{"id":22571,"date":"2017-11-14T17:17:34","date_gmt":"2017-11-14T22:17:34","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/how-climate-change-could-make-your-favorite-beer-less-refreshing\/"},"modified":"2017-11-14T17:17:34","modified_gmt":"2017-11-14T22:17:34","slug":"how-climate-change-could-make-your-favorite-beer-less-refreshing","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/how-climate-change-could-make-your-favorite-beer-less-refreshing\/","title":{"rendered":"How climate change could make your favorite beer less refreshing"},"content":{"rendered":"

Climate change impacts the global water cycle in a number of interdependent ways, including geographic variability in rainfall patterns, in\"\"creased water needs due to increased global temperatures, and the contamination of fresh water supply due to pollution and the rise in sea levels. [1] Corporations across multiple sectors are paying close attention to the potential risk this may have to their business models; in fact, the 2017 CDP Global Water Report found that thousands of companies are collectively committing $23.4 billion into projects that reduce their water risk. [2] Among the over 2,000 respondents to CDP\u2019s outreach for water data disclosure, many shared operating costs and supply chain disruption amongst their chief concerns, as shown in the chart. [3]<\/p>\n

The Smallest Brewers are in the Hottest Water<\/p>\n

Small and independent craft brewers should be especially concerned about their water supply risk exposure. The relative scale and production cost advantage held by the world\u2019s multinational macrobrewers as compared to these smaller, often local operations is a competitive divide that could continue to widen due to water risk mitigation techniques.<\/p>\n

Currently, the industry average ratio of water usage by volume to beer produced is about 7 to 1. [4] However, global brewers Anheuser Busch InBev and Molson Coors have production ratios of less than half that footprint, with continuing plans for further reduction. [5,6] By contrast, the smaller in barrels per year (bbl\/year) a brewer is, the worse their ratio. Brewers Association\u2019s recently-published 2016 Sustainability Benchmarking Update shows that while their best-performing large members producing >10,000 bbl\/year can get close to the macrobrewers\u2019 stats, at a ratio of 3.3 to 1, the water usage ratios vary considerably by size cohort and by individual brewery performance, such that the lowest-performing quartile of brewers in the smallest cohort (<1,000 bbl\/year) uses 82 barrels of water to produce just 1 barrel of beer! [7]<\/p>\n

Beer-making is Fun but Knowledge is Power<\/p>\n

The Brewers Association (\u201cBA\u201d) is a 501(c)(6) not-for-profit trade association, organized to \u201cpromote and protect American craft brewers, their beers, and the community of brewing enthusiasts\u201d. [8] The BA provides an array of support functions; the impact they have on water supply risk, at present, is the information they compile and make available to their members. Aspiring brewmasters have many aspects of the art and business of brewing on their mind, and often their primary consideration for water sourcing may typically be the underlying chemistry and its impact to the flavor profile and consistency of their creations. The benchmarking statistics that BA provides for their members allow them to also consider their operational efficiency against their peer group and incorporate BA\u2019s best practice recommendations to improve and realize short term cost efficiencies.<\/p>\n

However, while these resources are necessary and helpful, they are not sufficient to successfully position small independent craft brewers for long-term viability and competitive success. The risk of water supply shortages needs to be a much more prevalent topic of active consideration by smaller brewers as they evaluate plans to scale their operations. Specifically, I recommend that BA:<\/p>\n

    \n
  1. Broadly communicate a tangible outlook of the future of water availability, and the cost of such availability, for their member brewers. The related increasing costs of doing business may otherwise be underestimated for relatively new brewers who are very likely thinking of many other aspects of growing their business in the short to medium term.<\/li>\n
  2. Provide an even greater degree of advisory support to build action plans to meet water efficiency targets for their member brewers. For example, guidance on development of sustainable production practices and increased partnership with water-conscious agricultural suppliers will help accelerate the reduction of water usage towards the competitve range seen by high-performing, larger brewers.<\/li>\n<\/ol>\n

     <\/p>\n

    Don\u2019t Let Independent Craft Dry Up<\/p>\n

    MIT Sloan Management Review recently argued, rather persuasively, that water prices (in general, for all buyers) may need to rise significantly to better align intensity of water use with actual availability. [9] If this happens, and small independent craft brewers are not adequately prepared, I have to wonder about a few sobering possibilities:<\/p>\n

    How will the cost of efforts to responsibly manage water usage impact the prices of all the kinds of beer that consumers currently enjoy?<\/p>\n

    How might rising prices shift consumer demand for different types of beer? Will craft buyers get priced out and switch to national brands? Or will they just buy less craft?<\/p>\n

    Will independent craft brewers survive the competitive challenges resulting from price pressures?<\/p>\n

     <\/p>\n

    (792 words)<\/p>\n

     <\/p>\n

     <\/p>\n

    Sources:<\/p>\n

    [1] \u201cWater and Climate Change\u201d. Union of Concerned Scientists. http:\/\/www.ucsusa.org\/global_warming\/science_and_impacts\/impacts\/water-and-climate-change.html#.Wgtg-GhSwuU<\/a><\/p>\n

    [2] CDP Global Water Report 2017. https:\/\/www.cdp.net\/en\/water<\/a><\/p>\n

    [3] Ibid.<\/p>\n

    [4] \u201cWater and Wastewater: Treatment\/Volume Reduction Manual\u201d Brewers Association. https:\/\/www.brewersassociation.org\/educational-publications\/water-wastewater-sustainability-manual\/<\/a><\/p>\n

    [5] 2016 Better World Report. Anheuser Busch InBev.<\/p>\n

    http:\/\/www.ab-inbev.com\/content\/dam\/universaltemplate\/ab-inbev\/BetterWorld2\/reporting\/better_world_report\/ABInBev_2016BWR.pdf<\/p>\n

    [6] Increasing Efficiencies in Our Breweries. Molson Coors.<\/p>\n

    http:\/\/www.molsoncoors.com\/en\/sustainability\/sustainably-brewing\/water<\/a><\/p>\n

    [7] Brewers Association 2016 Sustainability Benchmarking Update. https:\/\/www.brewersassociation.org\/industry-updates\/sustainability-benchmarking-update-helps-brewers-gauge-utility-usage\/<\/a><\/p>\n

    [8] Brewers Association Purpose Statement. https:\/\/www.brewersassociation.org\/brewers-association\/purpose\/<\/a><\/p>\n

    [9] \u201cDoes Your Supply Chain Risk Management Strategy Hold Water?\u201d MIT Sloan Management Review. December 22, 2016. http:\/\/sloanreview.mit.edu\/article\/does-your-supply-chain-risk-management-strategy-hold-water\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    Water accounts for about 95% of the composition of beer, and it is also a crucial agricultural input for barley and hops. Given this significance, water supply risk mitigation should be a major focus for the Brewers Association and their membership of over 4,100 small independent craft brewers.<\/p>\n","protected":false},"author":9647,"featured_media":22572,"comment_status":"open","ping_status":"closed","template":"","categories":[64,1218,454,1788,3456,3336,1637,1447,1828,1480],"class_list":["post-22571","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-beer","category-climate-change","category-craft-beer","category-freshwater","category-water-efficiency","category-water-footprint","category-water-management","category-water-supply","category-water-usage","category-water-use-reduction","hck-taxonomy-organization-the-brewers-association","hck-taxonomy-industry-food-and-beverage","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nHow climate change could make your favorite beer less refreshing - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/how-climate-change-could-make-your-favorite-beer-less-refreshing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How climate change could make your favorite beer less refreshing - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Water accounts for about 95% of the composition of beer, and it is also a crucial agricultural input for barley and hops. 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