Hardly a week goes by without a crisis for a crop due to climate change. But a warning from Atsushi Katsuki two years ago still represents one that was particularly hard to swallow for drinkers.
“Although with hotter weather the consumption of beer may grow and become an opportunity for us, climate change will have a serious impact,” Asahi’s chief executive told the Financial Times in 2023. “There is a risk that we may not be able to produce enough beer.”
His comments came after an analysis by the Japanese brewer – owner of brands including Asahi Super Dry, Pilsner Urquell, Grolsch and Peroni Nastro Azzurro – showed France’s spring barley harvest could drop 18% by 2050 under the UN’s 4°C scenario, with Poland’s shrinking 15%. Hop quality would also be affected and so, too, the flavour of the beers.
Four degrees of global heating would present far more problems than a lack of beer but even if the world managed to keep temperature rises to below 2°C, the French and Polish barley harvests would fall 10% and 9%, according to Asahi’s assessment, while the quality of the hops from the Czech Republic would decline by 13%. Currently, we are headed for above 2°C and possibly even 3°C – which would represent some hangover for the beer sector.
And there are other risks for such ‘luxury’ products that offer no nutritional benefits of note. Andy Griffiths, global head of transformational partnerships at Diageo (and formerly head of sustainable procurement) is not alone when he warned beer and the farming associated with its production affects the environment requires attention from the growing and brewing industries. But how pressing is the ‘attention’ and what action are companies taking to adapt?
The research is clear
Research detailing the perilous future of pints is now relatively easy to find – especially since the turn of the decade. Indeed, 2020 was the starting gun for a decade of action on climate change, while the global pandemic and Russia’s war in Ukraine also had brewers in a sweat of the immediate future of their supply chains.
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By GlobalDataResearch published in Nature Communications shows that hop ripening in Germany, the Czech Republic and Slovenia started approximately 20 days earlier, production declined by almost 0.2 tonnes per hectare per year, and the alpha content (chemical compounds found in the hop plant, which are the source of bitterness, aroma and flavour in beer) decreased by around 0.6% according to data from pre- and post-1994. The experts predicted a decline in hop yield and alpha content of 4-18% and 20-31% by 2050, respectively, which highlighted the need for “immediate adaptation measures to stabilise an ever-growing global sector”.
Further digging has unearthed more of the risks of beer from climate change. “We now know the risks climate change poses to our sector,” says Emma McClarkin, CEO of the British Beer & Pub Association.
Last month, the BBPA, with the help of the Zero Carbon Forum and sustainability consultancy 3Keel, produced research detailing the risks posed by climate change to the beer industry. It warned how extreme weather events can “exacerbate barley’s vulnerability” during critical growing stages while a trend towards milder, water autumns may increase rates of waterlogging (which prevents oxygen from reaching roots, causing significant damage). The concentrated UK hop-growing regions are also exposed to the risk of acute flooding events.
And that’s just in the UK: the country imported £38.5m ($51.9m) in hops in 2023, becoming the fifth largest importer in the world. Hops were imported from the United States (£20m), Germany (£7.7m), Canada (£3m) Australia (£2.5m), and New Zealand (£1.3m). Only around 2% of the barley needed is imported but this doesn’t shelter the UK from the pricing shocks and potential future supply disruptions fuelled by climate change. The BBPA’s report details problems in Spain, France, Italy and the US. In other words, overseas supplies cannot be relied on as a substitute.
Asahi has flagged similar risks within its supply chain. The analysis mentioned by Katsuki in 2023 is presented in more detail in the company’s latest integrated report (which covers financial and non-financial reporting). This is a brewer that “places great importance on procurement of locally produced barley in Italy and Australia”. But these strategically important sources cannot be easily substituted so lose them and it “will have a significant impact on our business strategy”, the report reads.
Indeed, consider the ‘risks’ presented for the Oceania region and most can be traced to a changing climate and the biodiversity crisis: “Increases in various costs due to market fluctuations and high inflation; moderating beer consumption driven by diversifying tastes; supply chain challenges driven by external macro factors; ongoing twice-yearly increases in government excise continue to make the tax on beer in Australia very high; adverse change in consumption due to unforeseen macro events (e.g. pandemic, natural disasters, etc).”
Asahi notes: “[…] We will continue to prioritise our response to risks related to the procurement of key raw materials. While risks such as pandemics, geopolitical risks, and climate change have not been as severe as they have been at certain points in the past, their impact on profitability is significant, and they therefore require a thorough and swift response.”
Hope for hops
Page 71 of Asahi’s report lays bare the cash risks of too much carbon being emitted. Two scenarios are presented: one, in which measures are taken against climate change and degradation of nature; and, two, in which no action is taken. In scenario 1, the chronic and acute physical risks that the brewer faces are Y220m ($1.5m) and up Y14.5bn. However, if the world fails to act, Asahi is facing costs of Y1.8bn and up to 12.9bn across those physical risks like supply fluctuations and drops in quality and yield. And then there is ecosystem collapse to face … which is hard to put a figure on but would in a nutshell spell disaster.
If we are to ensure our brewing industry is resilient-enough to cope with drier summers and wetter winters, proactive steps are required
Bob Gordon, Zero Carbon Forum
With figures like that it’s easy to see why companies have been calling for both collaboration and political/policy intervention – and sooner rather than later. Like it or not, both are crucial to keeping a lid on temperature rises and protecting this sector. “If we are to ensure our brewing industry is resilient-enough to cope with drier summers and wetter winters, proactive steps are required,” says Bob Gordon from the Zero Carbon Forum, which is encouraging collaboration across the hospitality, foodservice and brewing sectors on net-zero. “Challenges on this scale require strong collaboration,” he adds.
This is where talk turns to solutions like regenerative approaches to crop production, the use of new drought and heat-tolerant varieties (and ‘winter-ready’ varieties), and integrated pest management. Hop growing is also likely to move to cooler locations, perhaps even Finland or Norway, noted HSBC in a recent update. “As climate change continues to impact the beer sector, we think investors should also continue to scrutinise companies’ sustainability commitments in the beer industry; future improvements should focus on the raw materials stage, especially malted barley, as well as packaging and water use,” the bank concluded.
Protection of the soil is seen as key, with most major brewers investing in trials of regeneratively-farmed crops. Jubel, one of the fastest-growing craft beers in the UK, has just moved to sourcing only regenerative farmed barley and malt. Reports suggest this could halve carbon emissions, while also providing the fruit lager company with a better handle on its supply chain as it targets further expansion.
Founder and CEO Jesse Wilson posted on social media: “Pumped to announce that we’ve partnered with Wildfarmed to pioneer switching all of our beer to regenerative barley. This has been a key project in our push to use business as a force for good, and is better for you and the planet,” he added. The move will provide “100% traceable supply chain from field to a frothy one”, as well as “100% pesticide free barley, and proven to eliminate nitrate and phosphate pollution in our waterways”, plus “carbon emissions of -3kg per tonne [versus] 320kg per tonne of conventional barley”.
Emissions figures for regenerative farming and so-called ‘carbon negative beer’ deserve unpicking but the improvements in traceability are key to reducing exposure top the risks associated with climate change and biodiversity loss. “At a fundamental level, the UK brewing sector must enhance the traceability of where and how its raw ingredients are produced,” noted the BBPA recently. “Without greater supply chain transparency and traceability, it is difficult to assess climate risks, measure sustainability progress, or ensure that regenerative agricultural practices are being adopted widely and effectively. Improving sourcing transparency will allow brewers to prioritise sustainable suppliers, support transitioning farmers, and track environmental impacts,” the organisation added.
This is what brewers around the world are (and certainly should be) doing. Indeed, as the climate changes so does the taste of beer. “I think there is a chance that they will change in flavour but not a lot,” Carlsberg CEO Jacob Aarup-Andersen said in an interview with Euronews earlier this year. “You can see the work we do in our research labs to make sure that, one, we can create more climate resistant hops but it’s also around how do we mimic some of the features of hops in a sustainable way, but more synthetic ways so we can mitigate this?” he added.
Aarup-Andersen’s comments bring to mind a recent paper that considered alternatives to crops like coffee and cocoa, some of them cultivated from cells or made with precision-fermented ingredients. The piece in Nature Food by experts from Stockholm University, Sweden, and Oxford University, UK, noted how these crops “generally receive little attention in the dietary transformation discourse and are often excluded or grouped as ‘other’ foods in dietary modelling studies. Additionally, coffee and cocoa are often considered luxury goods with minimal nutritional value, and therefore receive less interest in nutritional matters”. This has led to “neglect” of the negative environmental and socio-economic impacts of these commodities in research and public discourse has led to research in alternatives falling behind that for ‘priorities’ like meat and dairy.
Could beer (barley and hops) be in the same bracket – a luxury that offers little in the way of nutritional benefit and therefore deserves less attention and less funding? That is another debate (especially when throwing the social and economic pros and cons of a pint or two into the mix as well). Still, the risks of barley for beer being squeezed out as weather changes and supply tightens are real.
Reality bites
Under high warming scenarios, UK agricultural land use is “expected to be altered significantly”, the BBPA report noted: “prioritising barley for animal feed or direct food production over brewing would be likely”, for example. Research published in Scientific Reports, an academic journal, used a food-balance approach to examine expected impacts of climate change and mitigation policies on malt barley supplies, showing large deficits in malt barley supplies for all combinations of climate change, land use and population by 2050, with adverse implications for the malting industry.
If adaptation efforts prioritise necessities, climate change may undermine the availability, stability and access to luxury goods like beer to a greater extent than staple foods, warn experts at the University of East Anglia. In other words: sustainable diets and food security will (likely) trump a hard-earned pint at the end of a hot week.
Lager than life
Wherever you look there is research showing what Patrick Hayes, a professor at Oregon State University, recently called the “terrors” of climate change for the beer industry. “It will be increasingly difficult for us as plant breeders to provide new varieties of barley and new varieties of hops that can meet, just, all of the terrors of the climate change process,” Hayes told Fortune and The Associated Press. “And I say terrors because … it’s that volatility, which is so, so frightening.”
It was 2018 when researchers from the UK, China, and the US found decreases in the global supply of barley “lead to proportionally larger decreases in barley used to make beer and ultimately result in dramatic regional decreases in beer consumption (for example, −32% in Argentina) and increases in beer prices (for example, +193% in Ireland)”. They added that “[…] climate-related weather extremes may threaten the availability and economic accessibility of beer” but this is “not the most concerning impact of future climate change”. A fair point but try telling a pub-goer that on a Friday night after work.
