Sustainability | Beer

Could bulk beer shipping be another coronavirus legacy?

Ben Cooper looks at how the disruption caused by the coronavirus pandemic could prompt brewers to look again at shipping beer in bulk, with 'bag-in-tank' shipping now offering solutions to longstanding logistical challenges.

The Covid-19 pandemic has exposed vulnerabilities in international supply chains, but the solutions may bring sustainability benefits. The brewing sector provides a clear case in point.

The sudden shutdown of on-premise channels meant huge volumes of kegged beer was locked in supply chains, going to waste and causing both financial loss and logistical problems for brewers.

The longer the supply chain and lead times, the greater the impact. European beer exports to the US, therefore, were particularly exposed. There is a confluence of factors that suggests significant change is in the offing for the US imported beer sector.

According to GlobalData, non-US beers account for 20% of the US beer market but only 1% of this is locally brewed under licence. The remaining 19% is imported and the majority of this is shipped pre-packaged in keg and bottle.

Bag-in-box: beer edition

While bulk shipping of wine has increased hugely in recent years thanks to the development of the bag-in-container - or 'flexi-container' - the need for the product to be kept under pressure during transportation makes the flexi-container unsuitable for beer.

However, seemingly with perfect timing, Netherlands-based startup Mega-Inliner has developed a 'bag-in-tank container' (BITC) system that allows for pressurisation. Another key advantage is that, as the beer never comes into contact with the tank container itself, contamination concerns brewers face regarding the use of conventional tank containers are no longer an issue.

The recyclable plastic liner is only used once and the tank container can then be used for any product on a return journey, with clear efficiency benefits. By the same token, beer can be shipped in a tank container that has previously been used for another product without contamination risk.

Mega-Inliner reports it has begun supplying brewers such as AB InBev and Mahou San Miguel with its BITC system. Founder & CEO Sidon van Laarhoven describes the system, which provides a single-use, flexible plastic inner bag inside the tank container, as a "game-changer" for the beer sector.

Mega-Inliner’s BITC solution for beer logistics. Image: Mega-Inliner

While clearly uneasy about presenting his company as benefiting from a globally catastrophic event, van Laarhoven says the disruption in beer supply chains caused by the pandemic "opens up a huge amount of opportunity".

That opportunity should be seen more broadly than a benefit for a company offering the right technology at the right time. Brewers, and ultimately their customers and consumers too, stand to benefit from the emissions reductions this system can potentially deliver.

Change important now, more than ever

The cost and carbon efficiencies that European brewers, such as AB InBev and Heineken, could reap by switching to BITC bulk shipping to the US are particularly significant.

Research published by Netherlands-based investment bank Rabobank in March showed that using a BITC would more than halve the carbon emissions from beer shipped in kegs on a representative route from Rotterdam to Arizona, via Los Angeles.

Crucially, this research was compiled before the Covid-19 pandemic became the global crisis now being witnessed. This is no longer just a sustainability issue but one of risk mitigation and supply chain resilience, particularly against the possibility of further lockdowns and interruptions in the on-premise supply chain.

This is no longer just a sustainability issue but one of risk mitigation and supply chain resilience.

Francois Sonneville, senior beverages analyst in Rabobank's Food & Agribusiness team, who carried out the March research, believes the pandemic will be a "catalyst for change" in the US imported beer market.

Brewers would have moved "very, very slowly" towards bulk solutions, owing to a combination of high margins and consumer sensitivities concerning authenticity of imported brews, according to Sonneville.

"But, suddenly with the Covid-19 virus, I think that they'll have to look at it and ask themselves how do we get our beer now to the US without being either stuck with lots of kegs or no beer at all,” he explains. “I think this is a catalyst for change and they will start to look at the supply chain, and look at wine and say: What can we learn from the wine industry over the last 15, 20 years?"

Less risk for brewers in an uncertain climate

By shipping in bulk, Sonneville explains, the decision to bottle for the off-premise channel or keg for on-premise sales can be postponed by up to four weeks and flows can be redirected on arrival in the US. "Not only does this mean that brewers can start supplying the on-trade much quicker, but they are also less at risk if the opening of on-trade has to be reversed and a second period of closure were to be required."

With pressure on companies to reduce carbon emissions only likely to increase, shipping beer in bulk might soon become the "new norm" for transatlantic beer exports, Sonneville suggests, and he also believes BITC could transform inland beer transport.

Meanwhile, van Laarhoven, points out that many of the advantages the Mega-Inliner system offers brewers over the flexi-container apply to other beverage categories where existing bag-in-container systems are being used, notably temperature control and space efficiency.

Brewers can start supplying the on-trade much quicker.

With its huge bottling and distribution infrastructure in the US, AB InBev is clearly well placed to move first and fastest. Other brewers may be delayed by the need to obtain kegging and bottling capacity in the US.

However, Sonneville believes the complete shutdown of the on-premise channel provides brewers with "an ideal moment to think how you want the value chain to look".

Some might like to contend that an unprecedented dead-stop in global beer supply chains, occurring just as a technological solution enabling brewers to move to bulk shipping arrives on the market, is an example of synchronicity at work. Others will simply see this in terms of a raft of factors and conditions pointing fairly decisively towards a single course of action.

05/21/2024 01:24:48