Economies of Scale in Sustainable Brewing

Posted on November 23, 2011

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All aspects of beer intrigue me, so while I am not a consumer of American Adjunct Lager style of beer (think Budweiser, MGD, Coors, etc) I still appreciate the companies that brew them on many other levels, aside from taste. One of these areas of respect is the impact sustainability initiatives at these breweries can have.

No matter how you feel about big beer, no one can deny its impact in the market, from distribution to advertising, and now sustainability. While smaller, craft breweries have built sustainability into their strategy, operations, and mission, a number of large breweries have taken on sustainability measures in the past few years, and I know some people automatically discount these initiatives. However, it is important to realize just how big an impact these measures can have.

As an example, let’s compare some Granny Smith apples to Golden Delicious apples, or in this case craft beer to big beer, by comparing the size of the SABMiller to the U.S. craft industry.

SABMiller has initiated water use measurement and setting goals for reduction. Their current water ratio is 4.2 liters of water used for every 1 liter of beer produced. 1 Their goal is 3.5 liters used per liter of finished product. 2 This represents only water used in the production of beer, the overall water embedded in a liter of SABMiller beer is between 61 and 180, for production in Peru and Tanzania, respectively. 3 (I could not find reliable numbers for average total production.) The total amount of water used in SABMiller’s production of beer in 2010 was 731 million hectoliters, which is 73,100,000,000 liters. That means they are making 17,404,761,905 liters of beer a year, which is 148,317,796 barrels of beer. Context please?

SABMiller produces a lot of beer, approximately 10% of world beer production (world beer production in 2009 being 1,809,683,000 hectoliters4).  Further context, the U.S. craft beer market in 2010 was 1,167,839,796 liters, or 9,951,956 barrels.5 This means that U.S. craft beer production was 1/15th the size of SABMiller’s. What does this mean in terms of sustainability? SABMiller’s goal is to reduce their water use ratio to 3.5, if they are able to get to 3.9 they will have reduced their water impact by the size of the whole U.S. craft beer industry production. I realize that this is comparing total production to water waste reduction, but I think it gets the point across. If all breweries take on water use reduction initiatives, the beer industry can grow and have no additional impact on water resources.

Jargon/clarification:
“American Adjunct Lager” refers to a style of beer, not an individual brewery or the size of the brewery; however, it is the style that the big U.S. brewers are known for and associated with.
“Embedded” water refers to all the water that is used to produce a product, from growing the crops to washing the bottles.
Measurement: The simple measurement of impact, whether it is measuring water, CO2e, biodiversity, etc, is a first step in almost all sustainability initiatives. It is only with these numbers that feasible goals can be set. Goal setting in of itself it not enough, though lots of companies squat there for a while, it is following through on these goals that is important.
Units of Measurement: Yikes!  Usually production is given in barrels in the U.S., but liters are also used. A barrel equals 117.3 liters (or 31 gallons), so 1 barrel = 117.3 liters = 31 gallons.

Note:
The numbers used for SABMiller were taken from a single internal website. I found some wildly different numbers in different places, so I chose what I felt was the most accurate source. I suspect that the difference in numbers reported is due to: inclusion of the whole supply chain vs single stages along the supply chain (ie only production), outside articles without proper citation and reproduction, and differences in handling information between industries or groups.
1 SABMiller http://www.sabmiller.com/index.asp?pageid=4
2 SABMiller “Water Future Report” http://www.sabmiller.com/files/reports/water_future_report.pdf
3Ibid. http://www.sabmiller.com/files/reports/water_future_report.pdf
4Brewers Almanac 2011 http://www.beerinstitute.org/statistics.asp?bid=200
5Brewers Association Statistics http://www.brewersassociation.org/pages/business-tools/craft-brewing-statistics/beer-sales

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Posted in: Beer Industry