How a Local Supply Chain Can Strengthen Craft Breweries

How a Local Supply Chain Can Strengthen Craft Breweries and Their Communities

Proximity Malt, 07-05-2024

How a Local Supply Chain Can Strengthen Craft Breweries

The beer supply chain is plagued with inefficiencies and vulnerabilities that usually translate to pain points for craft brewers. These challenges stem from a variety of economic, geopolitical, and climate-related factors that can disrupt the supply chain at both local and international levels.

Recent events have highlighted these vulnerabilities, with European malt shortages due to container scarcity, logistics disruptions like the Suez Canal blockage, and customs delays impacting the timely delivery of essential brewing materials. Additionally, the U.S. has experienced inflation rates hitting a 40-year peak, with beer inflation reaching 7.7% around 2021/2022.

Factors such as climate change’s impact on grain production and rising fossil fuel costs suggest that supply chain issues will persist, potentially leading to smaller profit margins or increased prices. While large breweries may weather these impacts due to economies of scale and their ability to hedge, many craft brewers lack such a buffer. But embracing local supply can help. A 2019 study from Penn State Extension on Pennsylvania Craft Brewer found 52% of craft brewers want to buy locally to support the local economy and can charge 30% more for beer that is locally produced.

4 Advantages of Having a Local Supply Chain for Craft Breweries

  1. Create local partnerships, greater sourcing transparency, and new stories: By connecting with local farmers, maltsters, and suppliers, craft breweries can lessen their dependence on national and international sources prone to disruptions. A local supply chain cultivates trust and loyalty, by enabling collaborative problem-solving, priority access to raw materials, and the creation of unique products. The appeal of locally and sustainably produced craft beer is growing among consumers, who are willing to pay a premium for such products.
  2. Strengthen your core customer base from your local community: Craft brewers sourcing locally are likely to forge stronger bonds with their communities by getting to know their growers and sharing their stories. This not only bolsters the local economy but also cultivates a loyal customer base that values the brewery’s commitment to local partnerships and sustainability.
  3. Reduce uncertainty caused by political risk and logistics snafus: A local supply chain reduces the risks associated with global supply disruptions. Sourcing ingredients nearby allows breweries to sidestep the uncertainties of international trade, such as longer lead times, political instability, and logistical complications.
  4. Remove miles, dollars, and GHG emissions from your traditional supply: Collaborating with local suppliers enables craft brewers to tackle Scope 3 emissions effectively. Shortening the supply chain reduces environmental impact, resonates with eco-conscious consumers, and leads to savings on transportation costs.

3 Ways Craft Brewers Strengthen Their Community’s Economy By Sourcing Locally

  1. Increase demand and capacity for local businesses: Craft breweries can stimulate local economies by creating demand for locally sourced ingredients. This demand encourages local businesses to expand their capacity and improve their processes, leading to higher-quality products and a more robust local economy.
  2. Retain more profit locally by removing miles from the supply chain: By sourcing locally, breweries can keep more money within the community. This financial retention supports local employment and fosters a cycle of mutual support between the brewery, local suppliers, and customers.
  3. Improve long-term resiliency by partnering on mutually beneficial projects: Collaborative projects, such as those focused on regenerative agriculture, can enhance the long-term sustainability and resiliency of both the brewery and the local community. These partnerships can lead to innovative practices that benefit the environment and the local economy.

“It’s great knowing that the money we spend on malt goes back to the communities and that the growers will spend the money close to their homes- on seeds, equipment, groceries for their families, and that while they are shopping, they buy our beer, and the cycle continues”

Dave Thibodeau, Co-Founder of Ska Brewing in Durango, CO

Conclusion

In sourcing malt and other ingredients locally, craft brewers have the opportunity to build a community centered around transparency and trust where relationships are valued most. This approach not only supports local economies but also aligns with consumer expectations for sustainability and authenticity, providing a solid foundation for long-term success.

Want to discover other ways to secure the future of your craft brewery?

Dive in with our ebook “ReGenMalt Impact Analysis: Enhancing Brand, Community Impact, and Sustainability.”

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