Craft Brewing And Industry 4.0

In my last blog entry I wrote about a recent trip I made to Budapest, Hungary. I was there attending the annual conference of the International Geographic Union Commission on the Dynamics of Economic Spaces. The theme of the conference was Rethinking Economic Geography in the Era of the Fourth Industrial Revolution: Manufacturing, Entrepreneurship, Employment and Industry 4.0. My presentation at the conference was about the applicability of Industry 4.0 methods to the craft brewing industry.

So what is Industry 4.0? Put in historical context Industry 4.0 is referred to, by many, as the fourth industrial revolution (see diagram below). It is in fact, a “general term for networked, digitized production; machines and products are seen as networked and intelligent components that can exchange data locally, globally and among companies.” The different parts of an Industry 4.0 manufacturing system include the Internet of Things (IoT), big data, artificial intelligence, automation of processes with robots, 3D printing, and artificial intelligence (AI). For example, the Internet of Things (whereby machines connect and communicate with each other) permits manufacturers to use sensors that collect real time data on manufacturing processes. These data, in conjunction with powerful analytical techniques, can provide manufacturers with insights into inefficiencies in their manufacturing processes. Acting upon these data and analysis allows manufacturers to realize increased levels of productivity. In short an Industry 4.0 factory is a smart factory.

The four stages of the evolution of manufacturing
Source: Machines4u.com

While concepts such as the Internet of Things and big data might seem a million miles away from making craft beer, there are, in fact, several examples of breweries utilizing Industry 4.0 technologies. These include New Belgium Brewing who have production breweries in Fort Collins,Co and Asheville, NC. A major problem that New Belgium faced was unscheduled downtime on their bottling line. This meant that the brewery was not bottling as much beer as it could. To address the problem, New Belgium utilized what is known as a Manufacturing Execution System (MES). An MES is a computerized system which allows manufacturers to “track and document the transformation of raw materials to finished goods. MES provides information that helps manufacturing decision makers understand how current conditions on the plant floor can be optimized to improve production output.” The MES allowed New Belgium to identify the sources and number of downtime events. They were then able to take steps to remedy them. Downtime fell by 50%, and there was a significant increase in bottling efficiency. As a result, the number of cases of beer being produced per week increased from ~150,000 to ~200,000. All of this was achieved without any new capital investments.

While New Belgium is a relatively large craft brewer (the 4th largest in the United States), Industry 4.0 methods have been utilized by smaller craft breweries. Take Sugar Creek Brewing Company of Charlotte, NC. Opened in 2014, Sugar Creek specialize in Belgian-style ales. Annually, the brewery produces ~5,000 barrels of beer. When Sugar Creek realized that they were losing $30,000 a month due to excessive foaming they knew something had to be done. Excessive foam in bottles coming off the bottling line was a particular problem. Somewhere between 10% and 13% of a batch of beer was being wasted. The brewery turned to IBM and Bosch for help. Sensors were installed on the production line and the generated data were analyzed. The analysis showed that the excessive foam was created as a result of imbalances in pressure and temperature as the beer went from tank to tank on the bottling line. Armed with this new knowledge, Sugar Creek were able to make adjustments that solved the problem and reduced waste. An added bonus was more controlled and precise fermentations which resulted in better flavored beer. A short video explaining how Sugar Creek benefitted from Industry 4.0 technologies can be viewed here.

Sugar Creek Brewing Company of Charlotte, NC have utilized Industry 4.0 technologies

The two examples above clearly demonstrate the benefits of Industry 4.0 to the craft brewing industry. In addition to New Belgium and Sugar Creek, there are other craft breweries that are using Industry 4.0 technologies. These include Deschutes Brewery of Bend, OR and Tröegs Brewing of Hershey, PA. In reality though, I wonder about how many craft brewers are in a position to take advantage of Industry 4.0 technologies. Most craft brewers are quite small. Many, for example, do not have their own bottling or canning equipment, and so utilize the services of mobile canning companies. As one observer noted, “the use of sensors throughout the premises would seem appropriate in larger facilities. Smaller microbreweries would specifically struggle with the adoption of this advancement, due to height of cost. Smaller locations might not possess the space large enough to see any success either.“ While Industry 4.0 technologies may not become widespread in the craft brewing industry, those breweries that are able to utilize them are likely to realize unforeseen and unprecedented improvements in efficiency and productivity.

Hungary For Beer

I just returned from four days in Budapest, Hungary. I was there attending the annual conference of the International Geographic Union Commission on the Dynamics of Economic Spaces. I served as Chair of the Commission between 2010 and 2014, and so enjoy going to their annual conference to catch up with old friends, and even perhaps make some new ones. Trips such as this also provide me with an opportunity to explore the local beer scene. I had last visited Budapest in 2015, so I was curious to see how the craft beer scene there had evolved since then.

The first written record of brewing in Hungary dates to the twelfth century. During the sixteenth-century, manor houses and monasteries had their own on-site breweries; but it was not until the seventeenth century that what might be considered the first industrial scale breweries were established. By 1910 four brewing companies (Dreher Antal Brewery, First Hungarian Brewery, Kobánya Civil Brewery, and Haggenmacher Breweries) produced over ninety percent of beer consumed domestically. Despite the dominance of the Big Four, the Hungarian market supported an additional eighty-six smaller breweries. In 1948, the Hungarian brewing industry was nationalized. It remained that way until 1983. Between 1948 and 1983, a single state-owned brewing company (the Hungary Brewery, and its successor the Trust of Hungarian Beer Breweries) was responsible for producing all of the beer brewed in Hungary. Budapest was the main center of production during this period, – producing seventy-six percent of the country’s Beer.

Hungarians consume approximately sixty-three liters of beer per capita annually (2017 data). This placed them sixteenth out of twenty-eight European countries listed in a Brewers of Europe report. Like many other European countries, Lager is the most popular type of beer in Hungary, accounting for between eighty and ninety percent of beer consumed. Most Hungarian beer is produced by three breweries – Dreher Breweries (owned by Asahai Breweries of Japan), Borsodi Brewery (owned by Molson Coors) and Heineken Hungaria.

I enjoyed some Dreher Lager (and a shot of Jägermeister) while in Budapest

In recent years, craft beer has grown in popularity in Hungary. Modern day microbreweries made their appearance starting in the 1990s. According to a report by The Brewers of Europe the country was home to sixty microbreweries in 2017, up from twenty in 2011.

In addition to craft breweries, craft beer bars are also becoming increasingly common, particularly In Budapest. Indeed in an August 2019 piece CNN listed Budapest among the fifteen best beer cities in the world. While wandering around the center of Hungary’s capital city, I came across Beer Brothers Craft Beer Bar. It had fourteen Hungarian craft beers on tap. I visited Brothers twice during my short four-day stay in Budapest, trying a total of three different beers. The first was Stroman, a New England IPA from Ugar Brewery. Ugar is located in the town of Törökszentmiklós (population 23,000), eighty miles southwest of Budapest The second and third were both from Mad Scientist Brewery – Madhouse, a New England IPA and Lumber Sexual, a Brut IPA. Mad Scientist Brewery is located in Budapest.

Beer Brothers Craft Beer Bar
Beer Brothers Craft Beer Bar has 14 Hungarian craft beers on tap
Madhouse, a New England IPA, brewed by Mad Scientist Brewery

The second craft beer bar I visited was Neked Csak Dezso!. Although the sign on the outside said that it was a Brewpub and bistro, there was no brewing done on site. It was, quite simply, a craft beer bar. Although the service left a lot to be desired, this is a really impressive craft beer bar. First it is quite large. Second it has thirty-two craft beers on draft, over twenty-five of which were from Hungarian breweries. There were also a nice selection of craft beers that could be purchased to go. I arrived at the bar near closing time, so I only had time for one brew. I opted for Fruit Works, a Raspberry Gose from Brew Your Mind Brewery. The brewery is located in Szekszárd, a town of thirty-two thousand people, ninety miles south of Budapest.

Neked Csak Dezso!
Neked Csak Dezso! had a fine selection of craft beers to go
Fruit Works, a Raspberry Gose from Brew Your Mind Brewery

The third and final craft beer bar I visited was First Craft Beer & BBQ, located in Budapest’s Jewish Quarter. The brewery has two locations in Budapest – a brewery/taproom and taproom/restaurant. It was the latter I visited. There were twenty beers on tap, nine of which were their own creations. I opted for their Belgian Cherry Fruit Beer.

The entrance to First Craft Beer & BBQ
First Craft Beer & BBQ

This was my second visit to Budapest. My last visit was in 2015. My sense is that the craft beer scene has grown since then. There are certainly more craft breweries in the country. As noted above, there were sixty in craft breweries in 2017 (the most recent year for which I have data), compared to forty-six in 2015. From casual observation, it seems to me that the craft beer scene in Budapest is more vibrant than it was four years ago. There do appear to be more craft beer bars, and craft beer does seem more readily available in cafes and regular bars. I like Budapest. It is a vibrant city. I look forward to returning some day.

Further Reading:

Fertő, Imre, József Fogarasi, Anita Major, and Szilárd Podruzsik. 2018. The emergence and survival of microbreweries in Hungary. In Christian Caravaglia and Johan Swinnen (Eds.). Economic Perspectives on Craft Beer: A Revolution in the Global Beer Industry. London: Palgrave McMillen, pp. 211-228.