SMART BREWING SERIES: Part 1
What to Know About Energy Costs before Hopping into Craft Brewing
A 7-part series to increase your profits from the start
So you’re quitting your job and following your dream to do something way more exciting. Congratulations on joining millions of people who are following their dreams!
Before you hop into that craft brewing dream job though, let’s take a look at all the hidden costs of brewing so you can make savvy choices in equipment and processes right from the start. Follow our 7-part series to learn about all the hidden energy costs of craft brewing and how to control them.
How Energy Costs Bite into the Profits of your Craft Brewing Operation
Let’s face it. Craft brewing is super cool. I mean, where else can you roll up your sleeves and create something tasty, bubbly and so socially accepted? But as sexy as this artisan world is, it comes complete with its energy-sucking demons that not only cost you a pile of money but are also bad for the environment. And you know who’s not going to appreciate that? The Gen Zers and millennials who make up the lion’s share of your craft beer drinking target market.
Brewing beer takes an enormous amount of water and electricity to brew a single barrel. In fact, did you know that it takes an average of seven barrels of water to brew just one barrel of craft beer? Craft brewing is a very resource-intensive art. Some may even label it a wasteful one. However, there are things you can do to reduce the waste, the operational costs, and the impact on the environment. But first and foremost, saving on energy costs reduces most of the waste and helps you have higher margins (read “profits”) while doing what you love. Let’s dive into the hidden costs of brewing.
The shocking truth about craft brewing electricity costs
Since most start-ups produce fewer than 1,000 barrels (bbl) per year, they often lack the size and scale to create sudsy beverages efficiently. According to the Brewers Association 2014-2018 Sustainability Benchmarking Report, the median electricity usage for small breweries is 2.8 times that of breweries who make 1,000-10,000 barrels per year. The average cost of electricity for small brewers in the U.S. making fewer than 1,000 barrels per year is $24.91/bbl packaged. Compare that to the average for those making 1,000-10,000 barrels per year at $9.40/bbl packaged, and it’s easy to see that brewing in small batches is pretty costly.
What makes it so expensive? According to the Brewers Association and data from the U.S. Environmental Protection Agency (EPA), the lion’s share of electricity costs in brewing come from refrigeration, packaging and compressed air (some 70%). Add onto that the fact that energy prices in the U.S. have gone up by 25% since January of 2021 and it’s easy to see that electricity costs play a big role in the overall profitability of your new dream job.
By understanding where your largest costs are, you will have the ability to improve efficiency and your profit margins in the long run.
How your largest ingredient will water down your profit margins
Craft brewing requires a lot of water. Not only does it make up 90-95% of your total beer contents, it’s needed for boiling wort and for sanitizing your equipment during the brewing process. Boiling wort requires a ton of energy and is a crucial part of the brewing process. Remember, on average, it takes seven barrels of water to brew just one barrel of beer. Much of that water is then lost as steam in the process, which is typically pumped out of a rooftop, never to be used again.
Additionally, things like droughts and higher outdoor temperatures from climate change can also impact your ability to secure water, or at least secure it inexpensively. Using water wisely in your craft brewing system is of the utmost importance and something every new craft brewer should be monitoring.
The best ways to manage your electricity and water costs from the start
The first step in ensuring the efficient use of both electricity and water is to start with data. Tracking certain key performance indicators (KPIs) from the start will help you monitor and manage your costs with both.
Quick electricity cost reductions can be made by staggering equipment schedules to avoid peak demand electrical rates and installing motion sensors on lights in low-traffic areas. Other reductions can be made by optimizing your glycol cooling system, performing regular maintenance on your equipment, upgrading your lighting, and insulating your glycol and steam lines.
Water costs can best be managed by insulating your steam and condensate lines, optimizing your steam pressure so there are fewer leaks, using a condensate stack, using a clean-in-place (CIP) method that recycles your water and cleaning chemicals, and using dry clean-up practices. Reusing internal rinse water as an external rinse on your packaging line can also help conserve water, as can installing efficient nozzles and water meters at each brewing stage.
At the end of the day, the best improvements in your profit margins will be made when a system is in place to track and analyze all data regarding electricity, thermal, and water consumption so smart decisions can be made in the future. If the energy tracking system is built into the brewery equipment all the better! Follow us for Part 2 of our Smart Brewing Series: The Worst Energy Offenders in Craft Brewing and stay tuned for our smart, energy-saving solution announcement coming in April, 2023!