Drink Local - GSMSummit 2014, Joel Alex

Hello everyone.
My name is Joel Alex. I am a Old Town native, with a degree in Environmental Policy from
Colby College and over 5 years background in rural development, sustainability, and food
policy.
In 2013 I founded Blue Ox Malthouse, a company building Maine’s economy by connecting
Maine agriculture to the Maine craft beverage industry.
Today I am going to
1) Provide an overview of our business; and
2) Speak a little to what it has taken to get this off the ground.
Let’s start with the fact that….
1

It’s a great time to be in the beer industry, but not so much to be a brewer.
There has been recent explosion of craft beer nationwide. In Maine alone, there are now
over 50 brewing licensed operations with approximately 20 breweries opening in the past
14 months
It is a competitive and expensive market to break into, and these companies are looking for
unique ways to reinforce their brand and stand out from the crowd.
If you can bring something unique to the table, it is a great time to support this industry..
2

Malts is the grain based ingredient that makes up over 90% of the non-water ingredient in
beer.
It is beer what flour is to bread and as such provides the majority of flavor and all of the
body and color characteristics of your favorite beer.
Increasingly there is interest in elevating the craft beverage movement through the
inclusion of local malt promoting regional unique characteristics.
3

In 2013, the 36 breweries in Maine used approximately 80 million lbs of malt annually—a
market of $46 million—all of which was imported.
4

This is in contrast to the fact that Maine is the North East’s largest Barley producing state.
Potato farmers in Aroostook County grow over 40,000 acres of small grains annually with
much of that acreage in malting varieties.
What happens to this grain?
5

It gets exported to commodity markets in Canada, is processed, and a small portion of it
makes its way back to Maine as malt.
6

In order to close the loop and keep this grain in State, Maine is in desperate need of
processing capacity.
Blue Ox Malthouse by bringing malting technology to Maine provides the connection, that
allows Maine grains to be used in Maine beers.
We’re doing this by working to develop a pilot production plant that proves the viability of
this technology in Maine.
To accomplish this we need the pilot plant to 1) provide meaningful volumes to breweries,
2) be a meaningful midsize market to our suppliers, and 3) sustain the business.
What does malt production look like?
7

Malting is ag-industry at its best, and one of our challenges has been taking equipment and
scaling it to the market, and supply.
Here is similar setup to the one we are working on from a malthouse in North Carolina.
8

First we receive and grade the grain for storage in tote bags.
9

The actual production begins when the grain is soaked in steep tanks over 2-3 days to start
germination.
10

In the traditional English-Scottish methods that we’ll be using, the grain is then moved to
the floor where it germinates for 3-5 days.
11

Once the correct level of modification has occurred we move it to a malt kiln which dries
down the grain while preserving the enzymes needed in the brewing process.
The whole process takes about 7 days.
12

With the support of an MTI Seed Grant and Libra Future Fund Award, Blue Ox Malthouse
has been developing product since the beginning of this year, first of out of Belfast, Maine
and now with production capacity in Limestone, Maine. We have 9 Maine breweries that
have received samples for testing and providing feedback.
This was the culmination of almost 2 years research and training and made possible
through an MTI Seed Grant and Libra Future Fund Award.
What have been the challenges of starting this business?
13

So what is it going to take to get to Farm Maine to Beer Maine?
Blue Ox Malthouse needs about $546,000 to reach a commercially viable scale.
This scale and investment only allows us to reach 3% of the addressable instate market
after 3 years.
Food processing involves a lot of upfront capital investment for modest returns over the
long termà opposite of the sexy tech startup promising high returns in 3 years.
Result is a lot of traditional financing is out of limitsà had to rely on impact investors.
15

The good news is that there are resources in the Maine to help food based business grow.
These are some the organizations from which I have received early seed capital, technical
assistance, or both.
16

Here are more.
I have also received a lot of business to business support from food processors as well as
professional services.
17

Building stock. Despite all the building stock Maine has, finding an affordable space with
the utilities and layout that we need has been a big challenge. Most places we looked at
where cost prohibitive because of the enormous amount of time and money we would
have had to spend getting them ready for our operations and to food processing.
18

Grain infrastructure and supply is perhaps the biggest long term concern for our business,
and one of the places we are committed as a business to put in a lot of effort.
We want to supply entirely from Maine, but we need to set up farmers for success and give
them the knowledge and tools they need to meet the quality demanded by the brewers.
To do this, significant investment needs to be made into grain infrastruce that small and
midsized farmers can have access to.
Includes:
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And arguably the most important investment upon which the viability of the whole industry
relies. Variety development for geared towards Maine’s growing season and crop rotations.
24

Take aways are. We’re filling a missing and potentially impactful niche for local food
systems.
Starting this business has any number of real challenges including the big three…
Access to capital
Appropriate infrastructure for processing à less of a problem if we solve the first
challenge.
Biggest challenge on largest investment will be in the farmers and giving them tools for
success.
25

Appreciate your time and inviting me here. I look forward to your questions.
Thank you.
26

Drink Local - GSMSummit 2014, Joel Alex

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Drink Local - GSMSummit 2014, Joel Alex