supply and demand, ensuring our raw material future together justin livengood inventory manager bsg...
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Supply and Demand,
Ensuring our raw material future
together
Justin Livengood Inventory Manager BSGPh: 303.217.8655; E-mail: jlivengood@bsgcraft.com;
www.bsgcraft.com
In an age of massive brewery expansions, new breweries, and an overall explosion of growth in craft beer comes an increasingly tighter strain on the raw materials needed to support this growth.
Ring Ring– Hello favorite supplier – I need ingredients now….. help!
This is Mr. Norris, you know, from Make My Day Brewing Company! Our Brewmaster has done it again, and our branding, marketing, and sales folks have pre-sold 500 bbl’s. of a new seasonal that we need to begin brewing ASAP to meet demand.
Favorite supplier - I’m sorry but we are all out.
Supply Chain 101
Farm (Plan, Grow, Harvest) Distribution (Plan, Source, Buy)
Brewery (Plan, Source, Buy) Customer (Buy…..Drink)
Once the actual product is ready for distribution, this process can take anywhere from 2 to16 weeks depending on where the origination point is located.
Can supply really dry up?
YES• Decreased farm acreage• Pricing wars with feed and ethanol leading to change
in planted crops. • Production, malting, and roasting capacity• Weather instability• Rising populations• Unprecedented growth in craft beer
What growth?
Total bbls produced are actually down 1.64% since 2000.“Beer is considered a mature product so that growth is primarily the result of increased in population” -
Agricultural Marketing Resource Center 2013
U.S. Brewery Count
Growth in U.S. Craft
Growth in Worldwide Craft
How does this translate to raw materials?
Rice
Corn
Barley
Wheat
Hop Extract
Hops (Dry)
Acreage is up but production is down
Hops
Acreage strung reportU.S. Aroma Hops U.S. Alpha Hops
2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Ahtanum (D) (D) (D) 176 211 Apollo ® 747 827 885 874 974
Cascade 2171 1850 2371 3039 5330 Bravo ® 335 414 593 528 620
Centennial 298 357 820 1686 2233 Chelan (D) (D) (D) (D) 292
Citra ™ 98 113 239 538 1278 Chinook 384 443 572 1215 1672
Cluster 501 392 482 546 682 CTZ 11402 7841 7106 5776 6317
Crystal (D) (D) (D) 154 308 Galena 2412 1920 1415 954 450
El Dorado ® - - (D) (D) 96 Magnum (D) (D) 64 58 86
Glacier 70 61 44 56 98 Millennium 557 555 403 397 381
Golding (D) (D) (D) (D) 263 Nugget 2801 2185 2299 2494 2047
Liberty (D) (D) 108 83 131 Simcoe 183 237 495 940 1264
Mosaic ™ - - - (D) 339 Summit ™ 3286 3100 2700 2721 2881
Mt. Hood 254 250 309 346 247 Super Galena ® 1016 1020 1231 1134 1213
Northern Brew 92 94 159 120 145 Warrior ® 301 296 260 195 183
Palisade ® 351 373 308 264 152
Perle - - 98 (D) (D)
Sterling 101 87 86 (D) 122
Tettnanger (D) (D) 70 137 68
Vanguard - (D) (D) 59 76
Willamette 5188 3186 1673 1597 1104
Other 1/ 3568 2844 2499 2923 1889 Other 1/ 3568 2844 2499 2923 1889
Total Acreage 12692 9607 9266 11724 14772 Total Acreage 26992 21682 20522 20209 20269
Source: USDA
(D) Withheld to avoid disclosing data for individual operations % acreage aroma 42%
1/ Includes data withheld to avoid disclosure of individual operations and varieties not listed % acreage alpha 58%
Supply VS Demand $$$
Barley Acres and Price
Wheat Acres and Price
How do we move forward and ensure the best possible future for
our industry?
With communication and planning.
Key Challenges
Fight For Acreage – Western Canada
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Flaxseed Oats Special Crops All Wheat Barley Canola
Year
000
Acr
es
Ever- increasing number of
hop varieties
Hopproduction capacity
Malt Roasting Capacity
The sooner you can give contracts or projections for the following year the better to secure that roasting space.
Large volume brewers should look into contracting to ensure security of supply.
Small volume brewers should provide projections to ensure supply
Heritage Barley Varieties
Don’t go at it alone.
Together is always better.
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