The Economics and Carbon Footprint of Long-Haul Beer Transport
By Horst Dornbusch
In his review of the 2010 brew year at the Craft Brewers Conference in San Francisco in April, Brewers Association director Paul Gatza observed that the number and size of craft breweries is increasing, that many microbreweries are becoming regionals, and that 94 percent of regionals increased their sales in 2010. It is obviously a positive sign that craft breweries are gaining strength through higher volumes, but such expansion, when associated with greater distribution areas and longer shipping distances by land and even by sea, may not be the most environmentally responsible way to grow. Considering that foreign breweries of all sizes have been exporting beer to the New World for decades, it seems a natural impulse for the burgeoning American craft brew industry to turn the tables and try to enter the export game as well. But is long-distance beer transport regardless of direction really a good thing? This article looks primarily at transatlantic beer shipments as a model for analyzing the carbon footprint implications of not drinking locally.
It is an obvious truth that beer—both industrial and craft—is about 85 to 95 percent water, and water is heavy. Glass and cardboard are heavy, too, often matching the weight of the beer itself. Transporting such heavy goods, of course, takes a lot of invariably expensive and emission-intensive energy, which leaves significant trails of gasses in the atmosphere long after the freight has been consumed.
Many brewers nowadays are trying to reduce the carbon footprint of beer inside the brewery, but perhaps it is also time to focus on the carbon footprint of beer outside the brewery. This involves reconsidering, without preconceptions, many traditional trade practices and consumer expectations. It has become somewhat common knowledge that the majority of Americans live within 10 miles of a brewery, yet brewers, both domestic and foreign, still ship many beers even across oceans and continents; and many consumers are still eager to purchase such beers from distant places, though they are often in questionable condition and come at very high prices. However, more sustainable practices are not only feasible and desirable; they may also offer hard-nosed opportunities for making additional profits!
To understand the opportunities for savings, enhanced efficiency, and greater profits inherent in a new, strictly local paradigm of beer distribution, it is first necessary to understand the pertinent quantitative data: If all American beer shipments of just over 200 million barrels per year were packaged in cases only and each case were filled with 24 bottles of 12 fluid ounces or roughly 0.33 liters, they would fill approximately 2.275 million 40-foot shipping containers of some 1,200 to 1,300 cases each. This calculation is based on a typical case of beer weighing about 33 to 37 pounds (15 to 17 kg). Assuming a craft beer market share of roughly five percent by volume and an import share of roughly twice that much, the craft beer portion of these shipments would fit into roughly 112,500 containers; and the imports, into 225,000.
However, only about half the weight of a container load of beer is actually beer. Thus a full container may carry only about 90 barrels of drinkable liquid. Given the typical ratio of water to non-water substances in beer, this means that only about 1,100 pounds (500 kg), or 2.5 percent, of a typical container load of beer is neither water nor packaging. In theory, therefore, one could make an import locally by just shipping the raw materials required to make these 2.5 percent.
The Pernicious Impact of Burning Bunker Oil for Imports
To construct a simple ecological impact model for beer imports, let’s assume that all imports come from a single place in Europe, from Bremen, Germany, and arrives by container ship also at a single North American port, New York City. That’s a distance of 3,300 nautical knots or 3,800 statutory (land) miles. The shipping route would be much longer, of course, if the beer traveled from Asia across the Pacific or from Europe through the Panama Canal to the West Coast. A quick search on the Internet shows that a typical container ship carries between 5,000 and 15,000 containers; has an average speed of 22 knots per hour; and consumes an average of 1,700 gallons of heavy bunker fuel per hour. Thus it would traverse the distance between Bremen and New York City in about 150 hours, burning a total of 255,000 gallons of heavy, sulfur-rich bunker oil—one of the most polluting and harmful, fine particulate-spewing fuels available. At a nominal average of 10,000 containers per ship, that’s about 25.5 gallons per container, or roughly a quarter gallon per barrel of beer in each container. To transport all 225,000 containers of annual beer imports from Europe, therefore, would take roughly 22.5 ships burning more than 5.7 million gallons of dirty bunker oil.
The Cost of Trucking
Once imports reach the American seaboard, many of them need to be trucked inland, of course. For the model, let’s assume that all the beer will travel halfway across the country before it reaches the consumer—say, about 1,400 miles from New York City to Wichita, Kansas. A fully loaded tractor trailer gets an average of about six miles per gallon of diesel fuel. That’s roughly 230 gallons per container per 1,400-mile run, or roughly 2.5 gallons per barrel of beer in each container. Because you would need about 225,000 trucking runs to move our hypothetical volume of imports that far, all these runs together would consume more than 50 million gallons of diesel a year.
Here is an interesting comparison: American craft brewers need roughly 15 million gallons of fuel to produce their current annual 10 million barrels of beer. This is because it takes about 1.5 gallons of oil (or equivalent in other energy) to make one barrel of beer in a brewery. If all beer imports were made locally instead of shipped, therefore, the fuel savings on the ocean alone could power the entire American craft brew industry for at least one-third of a year; and the fuel savings on land could power it for an additional 3.3 years! This simple, pro-forma model, of course, is not empirically accurate because it ignores the fact that imported beers from Mexico and Canada are shipped by truck or train across borders and not across the ocean. As a didactic device, however, the model clearly reveals the enormous magnitude of the costs and pollution associated with mass beer importation from far away! In other words, it takes almost double the energy to ship such beers than it does to make them.
These pro-forma calculations obviously beg the question: What if most of that long-distance shipping and trucking came to a stop and we saved those millions of dollars spent on fossil fuels as well as eliminated the carbon dioxide emissions that go with them? What if we brewed those imports locally, for local consumption? There would be several advantages to both brewers and consumers. Because brewers operate in local economies, they could create new jobs where they are needed. Breweries could enjoy greater capacity utilization or faster amortization of their equipment. Local brews would also give the consumer a more fulfilling beer experience because, after all, beer is a perishable food--one that typically gets worse with age. On its way to the consumer, any beer undergoes inevitable flavor-destroying chemical changes from the influence of light and heat, including progressive staling from the oxidation of fatty acids; the deterioration of hop bitterness; and “skunking”—the formation of 3-methyl-2-butene-1-thiol (mercaptan) from a photochemical reaction of hop isohumolone with vitamin B2 (riboflavin). These beer-destroying chemical processes accelerate dramatically, if the beer is transported over very long distances, in the summer, and not in reefers but, as is common, in unrefrigerated boxes that may reach an internal temperature of 180 °F (82 °C) or higher.
Collectively, American craft brewers have already demonstrated that they can make just about any of the world’s beer styles, provided they have the right brewhouse and cellaring equipment and use the right ingredients. Because water anywhere can nowadays be “torn down” through such processes as reverse osmosis and “built up” with trace elements to match the brewing liquor of any location in the world, there no longer seems to be a compelling reason to ship it. The same applies to packaging, which amounts to about half the weight of packaged beer. There are plenty of North American suppliers of bottles, cans, caps, labels, and cardboard to meet any local brewery’s needs. As for true terroir-dependent components, such as special hop varieties and authentic base and specialty malts, these can be imported easily as needed. Because these amount to only a tiny fraction of the total shipping weight of packaged beer, their importation also amounts to only a tiny fraction of the pollution. As for yeast, several labs now offer hundreds of authentic specialist strains in dry and liquid form, even for express shipment overnight.
High-Value versus Industrial Imports
It would be an illusion to expect that all beer imports will suddenly stop just because of the high economic and environmental costs of long-distance beer transport. Such costs may even be justifiable for rare, high-value specialty imports. However, they are clearly much more difficult to justify for easily replaceable industrial mass-beer imports. Status-focused brand advertising, consumer habits, and inertia are probably the greatest obstacles to changing the current flow of ordinary beer imports into the United States. Another obstacle is perhaps the orientation of many craft brewers themselves. Let’s face it, the bulk of imported brews are relatively easy-drinking quaffing beers, many of good quality when they leave their home shipping docks. Such session beers appeal to a demographic of buyers who seek out beers that are perceived to be upscale (though they may not be, brew-technically), but are less demanding on the palate than many craft brews are today.
As Walter König, one of the general managers of the Bavarian Brewers Federation, pointed out to me, perhaps somewhat provocatively, during his visit to the 2010 Craft Brewers Conference in Chicago, “If American craft brewers want to reach more than four or five percent market share, they need to focus more on drinkability and session beers, not just on extreme experimentation. German beers, especially lagers, are sometimes derided by American craft brewers because they are deemed too unremarkable. However, these are beers that are suitable for quaffing when you are thirsty. In America, it seems, if you want to sit down and have a long social evening with friends over a few beers, you need to drink an industrial, not a craft beer. In my view, with very few exceptions, German lagers are not all that well made in America as yet, probably because many single-infusion systems won’t permit it. If American craft brewers want to grow, however, they might want to consider making more and better craft lagers; and with the growing sophistication of American brewers, I see a real growth potential there.” If König is correct, this would also have beneficial environmental consequences.
The clear alternative to shipping finished beer from abroad or from a distant state—after all, Portland, Ore. is almost as far from Portland, Maine as is Munich, Germany; 3,200 versus 3,900 miles—is shipping the few, relatively light-weight terroir-dependent raw materials, investing in a versatile brew system capable of handling a large variety of complex brewing processes, and importing “weightless” and thus environmentally neutral brewing knowledge, where needed. There are already several real-life and successful models that illustrate how this can be done.
The Local Non-Import “Satellite” Model
The best representation of the “satellite” model is perhaps the Trumer Brauerei of Berkeley Calif., which makes only a single brew, Trumer Pils. That brew is an exact replica of a Pils brewed by Trumer Brauerei in Obertrum, near Salzburg, Austria. The Berkeley brewery was started in 2004 by Carlos Alvarez of The Gambrinus Company of San Antonio, Texas, who obtained the rights to the Trumer recipe in a collaborative brewing and marketing partnership with Trumer Brauerei owner Josef Sigl. Explains Lars Larson, Trumer Berkeley’s brewmaster, “Carlos Alvarez decided that, sure, you can get many good German Pilsners in the United States, but they have been imported and thus suffered a great deal. He wanted to offer this great beer fresh on location, which meant it had to be brewed here so the customer could get it in prime condition.”
The Berkeley brewery uses the same ingredients and processes as the brewery in Salzburg. The model is obviously successful, because among the many awards the Berkeley lager has won in the German Pilsner category are a 2005 Great American Beer Festival® silver medal, a 2006 and 2008 World Beer Cup® gold medal, a 2007 Australian International Beer Awards silver medal, a 2010 World Beer Cup® silver medal, and a 2010 GABF gold medal.
The Trumer model may soon go in the other direction, because, in May 2010, the Stone Brewing Co. of Escondido, Calif. issued a formal request for proposals (RFP) with the intention of “owning and operating a brewery in Europe.” The RFP stated that there is demonstrated demand “for Stone’s beers in the European market, however, exporting beer from Stone’s current brewery in San Diego creates issues of cost, freshness, and carbon footprint.” No search results have been announced at the time of this writing.
Within the United States, a similar model is the Redhook operation with one brewery on the West Coast in Woodinville, Wash. and one on the East Coast in Portsmouth, N.H. “With bicoastal breweries, beer drinkers are guaranteed a fresh Redhook no matter where they are in the U.S.,” states the Redhook website. A similar bicoastal arrangement emerged in 2008, when Magic Hat of Burlington, Vt. merged with Pyramid of Seattle, Wash. Even giant Anheuser-Busch operates a dozen breweries in the United States.
The “Transplant” Model
Brewery Ommegang in Cooperstown, N.Y., is a classic case of the “transplant” model. The brewery is wholly owned by its Belgian parent company, Brouwerij Duvel Moortgat, and it makes strictly authentic Belgian-style beers. It differs from the model pursued by Trumer and Stone in that it does not attempt to replicate foreign recipes exactly, but rather tries to replicate their orientation. The beers made by this brewery may be “Americanized”, but if they were transplanted back to the Old Country, they would completely fit into the portfolios of brews offered there. This was demonstrated by Ommegang Abbey Ale a few years ago, when it was blind-tasted against Chimay Red at the Great British Beer Festival. As Larry Bennett, Ommegang’s self-styled “Minister of Propaganda” explains: “When it was announced that one beer had won the vast majority of votes, everybody assumed it was Chimay. But it wasn’t. A bit of a kerfuffle ensued, results were verified, and Ommegang Abbey had indeed carried the day. My point is not to diminish Chimay. It is a superb beer. But our beer is more culturally oriented than terroir-specific.”
The “License” or “Contract” Model
In this model, the mother brewery neither does, nor wants to, own a piece of the remote brewery. Instead, under various forms of arrangements, the distant brewery is a contractual partner rather than a subsidiary. One typical case is the Kona Brewery of Hawaii, which has a serious built-in transportation and thus carbon footprint problem if it wants to sell out-of-state. Hawaii is some 2,500 miles from the mainland West Coast and more than double that distance from the mainland East Coast. The solution for Kona was a contract brewing agreement with Widmer in Portland, Ore. and Redhook in Portsmouth, N.H. Now, the packaging and raw materials for Kona brews consumed on the mainland do not need to be shipped to Hawaii; nor does the packaged beer, from Hawaii to the mainland. [Editor’s Note: since the time of this writing, Kona Brewing Co. was acquired by the Craft Brewers Alliance Inc., which was formed when Widmer Brothers merged with Redhook in July 2008.]
Another, more hands-off, pure licensing agreement for the United States is currently sought by a German brewery, the Brauhaus Faust in the small medieval town of Miltenberg, an hour’s drive south of Frankfurt. Says Faust co-owner and brewmaster Cornelius Faust, “We have tried to export our beers to the United States, but found that, as a regional craft-size brewery by Brewers Association standards, the obstacles in terms of regulatory hurdles and trade practices inherent in the three-tier system were simply too complicated to be worth the expense and effort. Instead, we are now actively searching for regional licensing partners in the New World, who would replicate our proven and award-winning German-style recipes in their breweries, with our start-up guidance and periodic quality control, using the same ingredients and process as we do, but essentially brewing and marketing these beers, against a license fee, under their own authority and responsibility.”
A Nobel Laureate Agrees
The classic paradigm of international economic production and exchange, first postulated by British economist David Ricardo some 200 years ago, is the theory of comparative advantage. It says that a good is produced and exported from wherever it can be made most cheaply, owing to some accidental advantage in cheap labor, technical expertise, climate, or raw materials—provided that the costs of transport do not cancel out that advantage. As present-day economist Paul Krugman demonstrates, however, such cancellation often happens. Krugman calls this the "home market effect," according to which the location of an industry frequently owes more to entrepreneurial decision-making, the shrewd allocation of capital, and the scale of the domestic market than to any inherent advantage.
Translated into beer-making, Krugman’s model of economic geography means that any brewery should be able to make any beer style of any origin, for its domestic market, if only there are the smarts and the will to do so. This puts shipping beer into a completely new economic light, and helps to save the planet as well. For his insights into the strength of home markets over long-distance exchanges, Krugman won the 2008 Nobel Prize in economics…and who is to quibble with that?
Horst Dornbusch is the founder of Cerevisia Communications, a consulting company in the international brew industry. He is an award-winning brewer; the author of several technical and historical books on beer; the associate editor of the upcoming Oxford Companion to Beer (available in October 2011); and a frequent contributor to The New Brewer.