They make not look like much, but hops are one of — if not the — key ingredient to making beer, well, beer. These small green plants hold the key to turning yeast and water into that liquid delicacy enjoyed the world over, and different hops give different beers varying, distinctive bitterness and aromas.
But, while they may help create the flavors that make suds so appealing, brewers had a tough time getting their hands on those necessary hops for several years.
The problem hit a fever pitch in the late aughts and early 2010s when a shortage of hop plants hit beer-making operations around the world. While major brewers’ larger budgets meant they typically found new ways to get those key ingredients, small and independent breweries struggled to find cost-effective ways to source their key ingredient.
It was perhaps the worst time for a shortage, too. The brewing industry was undergoing a rapid shift. Hundreds of independent brewers were opening up shop with ambitions of tapping into the increasing demand for craft beer and, just as doors opened, these small businesses suddenly couldn’t reliably source their biggest need.
Out of that crisis emerged the Lupulin Exchange, an online, international platform through which brewers could buy and sell hops from one another. The platform aims to help those in need of hops hop-up, and enable those with a hops surplus to sell off the extra for an additional revenue stream.
But, in a recent interview with PYMNTS, Shane Kunkle, co-founder of the Lupulin Exchange, explained that while the idea was born to help brewers handle the hops scarcity, the market has since rebounded. Now that the shortage is over, the platform is working to connect brewers with surplus hops and those looking to fill a need or experiment with new varieties.
“We knew this was an issue, but when we pushed the site live, we were really surprised by how many people from around the industry were putting up listings and how much of a problem this really was,” Kunkle said. “Now there are people sitting on older hops that they need to get rid of, and now there is an overabundance that some brewers want to sell off, so this has been something that’s effective during both shortage and surplus.”
Because the Lupulin Exchange does not grow or sell its own hops, the platform works to connect brewers looking to sell their own stock with others seeking to fill a shortage or add an exotic or unusual variety to their rosters.
Larger breweries and smaller operations with hops to spare can list on the company’s platform based on the characteristics of the hops — including variety, current condition, price and available quantity. Meanwhile, buyers can search for hops based on any one of those or other features, access data on market demand and glean other insights to help inform purchasing decisions. They can also take advantage of features like Hop Alerts, announcements to notify prospective buyers when a certain variety of hop dips below a selected price point.
While it may be a simple-sounding premise, connecting buyers with sellers — and the reality of actually building and launching a platform to handle it — was anything but, Kunkle said.
“Before we came along, it was really hard for small breweries to get hops,” he said. “They had to contract their hops years in advance, or deal with hop brokers that wouldn’t take on new breweries because of all the risk. So, we knew we had to build a better way for these small businesses to deal with that process.”
The system’s simplicity was essential because many of the companies using the platform were — and still are — small startup operations that may not be used to buying hops directly from other brewers, Kunkle said. As a result, the Lupulin Exchange also looked to maintain that spirit of simplicity when it came to processing payments.
Kunkle and his team decided to build a platform that would allow buyers to set prices without having to account for logistical costs like shipping, which are often variable and difficult to calculate. Instead, his company automatically adds those charges to the displayed price for buyers, enabling sellers to know exactly how much revenue to expect from selling hops and sellers to view prices without being hit with fees late in the process.
Making and receiving payments are also designed to be as simple as possible. Buyers can use a credit or debit card or bank transfer to pay for their hops. Payment is then guaranteed within seven days via an electronic transfer or a paper check.
Handling hops abroad
With a simplified sales platform and payment processing system in place, the company has now turned its eyes toward international expansion. It launched sales in Canada for the first time in July, both for hops from Canada and those outside of the country, Kunkle said.
As it turns out, though, going international wasn’t as easy as pouring a pint. To open operations in Canada, the Lupulin Exchange needed to update its platform to accept payments in the country’s currency and from Canadian bank accounts. It also rolled out a new display interface, allowing buyers to track their hops’ sources and the currency in which the displayed price was calculated.
Next up? Helping brewers across the pond. Using lessons learned and infrastructure built during the Canadian expansion process, the company is now working to support European currencies and grow operations in the continent.
“We’re looking for growth opportunities, and the next big one is going to be the United Kingdom,” Kunkle said. “The big trick there is going to be supporting the British pound, but right now, American hops are really popular around the world, so we anticipate there being a real market for this kind of service there.”
With the power of platform payments, it may not be long before brewers from around the world are turning leftover crops into new revenue streams.
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