By Eric Peterson | Oct 16, 2016
Aurora, Colorado (cold storage in Englewood)
Industry: Brewing & Distilling
After giving a go at growing hops near Montrose with San Juan Hop Farm, father and son Randy and Tase decided to move in a different direction in 2010. "Unfortunately, we started the farm in the middle of the 2008 recession," says Randy, who previously worked in construction in Telluride.
But the two-year experience taught the Floreses a lot, and they made them numerous contacts. "At that time, there was a supposed worldwide shortage," says Randy. "I spent time with fifth-generation hop farmers in Idaho and Washington and learned how to grow."
The latter led to the the launch of US Hop Source as a direct seller for several farms, then buying and selling for dealers and brokers, then working with breweries to sell surplus hops. "Source is the main word, because we have our fingers in a lot of different areas," says Randy.
The business has evolved with the market, which isn't as tight as projected. "It's basically turned into a spot market instead of contract selling," he explains. "We've turned into a surplus merchant. We help small and large breweries."
With cold storage in Englewood that can hold more than 10 tons of hops, US Hop Source now deals in bulk -- as well as fulfilling notably small orders -- often redistributing large shipments to accounts across the U.S. and overseas, and sends out weekly emails on availability and pricing.
"We have filled a niche in the craft brewing industry to be a reliable source for brewers to find what they need," says Randy. "If a small brewer only needs 11 pounds, if we have stock, we'll sell 11 pounds. . . . Our prices are pretty competitive."
The market has responded: Gross sales topped $4 million in 2015. "This year's been pretty good as well," says Randy. "We'll probably surpass that this year."
US Hop Source now counts not only brewers, but producers, among its customers. "We also sell high-quality hop rhizomes to small hop farmers," says Randy. "This year, we did 50,0000 roots to a couple thousand small hop farmers."
The hops -- about 60 varieties in all -- largely come from farms in Washington, Oregon, and Idaho. Randy says other states' industries are notably less developed. He sees Michigan -- with about 1,000 acres set for 2017 -- as an emerging hops producer.
In Colorado, "quality is a challenge," he adds. "AC Golden has kept most of the Colorado hop farmers fat and happy," noting that the Coors offshoot pays a serious premium -- likely forking over $20 a pound versus $5.50 for popular varieties -- and shipping them and back to Washington for pelletization.
There are very few capable facilities, and even fewer outside the Pacific Northwest. "There's a huge learning curve in pelletization," he adds. "You can take a perfectly good product and ruin it in seconds."
US Hop Source's hops market has expanded from Colorado to the Midwest, Northeast, and Southeast, and the company now typically works with about 20 breweries every month. "It kind of fluctuates and ebbs and flows at different times of the year," says Randy.
Immediately before the new crop hits the market, "breweries are trying hard to stretch their 2015 supplies until they get 2016 contracts coming in," he says. "There seems to be a surplus in the market now. Beer sales are steady, but beer production is down."
Randy says new brewers probably don't need to wed themselves to a contract right away. "If you're contracted for something, you're obligated to take it," he says. "If I were a small craft brewer, I would work on the spot market rather than contracting hops. . . . Lots of breweries are trying to get rid of excess hops."
Favorite beers: "I like the darker, maltier stuff," says Randy, citing New Belgium 1554 and Left Hand Nitro Stout. Despite his line of work, he avoids big IPAs. "Hoppy beers have histamines. Really hoppy beers tend to wreak havoc on my sinuses."
Challenges: "Just keeping up with it all," says Randy. Tase handles the website and the books, and Randy handles sales and marketing. "I'm 57, so I ditched typing class back in junior high school."
Opportunities: "New craft beer markets where the big guys don't have a lot of coverage," says Randy. He points east of the Mississippi River as especially fertile territory -- and overseas. "Craft is exploding around the globe," he notes. "The craft beer industry in Europe wants U.S. domestic hop varieties. They want to be able to emulate the popular American craft beer styles."
Needs: "Letting people know that we're there to help them move their surplus," says Randy.
Another need: "A couple clones," he laughs. "We don't like to work 24/7."