THREAT OR OPPORTUNITY?

In This Article

Prior to my brewing career, I studied business for nine years. For most of my school days, our teacher used to roll down a penstained projector screen and we would watch episode after episode of Dragons’ Den, the YouTube documentary on ‘how things were made’ (would strongly recommend baked beans) and even the occasional episode of the Office (UK). Whilst this may come across as slander to my educational guardians, Levi Roots’ Reggae Reggae Sauce was a smash hit both in the classroom and the kitchen, my knowledge of baked beans is pub quiz winner worthy and my ability to quote the office has won at least a few cheap laughs over the years.

We did also learn one of the fundamental business evaluation tools, the S.W.O.T analysis. Strengths, Weaknesses, Opportunities and Threats. Strengths & Weaknesses are internal to a business, Opportunities & Threats are external to a business.

Its simplicity is its beauty as it forces you to analyse your own business from within and pigeonhole an entire external environment in to threats to your business and opportunities for growth. In this article we will explore how sustainability will change our external business environment which could affect your brewery in either a negative way (threat) or offer potential for growth (opportunity). Let’s get into it.

The Threat

Threats are negative external factors that could cause damage to your business and often include negative market share factors, product cost changes, reduced supply of key ingredients, disruption in routes to customers, and government policy changes.

Let’s relate these to the topic of sustainability.

Negative Market Share Factors

Eco consumerism is trending high with 40% of consumers indicating they have chosen brands/products that have environmentally sustainable practises/ values, which is a whopping +6% on the previous year.

Whilst complex to calculate and even more complex to compare. There is some information to suggest beer has a bigger impact on the environment in comparison to its alcohol and nonalcoholic competitors.

So, could the combination of eco consumerism and beer being ‘seen’ as a CO2e heavy product be a factor in the global decline of beer consumption? There also could be an argument made for eco consumerism influencing the ‘macro’ vs craft beer consumer trend. The three largest brewers, Heineken, ABInbev and Carlsberg, are in an arms race to achieve net zero by the same date. Could the eco consumerism rise be timely with their incredible focus on sustainability and their power of marketing to cause a shift towards macro beer drinking once again?

Plenty of ingredients to choose from here. But let’s choose a pretty essential one, water. Integral to the entire supply chain and of course to the brewing process itself. The Committee on Climate Change (CCC) predicts that the demand for water in England will exceed supply by between 1.1 and 3.1 billion litres a day by the 2050s.

2050 seems like a long time away. But couple the demand increase with one of the many consequences of our accelerated climate change - more droughts – and you start to see a shorterterm threat. The period of drought alone is intense on water supplies, but they also have a lasting effect on the overall availability of water.

So, the water providers may restrict water availability for your brewing process or your suppliers’ processes, reducing availability of raw materials requiring water in manufacturing which in turn would drive up price. Also, there are quality concerns to mention as low water levels cause water suppliers to switch your source of water frequently (and no, they have no obligation to tell you when this happens).

Disruption In Distribution

This is going to be significant if you have supermarkets as your current route to customer, equally if you would ever like too.

Supermarkets are under pressure to tackle their colossal impact on the environment. And where do supermarkets look first when they are under pressure? Their supply chain. “Five major supermarkets – the Co-op, Marks & Spencer, Sainsbury’s, Tesco and Waitrose – have reaffirmed their commitment to halve the food system’s environmental impact this decade and unveiled new measures to engage suppliers to meet this goal.”

Sarah George, Edie, Nov 2022

Fantastic news for the environment and challenging for the suppliers, those not in a position to fit their new criteria will be discarded. Remember, supermarkets are ruthless capitalist machines when they set their sights on the alcohol supply chain expect challenging goals, specific data demands, tight deadlines and no loyalty. With the threats covered it’s time to bring the fresh air of positivity.

The Opportunities

Whilst it was labelled a threat above, The Craft Beer Report 2023 issued by SIBA cites “48% of consumers think sustainability credentials of a brewer are an important factor when choosing a beer”.

So, the UK trend of eco consumerism has transcended into the craft beer market rather than shifted eco consumers away (for now). This looks like a serious opportunity for progressive craft brewers to me. One huge advantage small/ medium businesses (craft brewers) have over corporations (macro brewers) is their adaptability. So, whilst the ‘threat’ of the macro brewers using sustainability to gain market share is there, it can be used against them if the craft brewing industry acts quick enough because it can achieve macro goals far quicker.

Did you hear the government’s commitment to being net zero by 2050? Well guess what folks, almost £5 billion of funding is available to help UK businesses become greener as part of the government’s commitment to reach net zero emissions by 2050. Get a grant via local council or direct government grants for your next sustainability capital expenditure project!

Furthermore, if you’re looking to expand your business via external funding routes. You will need an operational sustainability plan to access them, as investors will need to see their investment protected.

Becoming more sustainable via resourcefulness (consuming less, producing more) in your brewery will reduce your monthly costs and increase the amount of beer available to sell. Importantly for the opportunity aspect it will also provide protection against changes in supply of raw materials and utilities.

Finally, resourcefulness requires no capital expenditure as standard so you can start your sustainability journey today.

Turning Threats Into Opportunities

Start your sustainability journey today. Why let sustainability become a threat? Why not take the opportunity sustainability presents to innovate, motivate and progress your business?

You can start with small changes today whilst you make your wider strategic plan for tomorrow. Nothing should prevent action today, progress can start slow it will build momentum later.

But what help is there out there for me? How do I make a long-term strategy? There are three steps to start your brewery and businesses long term sustainability strategy.

Education is fundemental. Knowing your scope 1,2 & 3 is one thing, understanding how to use that to create and influence change is better. And you can get both from 86-Carbon Literacy Training Data is next. You can’t create, track and analyse any progress without data, that’s life now. In house is always possible should you want to tackle it. If outsourcing data capture, management and reporting is more your thing. The best value software in the market is Zevero. Check it out, its outstanding.

Final Thoughts

A key message I wanted to get across is regardless of any emotions towards sustainability, there is an integral business case that shouldn’t be side-lined. Yet ironically, business has been at the heart of the climate crisis. The relentless drive to out compete one another has led to us negatively impacting the very world we need to survive. So perhaps, whilst ‘the business case’ will cause most businesses to adopt a sustainability programme. In fact, the answer to sustainability lies in collaboration. We as the craft brewing industry already have such a wonderful openness and collaborative nature. Now is the time to use that platform to better our industries carbon footprint. Be transparent, share everything, be loud and be proud of the journey you are embarking and take your fellow brewing compadres with you.