GREENVILLE — A farmer owned and operated hop grower in northern Kent County has acquired a nearby operation whose owners were looking to move into their next phase of life.
In a deal announced today, West Michigan Hopyards LLC purchased the farming operation of Hopyards of Kent Co. LLC, which Pam Miller and John Miller started in 2011 in Greenville, northeast of Grand Rapids.
The deal included about 14 acres of hops that will nearly double West Michigan Hops’ operation to 33 acres, according to Managing Partner Bryan Posthumus. The transaction included the land and buildings at Hopyards of Kent’s farm on Elkins Street in Oakfield Township. The Millers will keep their contract harvesting business and its facility on M-91, he said.
Terms of the deal were not disclosed.
Posthumus said his company was attracted to the deal because of Hopyards of Kent’s quality and strong reputation. The farm was also profitable, he added.
“They built their business, they loved their business, and they did a really good job at it,” he told MiBiz. “Farming, especially growing hops, is very time consuming, and they were ready to get out of the farming side of it. John and Pam are both in their mid 60s and they’re ready to enjoy life. They spent the last five to six years building a farm, and I think they’re ready to spend more time fishing, as John put it.”
According to Posthumus, the owners of both companies also maintained a long-standing relationship, as Hopyards of Kent is based about 5 miles from West Michigan Hopyards’ main farm.
Posthumus, along with partners Jason Jaekel and Mark Catlin, launched West Michigan Hopyards in January 2013, planting about 1.5 acres that spring before adding another 5 acres that fall. The integrated hop operation includes growing, processing and marketing hops to clients primarily in Michigan and the Midwest.
The company’s clients include Creston Brewery in Grand Rapids and Muskegon’s Pigeon Hill Brewing Co.
Before the deal for Hopyards of Kent, the company owned and managed 19 acres of hops spanning about 10 different varieties, including Triple Pearl and Comet. Meanwhile, Hopyards of Kent grows Cascade, Chinook, Centennial, Crystal and Michigan Heritage, a proprietary hop native to West Michigan.
Varieties like Cascade and Centennial are among the most widely planted varieties of hops nationally, according to 2016 statistics from the Hop Growers of America. Michigan’s hop-growing industry now ranks a distant fourth nationally behind states in the Pacific Northwest with around 650 acres planted last year, according to the group’s annual report.
However, as concerns of oversupply have emerged in the last couple of years, it’s put pricing pressure on commonly planted varieties, limiting returns for growers, as MiBiz previously reported.
Posthumus acknowledges the challenge with “saturated” varieties like Cascade.
“There are issues in the industry we see moving forward. But fortunately, it’s not a lot, it’s 2.5 acres. We’ll be able to absorb 2.5 acres with our customer base, but there might be some left over at the end of the year,” he said.
With the acquisition, West Michigan Hopyards also furthers the narrative of a consolidating hop supply chain nationally. However, the industry remains dominated by large growing operations and private equity-backed companies.
That’s also increasingly true in Michigan, where companies like Hickory Corners-based Hop Head Farms LLC sold to Indiana private equity firm Ceres Partners LLC in 2014, and New Mission Organics LLC/Michigan Hop Alliance in Leelanau County sold a majority stake last year to Streetcar Management Partners LLC from Southeast Michigan. The state’s largest grower, Mi Local Hops LLC, is backed by an investment group out of Traverse City.
While West Michigan Hopyards doesn’t have the deep coffers of private equity behind it, the company can offer a level of service that the larger firms often lack, Posthumus said.
“Any brewer can take a walk out at our farm, and I can tell them, ‘When I sell you hops, it will be coming from this row of hops right here, every year,’’ he said, noting West Michigan Hopyards is flexible enough to react quickly when brewers need help.
“The other advantage we have is we weren’t fortunate to start out with a ton of money,” Posthumus said. “We’ve had to build this business as inexpensively as possible. Until we purchased Hopyards of Kent, every pole we put in the ground ourselves, our barn we built ourselves. Our overhead is significantly lower.”
For now, West Michigan Hopyards remains committed to serving customers of Hopyards of Kent, which will transition to its branding, and to integrating the company into its operations. However, West Michigan Hopyards could consider additional transactions in the future, according to Posthumus.
“Down the road, we might look at doing it, but we want to make sure we stabilize first,” he said. “In last two years, we added 27 or 28 acres of hops. We want to make sure we’re growing as quickly as we can, but as intelligently as possible in securing that expansion.”