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Andrea Day

How “Wheat” It Is – An interview with IB&M on wheat malting

150 150 Independent Malt

Click here for the original SeedWorld article.

Saskatchewan Purple Wheat. Photo credit goes to Gloria Gingera and Pierre Hucl, at the University of Saskatchewan.

An exciting look back and forward at beer, vodka, gin, whisky and more being made from wheat.

When we think of beer and spirits, wheat isn’t likely the first crop that springs to mind. But, just like every other grain crop that humans have ever cultivated, it’s been used to make spirits and beers both plain and more inventive. 

Nowadays, with the craft brewery and distillery trend going strong, there are some new wheat genetics developments – and no shortages of new wheat-based alcoholic drinks to try. 

The Gin is In

According to a website called “The Gin is In,” among the eight crops that gin is mostly produced from, wheat only became a more-common base for gin in the 20th century. Because wheat was (and still is) “such a useful grain for baking, there was often very little good-quality grain on the market for distillers.” However, “advances in crop technology and modern agriculture have reduced wheat scarcity and now distillers can choose a wheat base if their heart-so-desires.”

One of these is Chuckanut Bay Distillery in downtown Bellingham, Wash., which uses local white winter wheat in its gin. 

Chuckanut Brand Ambassador Reggie Gallo says using local grains in their products is a priority, “and luckily we found a farmer in Whatcom County where we’re located who could provide us with corn, rye and wheat. We use white winter wheat mostly because it’s what we could find.” 

When asked why they chose wheat for their gin, Gallo explains that wheat lends the spirit a softness “that you don’t get from say, corn or rye.” 

“So, with that, our gin is very gentle and approachable,” he says. “We let the vanilla sweetness of the wheat spirit work in conjunction with our botanicals to bring out the best in each. Some people may say that the base spirit for gin doesn’t really matter that much because you just ‘cover it up’ with botanicals, but we don’t think that’s true. The wheat spirit we produce is one we’re very proud of and we would say it’s a very important part of our gin.”

100% Wheat Whisky

Wheat whisky in the U.S. (according to Stephanie Moreno, blogger for the ‘Distiller’ website) must be aged in new, charred oak containers and can be sourced from 51% to 100% wheat. “As for flavor profiles, think of ‘Wheat Thins’ or wheat bread,” she writes. “[Wheat whiskies] are flavorful, yet have a lightness and gentle sweetness to them. Depending on the amount of secondary grains, the spice factor is generally relatively low.”

One of the makers of whisky with a lower amount of wheat is major distillery Brown-Forman. Its first wheat whisky, launched in spring 2018, contains 52% wheat, 8% rye and 20% each malted barley and corn in the mash. In Australia, Starward makes a 60-40 wheat-to-malted barley blend whisky, distilled and matured separately in red wine barrels. 

Last Mountain Distillery says that wheat gives their whisky a smoother and sweeter taste.

However, many other distilleries use 100% wheat. These include Dry Fly Distilling in Spokane, Wash. (local winter wheat), Breuckelen Distiling in Brooklyn, N.Y. (New York state white wheat, and the firm also makes a wheat gin) and Journeyman Distillery in Three Oaks, Mich. (100% organic Michigan wheat).

Last Mountain Distillery in Saskatchewan is another that makes whisky from wheat, and in the case of their “Canadian Whisky”, wheat and rye. Their 100% wheat whiskies include a “Single Cask” and a “Red Wine Barrel Aged.” 

Last Mountain Head Distiller and General Manager of Operations Braeden Raiwet explains that when the owners Colin and Meredith Schmidt started the distillery, they did some experimenting with different grains to see what flavor profile they liked best – and wheat won the day. 

“The wheat gives the whisky a sweeter and smoother taste than something like a rye grain,” he says. “Having easy access to wheat right in our backyard – our wheat comes from a farmer about 40 km down the road – is an added bonus.”

He notes that wheat mash doesn’t become overly thick like rye mash, which “makes it bit more forgiving” and “easier to work with.” 

Raiwet adds that “for an unmalted grain, it actually ferments quite well, and we get fairly decent conversion out of it. The wheat is also a bit softer than something like an unmalted rye, which helps to speed up the grinding process.”

Getting Creative with Vodka

Still in Saskatchewan, there are at least two other wheat vodka-makers, both with unusual products. Lucky Bastard Distillers makes a Rhubarb Vodka and Stumbletown Distilling has created the first spirit in the world made from 100% locally-grown “Saskatchewan Purple Wheat.” Its Purple Wheat Vodka won the Platinum Award at SIP Awards 2019. 

Stumbletown owner Craig Holland notes that a lot of vodkas are made of wheat, but any grain can be used. Stumbletown had never made vodka but decided to go for it after hearing about SK Purple. 

“We’re all about trying new things, and this wheat seemed to be a good opportunity,” Holland says. “It’s hard to be creative about vodka. It’s supposed to be an odourless and tasteless spirit, but each grain does provide a little flavor, and we do have a lot of flavor in this one. It’s got a really smooth mouthfeel and can be enjoyed on ice. We’ve also done an oaked version limited edition, and it’s just about gone.” 

Stumbletown’s Purple Wheat Vodka was an experiment to try and get new flavor into a drink that’s hard to experiment with.

The release of Stumbletown’s Purple Wheat Vodka has resulted in a lot of media attention. Holland says they’ve gotten requests for shipping it all over the world. 

“We may ship it in future, but right now it’s only available within the province,” he says. “We may do a purple wheat whisky at some point in the future.” 

A Beer of Many Names

No matter what it’s called — witbier, weissbier – wheat beer is a very old beverage, as old as 2,000 years. Wheat beer is generally bubbly with a unique tangy flavor and pale color. German versions tend to have banana and clove flavors, while Belgian wheat beers are flavored with coriander and orange. 

The website, Craft Beer, is dedicated to showcasing the differences among beers, describes American wheat beers as among “the most approachable beers in the craft beer world” because without access to the specialty Bavarian weizen yeast, American brewers of wheat beer “were forced to use clean-fermenting American ale and lager yeast. The American wheat’s composition gives it a particularly inviting style, accepting of additional ingredients, particularly raspberries, watermelon and even chilis.”

Bell’s Brewery in Michigan makes a wheat ale called Oberon, and Anchor Brewing Company in San Francisco, America’s oldest craft brewery, makes several. Anchor was the place where the first wheat beer in America since Prohibition was made, in 1984, called Anchor Summer Beer. The brewery also offers Anchor Mango Wheat and most recently launched Anchor Winter Wheat, a blend of malted barley and four varieties of wheat from Belgium, Germany and the Midwest, plus a locally-grown soft red winter wheat. 

Michael Cooper, executive director and CEO of the premium malting company Independent Barley & Malt (IB&M), notes that aside from some craft breweries that seek out specific varieties, most wheat malt, roasted wheat, wheat flakes in the U.S. are not marketed as varietal-specific. Indeed, most of the wheat used for malting in the United States is Canadian hard red spring wheat, but the trouble is that type of wheat is primarily used for baking or milling and not malting. Among other qualities, wheat for baking purposes has higher levels of protein, and that’s not desirable for malting. This situation is the reason Vince Coonce, IB&M’s director of malting, is working with scientists at Michigan State University and the Michigan Craft Beverage Council to select a soft winter wheat that is better for malting.  

Genetic Developments

The study, now in its second year, involves the measurement of traits of four Michigan wheat varieties grown under different fertilizer treatments – agronomic traits as well as traits that lend themselves to high-quality malt production such as grain plumpness, friability and extract.   

 In terms of breeding wheat specifically for distillation, some years ago the GreenGrains Project was initiated at the James Hutton Institute in Scotland. The project breeders aimed to identify traits that contribute to high alcohol yield and also locate the genetic and environmental factors controlling these traits. High alcohol yield (related to amount of nitrogen in the grain) had already be shown to be influenced by environmental factors. 

Senior James Hutton Institute Scientist Joanne Russell reports that 38 gene regions were identified as accounting for variation in the 11 measured traits. 

“Since GreenGrains finished, we have focussed on barley and projects that have both a wheat and barley component,” she explains. “Such as a recently-funded European Union project developing genomics tools for legacy collections of both crops.” 

Looking Forward

Wheat has certainly earned itself a permanent place in the making of the many spirits and beers we enjoy. Both large firms and small craft distilleries and breweries are still experimenting with wheat in their products, and its future seems bright. 

However, a perennial grain cousin of annual wheat called “Kernza,” developed by the Land Institute in Kansas may have an even brighter future. It’s so far being used in a beer offered by Patagonia of Portland, Ore., and who knows what other beverages will follow.

Planned Independent Barley & Malt facility signs supplier agreement with The Andersons

150 150 Independent Malt

MiBiz article click here.

LITCHFIELD — Proposed commercial-scale maltster Independent Barley & Malt Inc. has signed an exclusive supplier agreement with Maumee, Ohio-based The Andersons Inc.

Under the terms of the agreement, Litchfield-based Independent Barley & Malt will use The Andersons (Nasdaq: ANDE) to source, supply, deliver and store the malting barley it will use in its operations.

That includes leveraging The Andersons’ transportation and logistics network of trucks, railcars and Great Lakes vessels, as well as storage facilities at the Port of Toledo and in Reading, Mich., where Independent Barley & Malt (IB&M) plans to lease 650,000 bushels, according to a statement.

Backed by a group of investors, Independent Barley & Malt hopes to commission its commercial-scale malt house in Hillsdale County in the fourth quarter of 2020, and targets production of 47,500 tons of malted grains annually. The company aims to serve the craft beer, distilling and specialty food sectors.

Independent Barley & Malt currently is “making progress” on project financing, Mark Schauer, the company’s director of corporate affairs, told MiBiz.

The company is the first tenant announced for Michigan Hub, a $100 million natural gas-fired cogeneration power plant campus that broke ground in October, as MiBiz previously reported.

Schauer said the deal with The Andersons did not include any equity stake in the company. He declined to discuss the timeline for the exclusive supplier agreement, saying that it was “long enough to build a market with intent to extend based on success.”

“Working with IB&M is consistent with our strategic intention to grow income from originations and managing grain assets, expanding trading and risk management services, and broaden our food ingredients and specialty grain platform,” Weston Heide, vice president of food and specialty ingredients at The Andersons Trade Group, said in a statement.

The Andersons “over time” also will work on building a network of local farmers in the vicinity of Independent Barley & Malt’s facility, located in the middle of the state about 20 miles south of I-94 and about 25 miles from the Michigan-Indiana-Ohio border.

Schauer said the company last fall planted a test plot of winter barley in Litchfield that it hopes to harvest this June.

“We will engage a group of Andersons’ growers to plant winter barley in 2019 in the region for harvest [in] 2020,” he said in an email to MiBiz.

Investment group, Andersons team up for malted barley facility

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The Blade article click here.

LITCHFIELD, MICH. — An investment group in southeast Michigan plans to build a $100 million facility to process malting barley for use by craft brewers, and it will be getting a big helping hand from The Andersons Inc.

Independent Barley & Malt Inc., of Litchfield, Mich., in western Hillsdale County, hopes to start construction on its 10-acre project by this summer and have it turning grain into malted barley by 2020.

The investment group said Tuesday it had signed a memorandum of understanding with The Andersons. The Monclova Township-based agribusiness will be the exclusive supplier of the crop and will provide delivery and storage of malting barley via its existing storage facility in Litchfield.

When completed, the malting facility will have more than 8,000 square feet of production, grain storage, and warehouse on 10 acres of a 42-acre site that could be expanded if successful. The facility will be able to make 47,500 tons of malted barley for brewing per year, utilizing more than 2 million bushels of malting barley and other grains.

IB&M said its facility, which will have 65 workers, will be the largest malting barley processing plant east of Milwaukee and be a boon to Michigan, Ohio, and Indiana craft brewers, most of whom must get their malted barley from Germany, Canada, and the northern plains regions of the United States.

A large commercial brewery uses about 35 pounds of malted barley to make a barrel of beer. But craft brewers use 70 to 120 or more pounds of malted barley per barrel beer.

“It’s been over forty years since the last large malt plant closed in Michigan. Michigan farmers basically stopped growing malting barley,” said Hal Reed, IB&M’s director of development and its board chairman.

“Today, Michigan’s malt industry is virtually non-existent, forcing craft brewers to import more than $100 million per year from out-of-state or foreign suppliers,” he added.

The investment group is working “to bring malting barley back to Michigan and produce a competitively priced, premium malt product for our craft customers,” Mr. Reed said.

According to Michigan State University’s extension service, throughout the first half of the 20th century it wasn’t unusual for Michigan to harvest more than 100,000 acres of barley annually. At peak times malting barley reached 300,000 acres.

But the numbers declined steadily starting in the 1950s. Demand dropped significantly after 1985 when the 135-year-old Stroh brewery on Detroit’s east side closed.

The past 10 years saw state production average just 10,000 acres. Craft brewers want a local source of malted barley, but there were few options for malt processing, Michigan State experts said.

Mark Schauer, director of corporate affairs for IB&M, said The Andersons was a key cog in the decision to build the Litchfield malted barley plant.

“The Andersons has a presence in Hillsdale County and we’ve known and respected their work in Michigan and the region as a grain company and their ability to develop big projects like their Albion corn ethanol facility,” Mr. Schauer said. “We knew their capabilities first-hand and had knowledge of the important work they do in agriculture,” he added.

The agribusiness already has a grain facility near Litchfield.

But more importantly, IB&M’s Mr. Reed is The Andersons’ former chief operating officer. He retired in 2016 but knew intimately the company’s grain capabilities.

“Working with IB&M is consistent with our strategic intention to grow income from originations and managing grain assets, expand trading and risk management services, and broaden our food ingredients and specialty grains platform,” said Weston Heide, vice president of Food and Specialty Ingredients at The Andersons.

The food and specialty ingredients business, which is part of the company’s Trade Group, has been supplying a variety of ingredients to the food and beverage industry for several years. It also has supplied malting barley to the craft brew market before, said Andersons spokesman Kate Langenderfer.

Mr. Schauer said The Andersons will provide additional support by advising farmers in southeast Michigan and northwest Ohio on the best methods to grow malting barley, what herbicides and fertilizers to use, and how to market the crop.

Most farmers in the region plant winter wheat, but planting malting barley might be more lucrative because it fetches about $2 more per bushel, Mr. Schauer said.

IB&M said it has targeted 2020 to start operating, but it could take five years or more to get the region’s farmers on board with planting malting barley as a winter crop.

“Our plan is to be in production in 2020, but the lion’s share of our barely will be imported. We have a study that says it will take 10 years before all of the barley we process is local, but we think it’ll be much quicker than that,” Mr. Schauer said. “We would like to cut that time in half.”

Michigan Coal Plant to be Redeveloped into Clean-Power Site

150 150 Independent Malt

WNEM article click here.

Coal Plant to be Redeveloped into Clean Power Site

150 150 Independent Malt

Detroit News article click here.

Litchfield, Mich. – A Michigan company is turning a former coal-fired power plant into a clean energy facility.

Michigan Hub, Inc. recently broke ground on the $100 million project at the Endicott Generating Plant in Litchfield. The 44-acre energy park will provide up to 168 megawatts of power to tenants, adjacent industrial facilities and local municipalities, the company said.

“Michigan Hub will craft the future with local power, supplying our tenants and customers with clean, locally-sourced electricity, steam, and chilled water at a price that will reduce their production and utility costs and increase their competitive positions,” said Michigan Hub CEO Glenn Foy.

Michigan Hub plans to have 15 tenants at the site.

“We believe in a true ‘hub’ of forward-looking businesses that demand low-cost energy that is locally produced and reduces their carbon footprint and costs,” Foy said.

Independent Barley & Malt, Inc. has been confirmed as the first tenant, according to a press release.

Independent produces malted barley and other grains for brewers and distillers. The company produces 50,000 tons of malted grains annually, according to the press release.

“Our initial interest in locating our plant in Litchfield was because of Michigan Hub’s vision for the site,” said Independent CEO Michael Cooper. “The synergies were immediately clear – the opportunity to access lower cost energy at an industrial site located in a thriving rural community were critical to our site selection.”

The project could create up to 75 full-time jobs and is scheduled to be completed between 2020 and 2021, officials said.

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Michigan Coal Plant to be Redeveloped into Clean-Power Site

150 150 Independent Malt

Associated Press article click here.

LITCHFIELD, Mich. (AP) — A Michigan company is turning a former coal-fired power plant into a clean energy facility.

Michigan Hub, Inc. recently broke ground on the $100 million project at the Endicott Generating Plant in Litchfield. The 44-acre energy park will provide up to 168 megawatts of power to tenants, adjacent industrial facilities and local municipalities, the company said.

“Michigan Hub will craft the future with local power, supplying our tenants and customers with clean, locally-sourced electricity, steam, and chilled water at a price that will reduce their production and utility costs and increase their competitive positions,” said Michigan Hub CEO Glenn Foy.

Michigan Hub plans to have 15 tenants at the site.

“We believe in a true ‘hub’ of forward-looking businesses that demand low-cost energy that is locally produced and reduces their carbon footprint and costs,” Foy said.

Independent Barley & Malt, Inc. has been confirmed as the first tenant, according to a press release.

Independent produces malted barley and other grains for brewers and distillers. The company produces 50,000 tons of malted grains annually, according to the press release.

“Our initial interest in locating our plant in Litchfield was because of Michigan Hub’s vision for the site,” said Independent CEO Michael Cooper. “The synergies were immediately clear — the opportunity to access lower cost energy at an industrial site located in a thriving rural community were critical to our site selection.”

The project could create up to 75 full-time jobs and is scheduled to be completed between 2020 and 2021, officials said.

Michigan Coal Plant to be Redeveloped into Clean-Power Site

150 150 Independent Malt

Midland Daily News article click here.

LITCHFIELD, Mich. (AP) — A Michigan company is turning a former coal-fired power plant into a clean energy facility.

Michigan Hub, Inc. recently broke ground on the $100 million project at the Endicott Generating Plant in Litchfield. The 44-acre energy park will provide up to 168 megawatts of power to tenants, adjacent industrial facilities and local municipalities, the company said.

“Michigan Hub will craft the future with local power, supplying our tenants and customers with clean, locally-sourced electricity, steam, and chilled water at a price that will reduce their production and utility costs and increase their competitive positions,” said Michigan Hub CEO Glenn Foy.

Michigan Hub plans to have 15 tenants at the site.

“We believe in a true ‘hub’ of forward-looking businesses that demand low-cost energy that is locally produced and reduces their carbon footprint and costs,” Foy said.

 

Independent Barley & Malt, Inc. has been confirmed as the first tenant, according to a press release.

Independent produces malted barley and other grains for brewers and distillers. The company produces 50,000 tons of malted grains annually, according to the press release.

“Our initial interest in locating our plant in Litchfield was because of Michigan Hub’s vision for the site,” said Independent CEO Michael Cooper. “The synergies were immediately clear — the opportunity to access lower cost energy at an industrial site located in a thriving rural community were critical to our site selection.”

The project could create up to 75 full-time jobs and is scheduled to be completed between 2020 and 2021, officials said.

 

Commercial-scale malting facility a ‘game-changer’ for state’s craft beverage supply chain

150 150 Independent Malt

MiBiz article click here.

LITCHFIELD — A group of investors plans to open a commercial-scale malting and grain-processing facility about an hour east of Kalamazoo to serve the region’s growing craft beverage industry.

Independent Barley & Malt Inc. is in the process of wrapping up its remaining financing and intends to break ground in April 2019 on what’s billed as the largest malt house east of Milwaukee.

According to CEO Michael Cooper, the company has secured seed capital from its partners, as well as mezzanine financing and debt, to build a commercial-scale malt house that targets production of 47,500 tons of malted grains annually. It aims to commission the plant in the fourth quarter of 2020.

Based in Litchfield, a Hillsdale County city with a population of about 1,300 people, Independent Barley & Malt is the first tenant announced for the new 42-acre Michigan Hub LLC, a $100 million natural gas-fired cogeneration power plant that broke ground last week. The facility, which could produce up to 176 megawatts of electricity by 2022, will supply power, steam and chilled water at advantageous costs to onsite companies.

“The reason we’re at Michigan Hub in Litchfield … is because this offers us the greatest competitive advantage, the lowest cost of doing business. We’re very thermally intensive. If we were combusting natural gas in our kilns, like much of the competition today, this project would not be as profitable or as successful,” said Cooper, an entrepreneur who worked for decades in the biofuels industry.

By locating within the cogen district, Independent Barley & Malt will save 41 percent on its energy bill compared to if the company had to buy energy off the grid, according to Cooper.

“The economies of scale dictate that we have to move large volumes in and out of the plant in order to be able to meet the current price points for bulk malts going into Michigan brewers,” he said.

In addition to the energy cost advantage, Independent Barley & Malt will be able to deliver freight savings to in-state operations that can take bulk malt shipments, thanks to the state’s high gross vehicle weight limit. Any other bulk malt shipments would have to come from out-of-state, where the weight limit generally follows the federal standard, which is about half of the tonnage allowed in Michigan.

Scott Graham, executive director of the Michigan Brewers Guild, describes Independent Barley & Malt’s plans as a “game-changer” for the state’s brewery supply chain. Although a handful of small malt houses have set up shop around the state and worked with farmers to develop the industry, a project of this size brings much needed scale, he said.

“Barley and malting are looking to re-emerge as an industry. There’s been good interest on the part of farmers, good work by the MSU Extension, but there’s an issue if a bunch of farmers grow it and they don’t have a market for it,” Graham said. “If we can see malting barley develop as a viable crop in Michigan, that’s a significant development. (Independent Barley & Malt is) going to require enough barley to make it a more interesting proposition for more farmers.”

OFFERING ADVANTAGES
Independent Barley & Malt will source all of its grain supply from Maumee, Ohio-based The Andersons Inc. (Nasdaq: ANDE), a diversified agribusiness focused on grains, plant nutrients, ethanol and rail.

To start, the maltster plans to source “a majority of the product” from Canada “for economics and quality” reasons, Cooper said. The company will use marine transport to move the grain from Thunder Bay, Ontario to the Port of Toledo, where The Andersons operates a grain terminal. The maltster also has leased space at The Andersons’ grain elevator 15 miles south of the malt house in Reading, Mich. to use for bulk barley storage.

“Not all barleys can make great malts. For world class malt, we need an all of the above (approach),” Cooper said of the company’s sourcing decisions, noting it eventually hopes to find ways to work with farmers in the Great Lakes region. “We also have a plan to implement an agronomy program where we can grow both a winter barley in the southern half of Michigan, Indiana, Ohio, and hopefully a spring barley in the north.”

The Litchfield project also includes plans for a “batch plant” where the company could work directly with brewers of all sizes to develop their own proprietary custom malts, focused on various flavors, colors, brewing properties or the origin of the grain, Cooper said.

“Instead of differentiating with hops or other adjunct additives like fruits or spruce tips, we encourage brewers to differentiate with their own malt,” he said. “All brewers are blending the same 50 varieties of malt from a small amount of global suppliers. … We’re asking folks to come to our plant and work through sensory to bring out and deliver exactly what folks are looking for.”

Cooper declined to comment on ongoing discussions with breweries and distilleries to source malt from his company, but hinted that Independent Barley & Malt had deals in the works.

“You couldn’t complete financing without having a certain amount of commitments,” he said.

Michigan-based brewery owners who spoke on background with MiBiz say they’d consider buying malt from a new source. However, executives at small producers noted that malt pricing is not a major factor in their sourcing decisions since their cost of goods remains minimal, even though they buy at a small scale. Instead, they’d gladly pay more for unique products, such as a quality, all-Michigan malt.

AN INDUSTRY IN FLUX
The undisclosed Independent Barley & Malt investment comes amid an inflection point in the craft beverage industry and its supply chain.

Nationally, craft beer garnered a 12.7-percent volume share of the beer market and accounted for 23.4 percent of retail dollars in 2017, according to the Brewers Association, which only tracks data for small and independent breweries. At midyear, the $26 billion craft beer industry grew by 5 percent, marking a continued plateau in sales growth.

More companies also are fighting for a piece of the industry. The Brewers Association estimates 6,655 breweries were active as of June 30, up nearly 1,100 from the same time a year ago. Another 2,500 to 3,000 remain in the planning stages, according to the trade group.

Additionally, the malt industry supply chain could soon face changes as a major supplier looks to exit its business. Last month, Bloomberg reported that Minnetonka, Minn.-based Cargill Inc. was considering selling off “part or all” of its global malting operation. The report cited sources that put the value of the transaction at more than $1 billion.

Coincidentally, The Andersons — which will supply Independent Barley & Malt — in September appointed former Cargill exec Pat Bowe as its new CEO. Bowe most recently served as the corporate vice president for Cargill’s food ingredients and systems platform.

For his part, Cooper believes Independent Barley & Malt will gain traction among brewers in Michigan and beyond because the company’s products will be able to compete on price and quality.

“I come from the fuel business. (Being) ratable is the ability to deliver on volume, on-spec, every time, all the time. That’s the consistency that the large brewers expect and demand,” Cooper said. “It’s going to take almost two years to build this plant. We’re going to be able to showcase the fact that we’re taking a massive investment risk to build this plant.”

Commercial-Scale Malting Facility a “Game-Changer” for State’s Craft Beverage Supply Chain

150 150 Independent Malt

MiBiz – https://mibiz.com/sections/manufacturing/commercial-scale-malting-facility-a-game-changer-for-state-s-craft-beverage-supply-chain?highlight=WyJtYWx0IiwibWFsdCdzIl0=

LITCHFIELD — A group of investors plans to open a commercial-scale malting and grain-processing facility about an hour east of Kalamazoo to serve the region’s growing craft beverage industry.

Independent Barley & Malt Inc. is in the process of wrapping up its remaining financing and intends to break ground in April 2019 on what’s billed as the largest malt house east of Milwaukee.

According to CEO Michael Cooper, the company has secured seed capital from its partners, as well as mezzanine financing and debt, to build a commercial-scale malt house that targets production of 47,500 tons of malted grains annually. It aims to commission the plant in the fourth quarter of 2020.

Based in Litchfield, a Hillsdale County city with a population of about 1,300 people, Independent Barley & Malt is the first tenant announced for the new 42-acre Michigan Hub LLC, a $100 million natural gas-fired cogeneration power plant that broke ground last week. The facility, which could produce up to 176 megawatts of electricity by 2022, will supply power, steam and chilled water at advantageous costs to onsite companies.

“The reason we’re at Michigan Hub in Litchfield … is because this offers us the greatest competitive advantage, the lowest cost of doing business. We’re very thermally intensive. If we were combusting natural gas in our kilns, like much of the competition today, this project would not be as profitable or as successful,” said Cooper, an entrepreneur who worked for decades in the biofuels industry.

By locating within the cogen district, Independent Barley & Malt will save 41 percent on its energy bill compared to if the company had to buy energy off the grid, according to Cooper.

“The economies of scale dictate that we have to move large volumes in and out of the plant in order to be able to meet the current price points for bulk malts going into Michigan brewers,” he said.

In addition to the energy cost advantage, Independent Barley & Malt will be able to deliver freight savings to in-state operations that can take bulk malt shipments, thanks to the state’s high gross vehicle weight limit. Any other bulk malt shipments would have to come from out-of-state, where the weight limit generally follows the federal standard, which is about half of the tonnage allowed in Michigan.

Scott Graham, executive director of the Michigan Brewers Guild, describes Independent Barley & Malt’s plans as a “game-changer” for the state’s brewery supply chain. Although a handful of small malt houses have set up shop around the state and worked with farmers to develop the industry, a project of this size brings much needed scale, he said.

“Barley and malting are looking to re-emerge as an industry. There’s been good interest on the part of farmers, good work by the MSU Extension, but there’s an issue if a bunch of farmers grow it and they don’t have a market for it,” Graham said. “If we can see malting barley develop as a viable crop in Michigan, that’s a significant development. (Independent Barley & Malt is) going to require enough barley to make it a more interesting proposition for more farmers.”

OFFERING ADVANTAGES

Independent Barley & Malt will source all of its grain supply from Maumee, Ohio-based The Andersons Inc. (Nasdaq: ANDE), a diversified agribusiness focused on grains, plant nutrients, ethanol and rail.

To start, the maltster plans to source “a majority of the product” from Canada “for economics and quality” reasons, Cooper said. The company will use marine transport to move the grain from Thunder Bay, Ontario to the Port of Toledo, where The Andersons operates a grain terminal. The maltster also has leased space at The Andersons’ grain elevator 15 miles south of the malt house in Reading, Mich. to use for bulk barley storage.

“Not all barleys can make great malts. For world class malt, we need an all of the above (approach),” Cooper said of the company’s sourcing decisions, noting it eventually hopes to find ways to work with farmers in the Great Lakes region. “We also have a plan to implement an agronomy program where we can grow both a winter barley in the southern half of Michigan, Indiana, Ohio, and hopefully a spring barley in the north.”

The Litchfield project also includes plans for a “batch plant” where the company could work directly with brewers of all sizes to develop their own proprietary custom malts, focused on various flavors, colors, brewing properties or the origin of the grain, Cooper said.

“Instead of differentiating with hops or other adjunct additives like fruits or spruce tips, we encourage brewers to differentiate with their own malt,” he said. “All brewers are blending the same 50 varieties of malt from a small amount of global suppliers. … We’re asking folks to come to our plant and work through sensory to bring out and deliver exactly what folks are looking for.”

Cooper declined to comment on ongoing discussions with breweries and distilleries to source malt from his company, but hinted that Independent Barley & Malt had deals in the works.

“You couldn’t complete financing without having a certain amount of commitments,” he said.

Michigan-based brewery owners who spoke on background with MiBiz say they’d consider buying malt from a new source. However, executives at small producers noted that malt pricing is not a major factor in their sourcing decisions since their cost of goods remains minimal, even though they buy at a small scale. Instead, they’d gladly pay more for unique products, such as a quality, all-Michigan malt.

AN INDUSTRY IN FLUX

The undisclosed Independent Barley & Malt investment comes amid an inflection point in the craft beverage industry and its supply chain.

Nationally, craft beer garnered a 12.7-percent volume share of the beer market and accounted for 23.4 percent of retail dollars in 2017, according to the Brewers Association, which only tracks data for small and independent breweries. At midyear, the $26 billion craft beer industry grew by 5 percent, marking a continued plateau in sales growth.

More companies also are fighting for a piece of the industry. The Brewers Association estimates 6,655 breweries were active as of June 30, up nearly 1,100 from the same time a year ago. Another 2,500 to 3,000 remain in the planning stages, according to the trade group.

Additionally, the malt industry supply chain could soon face changes as a major supplier looks to exit its business. Last month, Bloomberg reported that Minnetonka, Minn.-based Cargill Inc. was considering selling off “part or all” of its global malting operation. The report cited sources that put the value of the transaction at more than $1 billion.

Coincidentally, The Andersons — which will supply Independent Barley & Malt — in September appointed former Cargill exec Pat Bowe as its new CEO. Bowe most recently served as the corporate vice president for Cargill’s food ingredients and systems platform.

For his part, Cooper believes Independent Barley & Malt will gain traction among brewers in Michigan and beyond because the company’s products will be able to compete on price and quality.

“I come from the fuel business. (Being) ratable is the ability to deliver on volume, on-spec, every time, all the time. That’s the consistency that the large brewers expect and demand,” Cooper said.  “It’s going to take almost two years to build this plant. We’re going to be able to showcase the fact that we’re taking a massive investment risk to build this plant.”

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