Supplying Beer in a Changing Climate

Posted on December 9, 2011

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Changes in world weather conditions will change the growing region and availability of nearly all the inputs for beer. Barley and hop growing regions will migrate as traditional growing regions become too inhospitable and the availability of fresh water will diminish as water tables and weather patterns change. At the other end of the beer life cycle, distribution channels will be affected in the short-term by natural weather disasters, unnatural weather disasters, and possible changes in location of consumption – unnatural weather disasters being situations where people are exposed to greater consequences of a weather disaster due to poor infrastructure or planning.

On the input supply side. Brewers in the U.S. will likely have to find new sources for their inputs or change their ingredients, and all of this will likely cost more.1 In 2010 Russia, as the second largest supplier of barley in the world behind the EU, froze barley exports due to drought.2 The freeze was lifted this year, but lower barley yields in the EU are another cause for concern, especially as the lower yield has affected malting barley in particular.3 4

Physically reaching consumers is also becoming more difficult with extreme weather. The floods in Thailand have caused a crisis for the tourism industry, with special attention on the inability for beer to reach tourists at a crucial time of the tourism season. 5 In Phuket, Thailand, this is a serious concern as beer composes 60% of alcohol sales, where 20-30% of the income in the entertainment business is from alcohol sales. 5 In a country where 6.7% of the GDP is from tourism, reduced tourist expenditure is a concern for the country as well as the beer industry. 6 If tourists decide to go where they can get their beer, this will require breweries and distributors to realign their supply chains. It might be that overall locations of consumption will change, as people crave different beers in different temperatures and cities and regions are reshaped by weather and climate changes.

In theory, higher temperatures could drive greater beer consumption since few things are as refreshing as a cold beer on a hot day. However, from maintaining consistent temperatures during beer production to refrigerated trucks and energy intensive retails stores, especially if the beer is kept refrigerated, the cost of production, delivery and display could increase.

Whether or not the recent changes in weather patterns are due to global warming, they are affecting supply chains and this will not likely change. Aside from business continuity plans and risk analysis, brewers have to think about how changes in weather might change patterns of agricultural production, brewing inputs, who drinks their beer and where, and everything in between.

Note:

Yeast may be the only input unaffected, which is ironic since yeast is fickle and needs specific temperatures to perform its task. However, changes in temperature regions could affect those who brew in non-temperature controlled environments.

1 Public News Service, “Could a Warming Planet Harm Colorado’s Craft Brewers?” Nov 2011 http://www.publicnewsservice.org/index.php?/content/article/23236-1
2 Bloomberg, “Russia Lifting Grain-Export Ban as Drought Hits Crops Elsewhere” May 2011 http://www.businessweek.com/news/2011-05-28/russia-lifting-grain-export-ban-as-drought-hits-crops-elsewhere.html
3 Reuters, “Drought, rain curb malting barley crop in west EU” Aug 2005 http://af.reuters.com/article/commoditiesNews/idAFLDE77N0NY20110825
4BBC, “Farmers count cost of drought in parts of England” Nov 2011 http://www.bbc.co.uk/news/uk-england-15822474
5 Phuket Gazette, “Bangkok floods hit Phuket bars with ‘beer crisis’ ” Nov 2011  http://www.phuketgazette.net/archives/articles/2011/article11380.html
6 Wikipedia, “Tourism in Thailand,” accessed Dec 2011 http://en.wikipedia.org/wiki/Tourism_in_Thailand

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Posted in: Beer Industry