Photo: Rivertowne Brewing, Export, PA
Western Pennsylvania has seen a boom in local breweries and distilleries in the past decade. However, little has been understood regarding the supply chain supporting production of these beverages. Penn State Extension conducted research in 2017 to assess current and future production levels and supply chain actors and identify future potential for local and regional sourcing of ingredients.
- With the exception of a few business sourcing fruit and herbs, businesses in the region are not purchasing local or regional products.
- Relationships need to be built between brewers, distillers and farmers.
- There is overlap, and thus potential for partnership, between what local brewers need and what local farmers grow.
- There is demand for many agricultural products including fruits, grains, malted barley, herbs, vegetables and hops.
- Brewers and distillers are projecting significant growth.
- Challenges include a lack of ag literacy from businesses and tight purchasing margins which may necessitate a fundamental shift in expenditures for locally and regionally produced goods.
New potential is brewing in Western Pennsylvania
Western Pennsylvania is known for its lush rolling hills, beautiful farm lands, and a love of celebrating with a cold one. As is true for much of the country, the past decade has seen a boom in local Pennsylvania brewers and distillers, from Wigle Whiskey to Allegheny City Brewing. This report summarizes a research project conducted by Penn State Extension to understand if the growing craft beer and spirits industry can further connect with the well-established network of small local farms in the area.
Essential question: Can locally-produced beer and spirits be made with locally grown ingredients?
Photo: Wigle Whiskey, Pittsburgh, PA
Primary data was collected in 2017 by surveying 74 distilleries, breweries and cideries in 19 Western Pennsylvania counties. Site visits and informational interviews were conducted with business owners. In the region studied, there are 2,292 farms with the potential to sell to these businesses. Secondary data sources were reviewed to create asset maps in the region, and to create a network database for future work.
Data highlighted how the Western Pennsylvania craft fermented beverage industry is thriving, and quantified expected growth in beverage production over the next three years. Currently, 48% of the businesses we surveyed produce over 500 barrels of beer in a year. By 2020, 82% are expected to produce that or more, a 70% increase!
With so much competition, businesses need to find ways to distinguish themselves. As consumer values continue to shift towards transparency and sustainability, sourcing local ingredients is a key factor that can help brewers stand out and succeed in a competitive landscape.
Map and County Breakdown of Distilleries, Breweries, and Cideries in Western Pennsylvania
Note: Counties Armstrong, Greene, and Venango currently have no fermented beverage businesses.
Conversations, surveys, and market trends all point to the same message: brewers and distillers want to build relationships with local farmers. In fact, over 96% of the businesses would consider buying local ingredients for their products.
While it's clear that there is interest in sourcing local ingredients, beverage businesses are also more than a little concerned about price, availability, and consistency of local crops. This concern is well-justified: Pennsylvania is producing top-level quantities and qualities of craft beer (ranks 7th in the country by the Brewers Association), but the same cannot be said for hop production.
Variety of Hops Currently Used by Beverage Businesses
There are five different varieties of hops currently being produced in Pennsylvania:
This accounts for only three of the top five hop varieties used by local brewers.
Currently, not enough Pennsylvania farmers are producing hops, so brewers are not relying on or seeking out local farmers to supply their inputs. Large-scale hop producers can ensure a high level of consistency in hop variety, quantity, and timing of orders that simply cannot be matched by small-scale local producers.
Map of Hops Farms in Pennsylvania and Ohio
However, "hop" the border into Ohio and there are hop farms abound! As opposed to the five hop varieties being grown in Pennsylvania, Ohio farms are currently producing 30 varieties of hops. And while there are 7 hop farms across the entire state of Pennsylvania, Ohio has 70 hop farms that are networked through the Ohio Hop Growers Guild.
Quantity of Ingredients Currently Purchased by Beverage Businesses
Of course, the potential for Pennsylvania brewers to source local ingredients extends far beyond hops. Barley, wheat, rye, fruit, herbs, and spices are ingredients that are heavily used by brewers and distillers. These crops are all grown in Pennsylvania but the next critical step in this work is to work with farms to identify whether or not the production price of these crops can come into line with what brewers are willing to pay.
This survey research provides a valuable glimpse into the current state of local brewing in western Pennsylvania but perhaps the most important results are the questions that arose for future research. What accounts for the difference in hops farming between western Pennsylvania and Ohio? Could Pennsylvania brewers be sourcing locally from Ohio hop farms? See our full list of recommendations below.
- Ag literacy among brewers is needed. There is little understanding of production costs and seasonality.
- Growers need technical assistance growing specialty crops and assistance with creating new market channels.
- Grower/buyer networking events are needed to begin developing these relationships.
- Survey of hops farmers in western Pennsylvania and Ohio.
- What accounts for the huge difference in number of hop farms between western Pennsylvania and Ohio?
- Could Pennsylvania brewers be sourcing locally from Ohio hop farms?
- Why are there not more hop farms in Pennsylvania?
- Will growers buy at a price and volume that meets growers' revenue needs?
Thank you to all of the beverage businesses who participated in this study!