Date of this Version
This report summarizes the initial findings of a survey of 52 craft breweries (brewpubs, microbreweries, and regional breweries) in the states of Colorado, Nebraska, Iowa, Missouri, Minnesota, and Wisconsin. The head brewer or owner/operator was surveyed to determine the craft brewing industries’ level of interest in purchasing locally grown and produced grains and locally produced malt, as well as the procurement needs for the ingredients they purchase.
The craft brewing industry, which mushroomed in the early to mid 1990’s, slowed to a crawl in the late 1990’s, however, the industry began to rebound in 2000 as volume for craft brewers increased substantially. The breweries in this study were very optimistic about the future of craft brewery industry with all of the surveyed breweries believing that demand will grow in the foreseeable future.
The vast majority of the breweries (81%) feel the need to investigate new markets in order to survive in the craft brewing industry. The need for breweries to investigate new markets may be an opportunity for producers and craft breweries to partner and develop a market for beer that is produced with locally grown and produced ingredients and/or malt. Fifty-nine percent of the breweries were very or extremely interested in making the claim that their beer was made with grains produced or grown locally with 31% indicating that they were extremely interested. The survey also assessed the breweries’ level of interest in making the claim that the malt used in their brewing process was produced locally. Again, the majority (59%) of breweries were very or extremely interested in making this claim.
In order to supply craft breweries with ingredients and malt, it is necessary to understand their procurement needs. The breweries overwhelmingly prefer to purchase malt made with two-row barley (94% mention) rather than six-row barley (2% mention). A brewery’s malt needs can be broken down into the base and specialty malt that the brewery purchases to brew its beer. The breweries were surveyed on their use of four principle types of base malt: whole kernel, preground, dry malt extract, and syrup malt extract. Whole kernel malt was the most prevalent type of base malt used with 84% of the brewpubs, 92% of the microbreweries, and all of the regional breweries using this product. Whole Kernel Malt was also the predominant specialty malt used with 81% of the brewpubs, 85% of the microbreweries, and all of the regional breweries using this product.
In order to supply the brewery industry, it is important to know the size of the malt market. Brewpubs use an average of 45,000 pounds of whole kernel base malt per year, while microbreweries use an average of 206,000 pounds annually. Regional breweries use over two million pounds of whole kernel base malt annually on average. In an example given of converting pounds of malt to acres of planted barley, 175 acres of barley could supply nearly three “typical” microbreweries with their annual supply of base malt.
In order to supply a brewery, it is important to understand the characteristics that surround a brewery’s malt purchases. Some of these characteristics include: the typical malt order size; the type of packaging preferred by the breweries; their order frequency; where the breweries purchase their malt and how it is shipped to them. These characteristics were assessed for both base and specialty malt purchases and are described in detail in the report.
A significant number of brewpubs and microbreweries receive their base and specialty malt through a malt distributor. In addition, the smaller breweries typically order in smaller quantities (possibly paying a higher premium) and order less frequently (possibly to lower their distribution costs and meet minimum order sizes). By ordering on a less frequent basis these breweries may, at times, be forced to use a malt that is not as fresh as they would like to use. This dilemma may present an opportunity to supply these types of breweries.
In order to successfully compete in the brewing industry, a producer or producer owned maltster has to meet the needs of its customers (breweries). Four categories of procurement needs or attributes were assessed in the survey for their degree of importance in a brewery’s purchasing decisions. The categories included physical properties, chemical properties, services offered, and price. Among all of the categories, “recourse for poor malt quality”, “timeliness of delivery”, “consistency of taste”, and “malt freshness” were the top ranked attributes in their importance to all breweries. Each of these attributes had an average score of at least 9 (on a scale of 1-10) or a ranking of “extremely important” by all breweries.
Looking at the microbrewery segment, protein/nitrogen level and moister content were had an average score of 9.0 or above (extremely important), while malt analysis was extremely important to regional breweries. It is interesting to note that price (mean score of 7.92) was ranked fifteenth in importance among all breweries and seventeenth (mean of 7.57) among brewpubs.
Although malted barley is the main grain used in the brewing of beer, there are many other ingredients that are part of the brewing process. The most common of these “other ingredients” is wheat. More than 90% of the surveyed breweries brew wheat beer. The vast majority of the breweries (65%) prefer to purchase their wheat malted, while 23% prefer to purchase wheat in a raw form. It was estimated that it would take more than 2,800 acres of wheat to supply all (malted and non-malted) of the wheat beer breweries in the six-state region including 700 acres to supply Colorado and Nebraska wheat breweries. Overall, 90% of the breweries agreed with the statement that consumer demand for wheat beer would continue to grow.
Other ingredients used to brew beer include oats, rye and corn. Thirty-seven percent of the breweries use some form of oats in their brewing process. Thirty-one percent use rye, flaked rye, or rye hulls, while 13% purchase varieties of corn. Four percent of the breweries manufacture a beer that is brewed with organic ingredients.