Asahi chief warns climate change could lead to beer shortages

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Asahi’s chief executive has warned that climate change could lead to beer shortages as warmer temperatures hit barley and hops supplies around the world. 

Atsushi Katsuki, who has headed the Japanese brewer since 2021, said analysis conducted by the company found that global warming was set to reduce barley yields and the quality of hops significantly over the next three decades, and warned of a beer shortage.

France’s spring barley harvest could decrease 18 per cent by 2050 under the UN’s 4 degree scenario, the most severe, while Poland’s harvest would shrink 15 per cent. The quality of hops, a key component for the preservation as well as the flavour of beer, would decline 25 per cent in the Czech Republic, one of the world’s largest hop producers.

Under a scenario of below 2 degrees, the French harvest is forecast by Asahi to decline 10 per cent, that in Poland by 9 per cent and the quality of hops in the Czech Republic by 13 per cent. The world is headed for a temperature rise of up to 2.6C, the first comprehensive UN stock take of global efforts to limit warming recently concluded.

“Although with hotter weather the consumption of beer may grow and become an opportunity for us, climate change will have a serious impact,” Katsuki told the Financial Times. “There is a risk that we may not be able to produce enough beer.”

Volatile weather has already interfered with barley yields in recent years, leading to European malt and malting barley prices hitting record levels in 2022, putting pressure on brewers. Although prices have moderated, the cost of 2023’s crop this summer was about €100 above earlier averages.

Climate change has had a bigger impact on the price of barley than even Russia’s invasion of Ukraine, said Katsuki. 

“That is why we’re not just taking our own actions but we also need to push harder, working with other members of the industry and the society at large . . . we have to all work together to mitigate the climate change risks,” he added.

Asahi, which counts Asahi Super Dry, Peroni Nastro Azzurro and Pilsner Urquell among its stable of beers, has partnered with Microsoft and an agritech company to start tracking harvest volume and quality on farms. In January the brewer will also launch a new global procurement centre in Singapore, which will centralise sourcing of key ingredients to better manage possible supply chain disruptions.

Other international brewers have been investing in regenerative agricultural practices in an attempt to make their barley supplies more resilient to climate shocks. Anheuser-Busch InBev has invested in drought-resistant barley varieties in Africa, while Carlsberg aims to use fully regenerative agricultural practices by 2040.

Asahi, which has spent $20bn buying premium beer brands from AB InBev in Europe and Australia, was bullish about taking on bigger rivals.

“The brand awareness of Asahi Super Dry and Peroni Nastro Azzurro is well established in certain regions or cities, but not strong enough to call them global brands,” said Katsuki.

“Our ambition is to have [these two brands] among the global top 10” by 2030, he added, saying that having five global brands — which also include Kozel and Grolsch — as well as a presence in low and no-alcohol and soft drinks gave Asahi a competitive advantage over single-mega brand brewers.

According to Euromonitor, Asahi had a global market share of 3.4 per cent in 2022, compared with AB InBev’s 27.6 per cent and Heineken’s 13.3 per cent. The $19.8bn Japanese brewer has one-sixth of the market capitalisation of AB InBev and less than 40 per cent that of Heineken.  

The company had previously said it would not make further acquisitions until 2024 to reduce debt, but Katsuki said that “from 2025 onwards, we’ll be able to become more aggressive in investment again, including mergers”.

North America was “potentially the best and biggest market”, he added, but warned that there was limited opportunity to buy brewery giants there, while acquiring smaller craft beer brewers would not make it achieve its goal of having “wide reach throughout the region”.