From Wasted Crops To Craft Beer: 4 Steps For Creating New Market Demand

Learn 4 valuable business lessons from an enterprising startup that saw opportunity where others did not.
Writer and Public Speaker, Freelance
December 26, 2013

Never underestimate the power of a few bored geeks. The entrepreneurial team behind Skagit Valley Malting Co. consists mostly of retired computer and aerospace engineers, who moved to this bucolic region just north of Seattle with all intentions of retiring. But instead, they found an open niche market and the opportunity to help the community and build a business.

When retired entrepreneur Wayne Carpenter started working with the port of Skagit, he discovered two things. First, local farmers were growing barley at a loss, rather than as a reliable cash crop, as a necessary part of their crop rotation. Second, the valley's barley and wheat production was some of the best in the region, and Carpenter knew brewers worldwide would find it particularly attractive. He consulted with several friends, researched the supply chain and talked to several agricultural and brewing experts. In a little less than a year, he and his partners were ready to turn his germ of an idea into a working business model.

The nine founders made connections with local community farmers, international brewers and two regional agricultural schools to create a model for delivering boutique malted barley to craft brewers. This model is contrary to the majority of barley production in the world, which primarily grows a narrow range of crops deemed usable by large lager producers like Anhauser-busch and Miller Brewing. It's been greeted enthusiastically by the craft brewing community and is already servicing a few tons of grain orders per year.

Not every business can specialize in such a fun niche, but all entrepreneurs can learn from the techniques Skagit Valley Malting used to develop a demand for what they do best.

1. Create New Connections

Turning clients into friends is a buzzword in modern marketing, but the guys at Skagit Valley turned it up a notch by making friends with folks who weren't even in their organization. They got barley experts from two different agricultural schools to recommend barley varieties that would grow well in the region and then introduced those varieties to brewers. During the 2014 growing season, they'll help those brewers by contracting to buy specific quantities of those varieties from local area farmers, who stand to actually profit from these specialty crops rather than selling them at a loss. Though this didn't result in immediate sales for the malters, it helps to create goodwill that will hopefully pay off as the business model develops.

2. Don't Be Intimidated

When Carpenter was invited to speak at a brewer's convention in Portland, Oregon, he accepted, only to find that he was speaking among a roster of international beer celebrities and world-class experts on beer, farming and brewing. Despite the imposing company, he gave his speech and discovered the audience was hungry for his particular message. That presentation gave the company connections and a wide-reaching network it couldn't have achieved if Carpenter had bowed out after being intimidated by the other people headlining with him.

3. Find The Win-Win

Under this business model, local farmers win by making a 10- to 30-percent profit from planting barley rather than farming it at a loss. Brewers win by having access to more varieties of barley than they had in the past. Beer lovers win by getting to enjoy a greater variety of their favorite beverages made from these new crops of barley. Competition is part of the capitalist model, but a situation where everybody involved helps each other succeed is sustainable and profitable for the long haul.

4. Create Diaspora For Your Product

Diaspora is usually used to describe a population that's spreading out from a single point, but it can just as easily by applied to a product spreading from a single point. In the case of Skagit Valley Malting, the diaspora started when the company founders realized that their boutique grain would be just as attractive to bakeries and distilleries as it was to craft brewers. In fact, they've already started receiving orders from a five-star restaurant who wants craft barley to make its in-house breads.

Although Skagit Valley Malting has an unusual model in a unique setting, their strategy of finding demand by forging relationships is nothing new. What are some of your favorite examples of this plan in action? Share with us in the comments below.

Jason Brick has contributed more than 2,000 blog and magazine articles to local, regional and national publications and speaks regularly at writing and business conferences. You can find out more about Jason at www.brickcommajason.com.

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Photo: Getty Images

Writer and Public Speaker, Freelance