Supply Chain Woes Complicate Local Beer Production, Distribution
Hurry up and wait
You belly up to a bar, order your favorite local craft beer, grab the ice cold aluminum can and push in the tab to crack it open — tssss kr-pop.
For the consumer, it’s pretty simple. But for that can of beer, its journey was a little more difficult, possibly even treacherous in the times since COVID-19 struck, as supply chain woes and labor shortages are causing hiccups behind the scenes of what was once a straightforward process of brewing, packaging and distributing craft beer.
Some local breweries are having trouble receiving regular deliveries of key ingredients and supplies, especially from overseas, while others are hitting snags at the packaging stage due to a global aluminum can shortage.
While feeling these effects trickle down, distributors are also dealing with their own set of woes when it comes to vehicle and equipment delays.
Rising prices across the board and general unpredictability have led some to rearrange their logistics and plan for the worst, transforming the craft beer industry into an industry of hurry up and wait.
In the breweries
NoDa Brewing Company orders its beer’s ingredients and the supplies to package it from all around the world.
According to head brewer and co-founder Chad Henderson, the majority of NoDa hops come from the Pacific Northwest, but they also get some from Europe. Their grains — the barley, wheat, rye and oats needed for beer — come from the America’s Midwest, Germany and England.
Henderson said his team has spent 10 years perfecting a rhythm for when to place their typical order, but that rhythm can now be thrown off by weeks or months at a time. It helps that NoDa’s suppliers can usually give them a heads up if they foresee an issue, or suggest ordering more if there will be a long wait between the next shipment, but the team has to stay on their toes.
In some cases, suppliers have had to pivot by dipping into their own backstock or using a different but similar brand of hops to fill the order.
“The suppliers try to give us the best idea of arrival time, but they’re scratching their heads over it half the time too, because it’s not just getting it over to the U.S., it’s getting it on the trucks to then take it over to us because of either a personnel shortage or just no one in the docks to receive or load anything,” Henderson said.
Maureen Wierzbicki, quality control and production manager at The Olde Mecklenburg Brewery, echoed that professional relationships with suppliers have been key to maintaining the brewery’s pace of production throughout the pandemic.
“We have been able to work closely with our vendors to ensure materials are ordered in advance of long lead times, and with a safety stock necessary to flex with unforeseen production changes,” Wierzbicki said in an email to Queen City Nerve.
What was once a pretty straightforward process is now complicated by several factors, forcing brewers to be more intentional with their decisions and find creative workarounds.
In some cases, Henderson said NoDa has had to cancel batches and dump the beginning stages of a brew due to ingredient delays, essentially scrapping the brewing schedule. The brewery has also had delivery issues for the chemicals used to clean the tanks they put the beer in to ferment.
“It’s not simply can you make the beer? It’s can you make the beer with what’s coming in?” Henderson said. “And do we have stuff coming behind that that’s going to allow for us to keep making it? And is it going to move at a rate in which it’s not going to back stock into the avenues we want?
“Beer is very perishable,” he continued. “So when you’re having to backstock everything on top of it, it just makes it more complicated to make sure that we get the product out and get it consumed in a good method. And you’re not trying to catch up, but you’re also not trying to overstock yourself at the same time.”
In other words, brewers are trying to hit the sweet spot on a moving target.
From kegs to cans
Jason Alexander of Free Range Brewing said his brewery isn’t having issues sourcing raw materials because more than 90% of their ingredients come from North Carolina as part of their mission to support local agriculture.
“We’re not in the category of breweries feeling the pinch from the tightness of raw materials coming from Europe, but on the flipside, anybody that packages beer right now is feeling challenges in cost increase on the packaging side of it with can price increases and fuel surcharges being implemented again,” he said. “Any logistics with packaging materials are definitely more volatile in our industry right now.”
Free Range wasn’t canning beer at all prior to the pandemic, but like most breweries, the initial shutdown of taprooms forced a shift toward packaging beer in order to survive.
They now work with Greensboro-based Tap Hopper Canning, which comes to the brewery on “canning days” to package their beer.
Alexander said Free Range builds supply chain delays into its brew schedule and plans for a more conservative schedule given the unpredictability of aluminum can supply due to a global shortage.
“It pushed us into structure that needed to happen no matter what,” he said. “Instead of being on our timeline, it was on a timeline out of our control. But it was a good thing overall that we moved into that structure because it’s helped us facilitate new growth.”
At the start of the pandemic, Henderson said NoDa Brewing shifted its production from 50% cans and 50% kegs to approximately 95% cans, which of course meant having to nearly double down on can orders in an already stressed aluminum market.
That ratio has since changed to 65% cans and 35% kegs, but Henderson doubts it will completely level out due to a decrease in the demand for draft beer.
Unfortunately for breweries, it’s currently more expensive to can beer than it is to keg it, as every piece of the can costs money — from the label to the lid to the staff required to do the canning. And unlike kegs, cans are not reusable.
On top of that, Henderson said cans used to package beer come from companies that also supply major soda and energy drink companies, meaning competition is fierce.
“We tend to be on the back burner a lot,” he said. “So if there’s any sort of supply issue with either getting any aluminum or the aluminum stock itself, we usually are the ones that will feel it first because we’re really low on the priority list compared to Monster Energy drinks or whatever.”
Free Range handles their own distribution, as the majority of their cans are sold in their taprooms on North Davidson Street and Camp North End. The rest goes out wholesale to area bars, restaurants and bottle shops.
Most of NoDa’s beer goes on its own trucks, though Henderson said distribution companies do pick up a small amount.
“There’s still hiccups that happen with that, and you would have to delay pick-ups and whatnot before they go off to the hubs to then get distributed out to the bottle shops and can shops and things of that nature,” he said. “But for the most part, for us, that part has been affected a little less than it is getting the actual supplies.”
Taylor McDermott of Artisan Beverages, an independent Charlotte-based distributor, said his industry is feeling the effects of supply chain woes and labor and can shortages trickling down from the manufacturers of the products they carry.
Artisan distributes local, regional, national and international craft beer, wine, cider and non-alcoholic beverages. Artisan is not an importer, but the company works with importers to get international products and, since the pandemic began, McDermott said those importers sometimes have delays for months at a time — from product sitting on shipping containers at port or at sea to product waiting to go out due to lack of shipping containers.
“When you buy something, it starts at a production level and it goes on a journey to get to the shelf and all steps along the way are really important,” he said. “There are still going to be some challenges and having some patience and understanding that it’s not going to be perfect and it won’t be instantaneous as it may have been in 2019 and prior … you just gotta deal with it as much as you can.”
More directly, McDermott said distributors like Artisan are having difficulty ordering refrigerated box trucks and vehicles for their fleet due to manufacturers posting 18-month delays.
There are even parts and maintenance delays when his trucks break down or need a routine tune-up, and he’s facing construction delays with the company’s warehouse expansion into Raleigh because refrigerator cooler materials and equipment are backordered.
Despite these issues, McDermott insisted product availability, at least for Artisan, hasn’t been affected.
Behind the bar
Michael Felt, owner of NoDa bars The Blind Pig and NoDa 101, isn’t the hurry-up-and-wait type. He said he’s shifted away from an emphasis on local beer to a more national-based brand strategy due to fluctuations in the market.
“Since COVID, it’s kind of been like, well, what can we get? So, we talk to our reps in that kind of fashion and that’s what we’ll sell. That’s what we’ll buy,” Felt said. “As far as being brand loyal and brewery loyal and distributor loyal, that’s kind of just gone out the window really.”
Both of Felt’s bars were closed during the initial shutdown and, when they reopened, staff turnover at the distribution companies and breweries made it difficult to continue old partnerships.
“These are relationships that we’ve cultivated over the last 10 years or so and, on the supply side, no one was reaching out either because they’re stretched thin, because it’s not just ingredients and materials that are in short supply, it’s labor and truck drivers,” he said. “Everything has been affected.”
Though prices for ingredients and supplies in the craft beer industry continue to rise, Alexander said Free Range has been able to absorb the costs through greater efficiency in its systems.
He hopes the supply chain woes lead to packaging innovations within the industry and new options for sourcing so as to not be so heavily dependent on Europe and China (the world’s largest exporters of aluminum products).
Henderson believes it’s going to take systemic change to solve the labor shortage that’s bogging down logistics. As for the consumer, he said the best way to help the breweries is to order a beer.
“People going out and trying new stuff at least gives the local breweries business and gets their stock moving and gets the feedback and gets people aware that there’s people out there making product and trying to get new cool stuff out there,” Henderson said. “And we’re stressing pretty hard to try to do that.”
So, next time you belly up to a bar, order your favorite local craft beer, grab the ice-cold aluminum can and push in the tab to crack it open, just remember the journey it took to get there.
This work by Queen City Nerve is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.