercialisation there’s risk and cost, and it’s not guaranteed to succeed.”

In a bid to keep on top of the risk, the team keeps in touch with brewers and consumer tastes to keep their flavours fresh and current for the modern palate.

Hops is a tenuous crop that’s highly sensitive to climatic conditions. HPA has always set out to grow more than the domestic market needed, the logic being that when the UK or US had a bad season they were unilaterally affected, thus creating a market for a southern hemisphere grower.

Johnston explains: “Hop plants live on every year, you don’t harvest and sow again like other crops. So, the full life cycle requires the right daylight hours, the right temperature, the right rain and, during winter, some very cold temperatures; to help the life cycle of the plant go to sleep and then wake up in the next spring ready to go again.”

Exporting to 25 countries

Australia has a long history of hops export and today exports form almost half of HPA’s sales. The business exports to 25 countries, with the US buying around half of all exports, followed by the British and European markets.

“From our 2017 harvest we exported about 40 per cent of our total harvest,” Johnston says. “Sixty per cent for Australia, 40 per cent for export. The growth story for us is entwined intimately with the portfolio change. With this pursuit of the modern flavour varieties. We’ll be searching for 1,200 tonnes out of the 2018 harvest.”

As part of the Barth-Haas Group of hop-trading companies globally, HPA exports into the network distribution of the group, which has offices in Germany, the UK, the US, China and Hong Kong, among others.

Looking ahead, HPA wants its name to continue to be synonymous with quality Australian hops.

“When brewers think Australia and Australia’s great differentiated high-performing, high-impact hops, they think HPA is the origin,” Johnston says. “We are Australia’s biggest hop grower. We’re the only mature and effective breeding program in Australia. We really have that opportunity, and almost a duty, to forge a high-quality identity out there.

“I think our secret to success is that we definitely understand the customer. We actively pursue quality across our whole operation. We’ve worked really hard to present a product that’s different.”