The Beer Supply Chain: How it Works & Trends to Expect

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Beer — it’s been a staple in many cultures for thousands of years and is still one of the world’s most popular drinks. From paddock to pint, an intricate set of systems and processes are undertaken to place that frothy cold brew in your hand.

Each link in the beer supply chain comes with its own issues and challenges. From 2020–2022 the Covid-19 pandemic was one of these and will continue to be so for some time. Post pandemic, evolving pressures will endure to disrupt the beer supply chain in 2024 and beyond. Beer supply chains will need to be flexible to adapt and survive the changes and challenges ahead.

What is the beer supply chain?

The beer supply chain is a system of crucial steps taken from recipe conception through to production, brewing, bottling and delivery to the consumer. This journey from the field to the fridge includes sourcing essential raw materials such as malt, hops, and yeast, along with the people, production activities, information, and resources involved in getting a beer into the hands of your customers.

Complex beer supply chains involve multiple channel members including growers, brewers, distributors, and retailers. Contemporary supply chains are based on the direct-to-consumer model made possible through the growth in eCommerce and made necessary through the Covid-19 pandemic.

How does the beer supply chain work?

Beer, like any other product, follows the rule of supply and demand, but the brewing process can be complicated, and so too the beer supply chain.

It starts first with the raw ingredients needed for production and packaging and stops when the beer is delivered to the end user. This could be home delivery of a carton from an online order or when the barman pours a pint for a pub patron.

wheat for beer Building environmental issues threaten the supply chain of beer

Raw materials

Raw materials include essentials such as water, malt, hops, and yeast. Additional ingredients like coffee beans, spices, and sugar are also used for innovations and twists on the traditional brew.

It is estimated that 39 million hectares of barley was harvested in 2019. Roughly 70% of that was used as animal feed while the other 30% or 11,817 hectares was used to produce malt for the brewing of beer.

The beer industry is currently experiencing a scarcity of hops due to adverse weather, bush fires and other environmental events. With rising temperatures reducing soil moisture and droughts exacerbating water shortages, climate change poses a real threat to the availability of the raw materials of the beer supply chain.

Additionally, Ramularia disease is affecting barley crops, and the arable land area used for growing crops is shrinking. Consumer demand for sustainable crops and locally sourced produce is and will continue to be key factors for raw ingredients in the beer supply chain.


Beer production has always been labour-intensive, particularly in the smaller craft and boutique breweries.

SaaS inventory software offers brewers real-time solutions to improve the efficiency of brew production. These tools link forecasts to production schedules and supplier contracts, providing complete and detailed insights to track ingredients and expiry dates, and offer analytics to predict seasonal demand fluctuations.

Software solutions replace manual methods of inventory tracking to provide access to better management tools and accurate financial data. Implementing basic automation into brewery operations can reduce labour and improve product consistency.

Simple automation reduces manual tasks like checking temperatures using single input computer chips and a single output cooling valve. More complex well-designed automation systems are extremely flexible, enabling brewers to make changes and easily program new recipes.

beer bottles As the craft beer industry grows, the beer packaging market grows too


The increase in demand for craft beer has led to a corresponding growth in the beer packaging market. Beer packaging is the part of the beer supply chain that involves the bottling and labelling of bottles, PETs, cases, and kegs.

However, the many benefits of glass mean that glass packaging is expected to have the largest market share of the industry moving forward. Glass is reusable, recyclable, and it keeps beer fresher for longer compared to other packaging materials. Glass is also a good insulator which keeps beer colder much longer than any other type of single-use packaging.

Additionally, glass reduces the risk of spoilage because it has a zero rate of chemical interaction with other products, and amber glass beer bottles prevent light from entering the bottle.

The beer packaging market is competitive and appears to be fragmented. Suppliers are competing on price, capacity, volume, and quality. The popularity and demand for original packaging solutions – especially those with eco-friendly credentials – is expected to continue therefore technological innovation is likely to impact the market considerably.


Beer supply chains need to be supported by efficient shipping and logistics. Batch tracking using brewery software tools enables product monitoring to determine the status of all inbound and outbound deliveries to the warehouse – which ensures timely deliveries and customer stock replenishment.

Automation is revolutionising the beer supply chain through automatic storage and retrieval systems that improve warehousing and dispatch efficiency. With the addition of brewery software, brewers can account for all materials and shipping costs to ensure products are accurately priced to maximise revenue.

beer in the warehouse Distributors and retailers have had to adjust the way they sell beer through the different stages of lockdown


Distribution covers a wide range of activities and a variety of supply chain participants. Quality auditing, marketing, training, and food pairing are all distribution activities. Participants in the beer supply chain vary from wholesalers to retailers, restaurants, bottle stores, pubs and clubs.

Distribution and supply are vulnerable to an unpredictable customer and ever-changing preferences. Take for example the increased demand for beers with fewer calories and lower ABV that is expected to be high in flavour and with food-pairing compatibility.

The beer supply chain was adversely affected in 2020 and 2021 due to the Covid-19 pandemic, which caused nation-wide lockdowns, the closure of hospitality venues and restrictions on social gatherings.

The pandemic changed the way in which beer was packaged and distributed. It generated growth in eCommerce, online demand, and direct-to-consumer supply due to whole nations being forced to stay at home. Brewers had to rethink packaging to meet this change in demand. Twelve-packs replaced kegs, for example, and stock meant for hospitality venues was redirected to retail outlets such as supermarkets and bottle shops.

Covid-19 has been extremely disruptive to the distribution and supply of beer products and this is likely to linger for some time yet. While international markets continue to be affected by Covid-related supply chain issues, domestic consumers appear to remain loyal to local brewers.

What does the beer supply game tell us about the beer supply chain?

The Beer Game teaches supply chain principles using a role-play simulation throughout all stages of the beer supply chain. It demonstrates how problems arise due to a lack of information sharing and uncoordinated processes.

One common supply chain issue is termed the bullwhip effect. The bullwhip effect is a distribution channel event that refers to shifts in inventory stock levels due to changes in consumer demand. Demand forecasts succumb to supply chain inefficiencies the further you move up the supply chain.

For example, forecasted customer demand is 25 units, a retail order including safety stock becomes 40 units, the wholesale orders 60 units to gain bulk purchasing benefits and the manufacturers raw materials order is 70 units to bring costs down. The bullwhip effect in this scenario creates 45 units more than the forecasted consumer demand.

How to reduce waste in the beer supply chain

Reducing waste in the beer supply chain is essential to cutting costs, improving profit margins and overall operational efficiency. Brewery software solutions are key in helping to reduce waste and boost profitability.

Both the raw ingredients and the finished product of beer brewing are perishable goods. By implementing brewery software systems, brewers can reduce spoilage waste by monitoring production, inventory stock, sales, and raw materials. Brewery software provides real-time data to identify batch lots and use-by dates well in advance of spoilage occurring.

How has Brexit affected the beer supply chain?

Britain’s exit from the European Union has had an effect on the beer supply chain.

After Brexit, Britain is now free to introduce tariffs on imports from the EU, and the EU will almost certainly impose tariffs on British goods. Brewers, therefore, will pay more for ingredients such as malt, hops or barley traded between Britain and the EU.

Post-Brexit, Britain can drop current EU-imposed tariffs meaning brewers may pay less for hops, malt or barley imported from outside the EU. However, these imports generally come with increased shipping costs.

For beer exporters from the UK, current conditions have meant extra costs, paperwork and regulations for those exporting to the EU. Additionally, some brewers have found it difficult to find staff or businesses to transport their product, with drivers preferring to stick to easier routes within the EU. 

Climate change and the beer supply chain

Climate change poses a major threat to our environment and will conceivably wreak havoc on the beer supply chain.

The demand for hops is increasing, yet restrictions in supply caused by extreme weather and drought and the resulting hop shortages are causing a constant fluctuation in the cost of raw materials.

A 2018 paper discussing the effects of climate change on beer supply suggests that extreme weather events caused by climate change can have a devastating effect on global barley production.

Assuming the current geographical distribution and density of barley agriculture remains constant, this has the potential to affect beer prices, consumption demand and possibly result in reduced trade between beer-loving economies.

Blockchain and the beer supply chain

Consumers are increasingly more interested in knowing the origin or source of raw materials, and the ethical footprint and sustainability of products they buy. This is particularly true of craft beer enthusiasts.

Blockchain technology provides consumers with the ability to trace information about where the barley in their brew is grown, reaped, and malted. This end-to-end view of the supply chain is achieved by simply scanning a QR code on a pack of beer.

In 2020 AB InBev introduced blockchain trails to collect data and provide information to customers and also help guide agricultural development such as improving the growers’ barley yields and environmental footprint.

Blockchain brewery software provides a decentralised platform to enhance traceability and gain valuable data on raw ingredients. Not-for-profit Fairfood uses blockchain technology to trace food items to their source, enabling farmers to gain fairer prices and employees better wages. The technology also enhances billing transparency through public transparency of transactions, expediting the flow of capital and maintaining security.

Technology and the beer supply chain

Brewery software technology enables the brewing process to be connected along the entire supply chain – from concept to sales and financial reporting – using digitally linked hardware and brewery software systems.

Monitoring and understanding exactly when and how much of any ingredient will be available is critical for microbreweries. The use of artificial intelligence and analytics is predicted to rise because it can track, examine, and interpret relevant information to minimise the overall cost of beer production.

Future trends will see more breweries embracing the Internet of Things (IoT), with technology such as RDIF tagging, GPS monitoring of shipments, programmable logic controllers and sensors to automate beer production. IoT will drive efficiency, productivity, quality, and safety with real-time monitoring and data-driven decision-making.

Further changes to the future beer supply chain

Technology, pandemics, climate change and consumer demand preferences have all impacted beer supply chains. Predictions for 2024 – and even beyond – suggest that these trends will be ongoing:

  • Brewery software and smart technologies will continue to evolve and implemented to improve brewing processes, inventory control, quality control and delivery
  • The number of brewery brands able to get completely involved in distribution and retail will decrease. This will contribute to buyouts, strategic partnerships, and increased competition
  • The preference toward low alcohol beverages from health-conscious consumers is growing and the sales of no- or low-alcohol beers will rise with the introduction of more choices and better-tasting options
  • Supply chain issues will continue for some time due to the ongoing effects of Covid-19 and Brexit
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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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