Supply Chain Issues Affecting Craft Breweries
Most businesses have felt the effects of supply chain shortages and delays during the COVID-19 pandemic. Craft breweries are no exception, as they often need specialty ingredients, whether sourced domestically or overseas, for more exclusive beverages.
With delays at ports and trucking shortages at home, consumers are continuing to see the price of alcoholic beverages increase. Learn what’s behind these changes.
Sourcing and Shipping Ingredients
As competition continues to increase, craft brewers are looking to get more creative. For beers and IPAs, this might involve adding more ingredients to their brew like fruits and spices that are found locally or need to be imported. However, current supply chain issues can limit the ingredients able to be shipped and may cause significant delays.
During the pandemic, droughts affected barley harvests and hops crops in the United States and Canada. This has resulted in a limited supply or lower quality essential ingredients.
Beyond brewing, owners have also encountered an aluminum can shortage. Multiple factors have reduced the supply of cans available to both macro and microbreweries, including:
- Increased consumption of alcohol during the pandemic
- Decreased metal manufacturing
- Reduced supply from recycled aluminum
- Transportation issues due to a trucker shortage impacting can shipments
As such, breweries started ordering more supplies in advance or looked for alternatives. For instance, customers are filling personal growlers in taproom or using blank, unbranded cans. Smaller breweries have leaned toward the latter due to a lack of storage space or difficulty finding suppliers for mobile canning or more comprehensive distribution.
Beyond hops and barley, food-grade carbon dioxide (CO2) is also crucial to canning and serving – specifically, filling cans and pouring beer in a taproom environment. This grade of CO2 comes from ethanol. Similar to what we’ve seen at the gas pumps, transportation limitations have reduced the amount of ethanol readily, reflected in supply and price.
Other Operational Basics
Although beer might be the heart of a brewery, more than ingredients are needed to operate a taproom. Microbreweries have reported delays in ordering kegs and tap handles, as well as lighting, merchandise and corrugated cardboard.
Similar to the situation with aluminum cans, a spike in ecommerce orders has resulted in greater demand for cardboard without the production or recycling program in place to deliver what businesses need, when they need it. In turn, craft breweries are spending more on these basics, whether for ordering operational essentials or packaging cans.
Whether you are new to the industry or own an established craft brewery in Connecticut, anticipate any challenges with sufficient commercial insurance coverage. To discuss your policies, contact a HUB/Ion Insurance agent today.