3 Top Practices To Reduce Costs In Craft Breweries

Craft breweries are responsible for a catalog of expenses to produce a top-quality brew that keeps customers coming back. Many expenses, including ingredients costs, equipment and maintenance, real estate, packaging, and distribution, are difficult to reduce. However, implementing a few efficient business tactics such as sourcing local ingredients or reducing waste can offset overhead costs and make the brewery more sustainable in the long term.

Recently, craft breweries have been experiencing cost increases, with every aspect of brewery overhead surpassing budgetary expectations:

• Raw materials and ingredients
• Rent (increasing interest rates?)
• Equipment
• Labor
• Energy
• Marketing
• Distribution and transportation

Small craft breweries—with limited scale and resources— especially feel the pressure. Even so, most breweries are reluctant to pass the cost onto the consumers for two reasons:

1. Consumers are unwilling to pay more for craft beer as the industry matures.
2. Brewers are eager to hold onto their market share and keep businesses operating efficiently.

Charles Vallhonrat, executive director of the Texas Craft Brewers Guild, stated in a CNN interview, “Things have to click for the brewery to be bringing in the revenue with visitors, with events. One hiccup, one bad delivery, one missed equipment, one bad batch, and you can be at risk. People are getting by, but it’s not clear sailing right now.”

As the industry becomes more competitive, craft breweries have to navigate these challenges by finding ways to lower costs and champion practices that are not only sustainable but give them a financial advantage.

Shrinking Brewery Costs With Sustainable Practices

The beer industry is a heavy consumer of natural resources, especially water and energy. From the plentiful amounts of water needed to make beer to Scope 3 carbon emissions coming from their raw material supply to the waste created through production and packaging, sustainable practices are one of the most impactful ways to cut down costs in the long run.

Craft breweries aren’t impervious to the effects of climate change and are already facing issues with water accessibility and water quality. They are seeing spikes in their raw material costs due to the effects of harsh weather conditions impacting their raw materials. Switching to sustainable practices like reducing energy and water costs and improving waste management is more than a way to reduce their environmental impact; it’s a far-sighted business decision.

Three ways breweries are tackling sustainable practices include:

1. Becoming resource efficient: by optimizing water, energy, and raw material usage, minimizing wastes throughout the brewing process, and using renewable energy such as installing solar panels and wind turbines.
2. Preventing waste ending up in landfills: by finding ways to reduce, reuse, and recycle the considerable amount of waste the brewing process generates.
3. Reducing greenhouse gas emissions: by reducing energy waste and reducing energy consumption across the beer supply chain and brewing processes.

Some of the ways craft breweries are making the above changes include:

1. Reducing, reusing, and recycling water: ensuring less water usage during cleaning processes and using closed-loop cooling systems that recirculate the water will reduce water and energy use, like Seismic Brewing Company in CA. Brewers are also using water-efficient equipment like mash tuns with built-in water-saving features. Some breweries are partnering with local farms that can utilize wastewater, like Pelican Brewing in OR.
2. Using energy-efficient equipment and processes: Brewing equipment with features like increased insulation, energy capture and recovery systems, and automated temperature controls that reduce the need for intense heating or cooling. By capturing the heat generated and wasted during boiling or fermentation with an energy recovery system, brewers can recycle energy for processes in the next brew cycle, like Denver Beer in CO.
3. Minimizing and managing waste: Techniques like composting spent grains and hops keep waste from ending up in landfills and improve soil health. Recycling bottles, cans, and cardboard packaging and repurposing packaging save money and reduce costs, like Anderson Valley Brewing in CA.

Offsetting Costs by Turning Sustainable Practices into New Revenue Streams

Utilizing the by-products of brewing represents new ways of generating income for most craft breweries.

On average, producing 100 liters of beer generates 20 kilograms of spent grain. Worldwide, the beer industry produces an incredible 40 million tons of spent grain annually. Solid waste, primarily spent giants from the mashing process, constitutes 85% of a brewery’s total waste.

There are at least three ways that breweries can use it to generate income:

1. Sell spent grain as animal feed to local farmers: spent grains are devoid of sugar and packed with proteins, fiber, and minerals, making them a highly nutritious and low-cost livestock feed.
2. Sell spent grain compost: The bulk price of compost is anywhere from $20 to $50 per yard, and it can be a steady stream of income for craft breweries, especially given that nutrient-rich spent grain can help reverse damage to soil and increase soil fertility.
3. Sell spent grain as an upcycled food ingredient: Though the global market size for dried spent grain continues to grow, viable markets are difficult to find unless located close to rural areas. Further, commercializing spent grain for food-grade usage entails initial costs for equipment, storage, and processing, and commercialization partners remain limited.

Reducing Transportation Costs By Sourcing Local Ingredients

Scope 3 emissions, which are indirect emissions from factors like upstream supply chain and distributions, are a predicament that most breweries are struggling to overcome. Nationally distributed malt not only unnecessarily adds to their carbon footprint but also pads their costs with additional transportation fees. The best way to reduce transportation costs and carbon emissions is to source malt locally.

Sourcing from local farmers and suppliers helps with both environmental and economic sustainability. Buying from local farmers who invest in preserving their soil is one way to help the environment and the local economy.

By reducing the distance the grain needs to travel, breweries can become much less reliant on fossil fuels used in the transportation sector, which will benefit the entire industry and, in fact, the planet.

Moreover, local ingredients with fewer miles to travel to the brewhouse means fresher ingredients of prime quality. The grain is harvested at the peak ripeness, processed, and delivered for brewing in a fraction of the time compared to national or international suppliers.

Reducing Overhead By Embracing Change and Innovation

In closing, effectively managing costs comes down to staying on top of thoughtful innovation and change. By embracing sustainable practices like optimizing resource usage, minimizing waste, and sourcing local ingredients, breweries can reduce their environmental impact while enhancing operational efficiency. These practices not only align with consumer preferences for eco-friendly products, but position craft brewers for long term success.

Want to learn more about sustainable practices fit into the larger brewing ecosystem?

Download our infographic “Crafting Community: The Impact of Sustainable Brewing”