Bottoms up or belly up for brewers?

It’s been a busy few weeks for Rishi Sunak (and Boris!) and maybe the pressure to balance the books (Covid, Levelling-up, Build-Back-Better) is getting to him. Well-known as a teetotaller, the somewhat incongruous sight of the Chancellor in a brewery with Boris after delivering his latest Budget may highlight the compromises he is having to make. He may have raised a glass, but he didn’t drink it.

In a move to support struggling pubs, Sunak amended the rates of Excise Duty, announcing a new lower rate for draught drinks. What he didn’t do, however, was allow this lower rate to apply to any beer sold from a cask of less than 40 litres. Had he also wanted to help the many small, local producers of craft beer, who mainly produce casks of 20-30 litres, he would have done so. With renewed interest in supporting their local community — often with the pub at the heart of it — it would have been great if Rishi had had the foresight to support the locals at The Kings Arms or The Eagle in their wish, as the frosty evenings approach, to enjoy the taste of a beer less travelled. Maybe he was setting funds aside to allow for a successful COP26 to be toasted with cheaper fizz…

Could climate change affect the brewing industry?

Turning to COP26, progress was certainly made but the reality is that the hoped-for commitments to limit global warming to 1.5oC were not forthcoming. As a consequence, the wide-ranging effects of climate change, already being felt, are only likely to increase. One sector materially affected is agriculture, which includes those farmers supplying the brewing industry. Increased droughts and extreme heat waves are threatening crops of barley, the grain typically used in beer, and also the reliability of the water supply, which makes up to 95% of an average beer. Unless decisive action is taken by the brewing industry to support and maintain a responsible and resilient supply chain, beginning with the farmer and their land, not only will the industry be under threat, but a pint of beer may become an unaffordable luxury for many in future.

Conscious of this threat, companies in the brewing sector are taking steps to ensure that they are able to cope with changing weather patterns both locally and in those regions around the world where their suppliers are operating. Anheuser-Busch InBev, based in Belgium, is one of the largest buyers of barley globally for beer brands including Budweiser, Corona, Beck’s and Leffe. In a pilot project in Europe, it is using blockchain technology to track the source of the barley in every beer. This transparency, and the insight it brings, benefits everyone along the supply chain. As well as giving consumers an end-to-end view of a product’s evolution from grain to glass, giving responsible drinking a second dimension, the project aims to use data analytics to improve growers’ yields, water and energy efficiency, and soil health.

Specific mitigation and adaptation strategies being taken by AB InBev to protect their supply chain include new variety development (developing more resilient, drought tolerant barley varieties), crop management, watershed management and informed sourcing decisions. Water stress emerges as a critical issue, increasing in the next 10-20 years. AB InBev have set sustainability goals including measurably improving water availability and quality in all of its communities in high-stress areas by 2025.

What other measures could brewers take to become more sustainable?

Aside from concerns over water availability and barley yields, the drinks industry uses significant amounts of energy to run its operations. Whilst there is undoubtedly still much to do, transformation activity has begun. In Spain, for example, Heineken has signed a deal with energy supplier Iberdrola to power all four of its Spanish breweries and its offices with solar power. It then plans to replace existing gas boilers with ones that use biomass. AB InBev estimates that over one third of its GHG emissions derive from packaging. Under their ‘Circular Packaging’ initiative, the company’s ambition is that 100% of products will be in packaging that is returnable or made from majority recycled content by 2025.

In their own words, AB InBev acknowledge their responsibility to people and planet.

“Brewing great beers relies on a healthy environment and thriving communities. That is why we always say, sustainability is not just part of our business, it is our business.”

AB InBev, “Bringing People
Together for a
Better World: 2020 Environmental, Social
& Governance Report”

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