THE GIST
Origin Malt has grand ambitions—and it’s betting on an unsexy beer ingredient to realize them.
The Marysville, Ohio-based malting company, founded in 2015 by Victor Thorne and Ryan Lang, planted just under 10,000 acres of barley this year, but wants to add 75,000 more in the next five years. That’s more than the 70,000 acres of barley the state of Minnesota seeded in 2019; Montana, the nation’s top barley-growing state, seeded 920,000 acres, according to figures from the American Malting Barley Association.
Adding acreage from Illinois east to New York, Origin believes its lead barley variety, Puffin—a winter-malting barley strain descended from Marris Otter—has the potential to be a homegrown U.S. replacement for some of the imported European barley American brewers rely on. Significant money is at stake: the U.S. imports millions of dollars of malted barley from the U.K. alone each year.
Origin is planning the construction of its own malting facility, but currently has contract agreements in place with two malt houses, Canada Malt and Great Western, to get its product to market as soon as possible. In December 2019, Origin signed a distribution agreement with Country Malt Group (CMG) to make Origin’s products available through CMG’s network, distributed from five CMG distribution warehouses in Champlain, New York; Asheville, North Carolina; Chicago; Tampa; and Dallas.
Advertising itself as a local option for Midwest and Great Lakes breweries, Origin says all of its barley is grown within 300 miles of its Marysville headquarters. Because of its size and partnership with CMG, the company says it’s able to meet the needs of breweries that would generally be too large to buy barley from craft malting houses who don’t have the kind of production level regional breweries would require. Origin is eyeing this middle space—bigger than boutique maltsters but smaller than global corporations—as an underserved area, and wants to fulfill a need for local ingredients at a larger scale.
But questions about just how large Origin’s aspirations are, and whether its size moves it well beyond the realm of “craft malt,” echo some of the same issues craft beer itself has debated for a decade.
WHY IT MATTERS
“Whoever is the PR person for the hops industry needs a raise,” says Brent Manning, president of the Craft Maltsters Guild and co-founder of Riverbend Malt House in Asheville, North Carolina. “Nine out of 10 people on the street would tell you hops are the most important thing in beer.”
He’s not wrong. Enthusiastic craft beer consumers can rattle off their favorite hop varieties, and casual drinkers may recognize hop names like Citra or Mosaic due to their use in beer names or in the text on labels for IPA—America’s most popular craft beer style. Even Labatt Brewing Company places both on the front of a label for its Blue Citra “Hoppy Session Lager.” Few drinkers are clamoring for specific malts, and fewer still could name-drop Carapils or Munich, let alone Puffin.
But small craft malt houses have for years run their businesses on the premise that locally grown grains malted by small outfits are superior in quality—and produce more characterful beer—than those supplied by global conglomerates. Enough brewers care about these small malt houses’ connections to local economies to keep in business the 60-plus malt houses that make up the Craft Maltsters Guild.
Origin Malt’s leadership describes its expansion plans as “very aggressive” under the assumption that there are more (and larger) breweries looking for locally grown, specialty malt that smaller domestic malt houses aren’t able to supply. The company’s focus on supply chain improvements means it hopes to deliver Puffin and other varieties of barley to those customers. Given its current contract malting arrangements, though, Origin acknowledges its products are likely more expensive than malts available from multinational suppliers like Briess or Viking Malt. But Hagerty says Origin tries to offset that by direct contracting with as many breweries as possible, reducing the price uncertainty and mark-ups of the spot market.
“We’re optimizing for breweries of all sizes and bringing them that value,” says Sara Hagerty, who leads marketing and sales for Origin. “Being able to say they support family farms that are directly contracted, that speaks to breweries of any size.”
While its scale means that Origin is able to serve breweries that smaller malt houses couldn’t, it also puts Origin outside the parameters of what has been considered “craft” malt. The Craft Maltsters Guild defines craft malting houses as those that produce less than 20 million pounds of malt per year, are independently owned by a 76% majority of ownership, and source at least 50% of their grain from farmers within a 500-mile radius. The guild doesn’t recognize Origin as a craft malting house because it produces more than 22 million pounds of malt per year.
The idea that a malt house could be too large for a “craft” designation mirrors beer industry discussions over the Brewers Association’s definition of craft. In recent years, the BA has changed its own definition multiple times, most notably increasing the amount of beer a brewery can produce to still meet its definition of “craft,” alienating some of its smaller members. The debate over how big a craft brewery—or raw materials supplier—can be to still be considered “craft” is ongoing.
“People like Origin and Proximity and Independent Barley & Malt, these groups are scaled above what we consider craft malt, but are definitely still on the craft malt side. They’re nowhere near Rahr or an AB InBev plant,” Manning says. “Maybe we’ll call them ‘regional-scale maltsters.’ The story has yet to be told with what their impact will be on our industry.”
Manning says his brewery clients tell him a malting house “can’t be local enough,” and that his clients likely wouldn’t warm to a company that contract malts or grows its barley a few states away. Riverbend is located in western North Carolina, just an hour from the Tennessee border, but if he wants to gain brewery or distillery clients in Tennessee, he says he has to offer them Tennessee-grown grain. That’s something a regional, mid-size malting company might struggle to do. On the other hand, certainly not every brewery draws such a hard line in terms of what constitutes locally grown grain—and those are the breweries who might be most receptive to Origin.
“But for some breweries, they might be a perfect fit. They walk into a midscale brewery in Ohio and say, ‘I have Ohio-grown grain. It’s more expensive than Briess, but it’s cheaper than the small-scale malt within 50-100 miles of you.’ Some might say, ‘That sounds attractive,’ others might stick with the small-scale malster because that vision jibes with the ethos of their brewery and feels better in their gut.”
Manning doesn’t specifically name a brewery in that anecdote, but he could well have been talking about Rhinegeist, a growing Cincinnati, Ohio-based brewery that produced 105,000 barrels of beer last year. The brewery contracts for about 7-8 million pounds of malt annually; in 2020, it plans to buy about 90,000 pounds from Origin.
“Obviously we’re pretty big so we can’t work with most craft maltsters. They can’t be our main supply,” says Cole Hackbarth, director of brewery operations for Rhinegeist. “That’s what’s different about Origin. They’re not really craft malt; they’re on the level with national maltsters, so I think the potential for that in the future is what drew us a bit.”
Though Origin’s malt costs Rhinegeist a bit more than that of other, larger malt providers, that’s also a function of its size. Rhinegeist could get Pilsner malt at a lower price from its other malt supplier, but that’s because the brewery buys 7-8 million pounds of malt from that larger supplier every year. If Rhinegeist were a smaller brewery buying malt by the pallet without contracts, Origin’s prices might be even with other companies.
Hackbarth says Origin also offers advantages: high quality, a commitment to winter barley research and development, a staff committed to educating breweries, and lower freight costs for Rhinegeist (Origin is based just 45 miles from Cincinnati). Notably, telling a story to consumers about local malt isn’t part of that equation. The customer indifference he reports tracks with past studies that show drinkers are interested in the idea of independent and local breweries—to a point. Most of those studies surveyed primarily craft beer drinkers, and one study from the Journal Of Wine Economics found drinkers struggle to define what “local” even means when it comes to beer.
“I think for the most part, the customer doesn’t care,” Hackbarth says. “The decision to go with Origin was more from the internal business side. It’s looking to the future. They are planning to be big enough that potentially they could someday supply all of our malt in bulk by the truckload. It’s a long game; we’re giving ourselves more options as things get more competitive.”
Origin is in the process of determining exactly how it should scale itself. That’s the core of the company’s decision not to build its own malting facility right away, instead using contract maltsters as it determines demand for its products. Hagerty says Origin’s exclusive partnership with Country Malt Group allows it to meet almost all sizes of orders, from large breweries who need truckloads of malt each month to small breweries who need one pallet a month of 40 different bags. Origin’s ambitious future depends on the health of the craft beer market, which Thorne says is entering “more of a mature phase” after years of high growth.
“I think we’ll learn more over the next few years as to where our ideal size and position in the market should be,” Thorne says. “The fact that America still imports the majority of malt into craft breweries gives me confidence that we can continue to grow well into the future.”
Words by Kate Bernot