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Risks of Investing in Hops

Industry failure – As explained in solution background, the hop industry shows no signs of slowing down in the immediate future (~5 years). The probability of industry related recession is considerably small. However, this is the biggest threat to the solution if it became a reality. If this hop industry was to face a recession, brewery controlled farms would likely remain successful as the hops produced could be integrated into the brewing process of the owning breweries, potentially creating new products for the breweries.

 

Risk of no land available to purchase – The risk of land availably should also be considered. This could potentially become a significant stumbling block for the solution. The availability of land in the future is highly unpredictable. It is recommended that research in this matter is commenced immediately.

 

Rejection of the solution by New Zealand Hops Marketing Board or New Zealand Hops Limited – Highly unlikely situation, however this risk should still be given consideration. This event would likely result in cancellation of the solution. If a large amount of breweries are willing to partake in the solution it may be possible to establish a spate marketing board controlled directly by brewery owned farms.

 

Rejection of the solution by the New Zealand Government – There is a small chance this solution will be rejected by the government. This would likely result in cancellation of the solution. Consequently, Government approval has been scheduled in the initial stages of implementation.

 

Rejection of the solution by breweries – There is a possibility that this solution is rejected by breweries. In this case, further research and discussion should be conducted to distinguish the reasoning for rejection.

 

Unrealistic initial investment for breweries – The price of setting up a recommended hop farm maybe be unreachable by smaller breweries. If this is the case for some or all of the participating breweries, it may be possible to create conjoint hop farms, owned by several smaller breweries. This will reduce the initial investment required by single breweries however, profits generated for individual breweries will be reduced.

 

Food Tech Group 7 (2015) - 141.112. Created with Wix.com

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