Smaller breweries strive to become more sustainable

June 22, 2021, 11:00 AM UTC

This story is part of The Path to Zero, a series of special reports on how business can lead the fight against climate change. This quarter’s stories go in-depth on sustainability in supply chains.

When the COVID-19 pandemic hit in the so-called preloading season ahead of major events such as St. Patrick’s Day, spring break, and the beginning of the baseball season, beer distributors faced unprecedented supply and environmental challenges.

Distributors had to work with municipalities to determine the safe level of draft beer that they could dispose of and travel to the facilities of companies that offer specialist decanting. In some cases, they partnered with distillers to donate kegs of beer to be made into hand sanitizer. 

Sustainable practices in brewing aren’t new, but as the planet faces a climate emergency, large and small beer companies alike are placing increased focus on sustainable practices, such as renewable energy, carbon reclamation, and sustainable resource use. 

For craft breweries with smaller budgets, embracing sustainability practices and innovation in favor of shorter supply chains has meant a way to compete—and stay in business.

“Brewing is a resource-intensive process, so it is our responsibility to constantly evolve our practices to reduce our environmental impact and offset where we can,” said Jason Perkins, brewmaster at Allagash Brewing Company in Maine. 

Path to Zero June 2021-Breweries-Canning
Canning production at Throwback Brewery.
Courtesy of Throwback Brewery

The brewery was one of 78 to participate in a sustainability benchmarking report compiled by the Brewers Association in 2015. By 2017, the participation level had increased by 50%.

Upholding sustainability commitments while tackling supply challenges for months could take a toll on breweries, making smaller craft beer companies particularly vulnerable. 

Big Beer accounts for most of the beer produced in the U.S., but craft is growing fast. The number of craft breweries increased by more than 80% between 2015 and 2020, creating new business owners in the energy-intensive brewing industry who must consider how to plan for a sustainable future. 

Now, amid business recovery from the pandemic, craft brewers are shortening supply chains to reduce their carbon footprint. This is helping local producers grow their businesses in challenging times, supporting a more diverse market of raw materials for the beer industry.

Smaller breweries are not the only ones setting sustainability goals. AB InBev, the world’s largest brewer, pledged to cut its greenhouse gas emissions by 25% by 2025. Molson Coors set a goal of decreasing carbon emissions by 20% across the value chain by 2025. By breeding new non-GMO varieties of barley that result in better yields, they are working to improve water-use efficiency in their agricultural supply chain by 10%.

This preference for local ingredients is a growing trend that has benefited Matt Cunningham of Rustic Brew Farm in Ohio. He said he found that the supply-chain disruption caused by COVID-19 was a “rally cry” for shorter supply chains, and he gained customers who prioritized local grain. 

“It pushed people toward [buying] local a lot more,” he said.

In Michigan and Maine, too, small farmers are benefiting from the support of craft breweries. Brewery Vivant committed to using at least one bag of grain from Michigan per batch of beer. 

Path to Zero June 2021-Breweries-Allagash-Brewing-Company-Buck-Farms-1-2
Allagash Brewing Company uses local Maine-grown grains from Buck Farms, as seen here, in several fan-favorite beers.
Courtesy of Allagash Brewing Company

“It’s not a ton, but at least it offers that support to farmers around here, to know they can count on that revenue stream coming in from us,” said Kris Spaulding, co-owner of Brewery Vivant. In Maine, Allagash has pledged to support local farmers by brewing with 1 million pounds of local grain per year.

There’s more than just malt, hops, water, and yeast going into some modern craft beer. 

Allagash had a close relationship with a local orchard to source strawberries, cherries, and other fruits used in the brewery’s signature offerings.

“Thanks in large part to our support over the years, they’ve been able to grow with us and expand their business significantly,” Perkins said. “Brewing with local ingredients is just one of the many ways we are improving sustainability at the brewery to lessen our footprint.”

The beer supply chain starts with the raw materials that the brewery will use to make beer. Once these ingredients and packaging items are received by the brewery, they move into production, followed by dispatch, and beer is distributed then consumed. 

In a fully sustainable model for Big Beer and craft beer alike, the environmental practices of breweries themselves must be complemented by distribution teams. David Christman, VP of state affairs of the National Beer Wholesalers Association, said that many of the organization’s members are constantly innovating to make their operations more environmentally friendly, such as by converting truck fleets to natural gas and moving to hybrid vehicles. 

The pandemic also led to supply-chain challenges because of a shortage of aluminum cans—a packaging method that brewers have increasingly moved toward in recent years, with a lower carbon footprint during transportation due to being lightweight.

With restaurants and bars shuttered during lockdowns, overall beer production volume was down, but canned beer sales were up since drinkers were consuming beer at home. By the end of the year, the demand for aluminum cans was outstripping manufacturing volumes. 

“It is possible that 2020 has been the year with the most supply-chain challenges in recent history,” said Bart Watson, chief economist for the Brewers Association, noting that the 2008 hops shortage may be the exception. But the supply-chain challenges aren’t over for the beer industry: The ongoing aluminum can shortage continues.

“[It’s] still a concern and will continue to be until manufacturing capacity catches up with demand,” said Chuck Skypeck, technical brewing projects manager at the Brewers Association.

While these craft breweries hoped that sustainability credentials would help differentiate them from the competition, consumer demand for sustainably sourced goods can be fickle.

Spaulding said that she is seeing evidence that consumers are gradually becoming more mindful about buying and supporting local where they can. 

“I think we’re starting to head in that direction [but] not as quickly as I would like,” she said, pointing out that consumer aspiration and intent does not always turn into behavioral change right away. 

But she and other craft brewery owners remain committed to operating as sustainably as possible, despite living with the challenges of the pandemic. 

Nicole Carrier, co-owner of Throwback Brewery in New Hampshire, said that she couldn’t imagine doing things any other way. “The biggest thing in marketing now is to be a value driven or purpose driven company, but we’ve always done it before it was in vogue.”

Subscribe to Fortune Daily to get essential business stories straight to your inbox each morning.

Read More

Path to ZeroEnergyClimate ChangeElectric VehiclesSupply Chains