New Belgium Brewing Company: Brewing With a Conscience doc

New Belgium Brewing Company:
Brewing With a Conscience



By Christopher Asher, Elina Bidner and Christopher Greene

January 2003

The
Wirth
Chair
in
Environmental
and
Community
De
velopment
Policy

UNIVERSITY OF COLORADO AT DENVER & HEALTH SCIENCES CENTER
The Graduate School of Public Affairs

The Wirth Chair in Environmental and Community Development Policy

The Graduate School of Public Affairs
University of Colorado at Denver & Health Sciences Center
Campus Box 133 | P.O. Box 173364
Denver, CO 80217



New Belgium Brewing Company:
Brewing With A Conscience


Christopher Asher
Elina Bidner
Christopher Greene

Faculty Advisor: Thomas J. Dean
Leeds School of Business
University of Colorado at Boulder

1
Introduction

Jeff Lebesch and Kim Jordan founded the New Belgium Brewing Company in 1991
(“NBB”), with a mission “to operate a profitable company which is socially, ethically, and
environmentally responsible, and that produces high quality beer true to Belgian styles.” From
this initial vision, they developed a set of “core values and beliefs” that guided the company
through its early, fast paced growth. Fueled by the success of their flagship beer, Fat Tire, New
Belgium Brewing Company’s growth greatly outpaced that of regional competition in a highly

competitive industry that exploded on the Colorado scene in the early 1990s. NBB was able to
withstand intense pricing pressures and maintain continuous growth, becoming the 6
th
largest
specialty brewer in the United States by 2002, and winning numerous awards along the way at
the industry’s most prestigious events.

The company’s focus on energy efficient brewing processes and environmentally friendly
technologies and practices were reflected in their mission statement and core values. By holding
true to these beliefs, NBB has set new standards for efficient brewing operations, environmental
stewardship, and employee happiness for the industry. The 1995 design of a new brewery and
operations facility, which became the industry paradigm for energy efficiency, indicated the
company’s level of commitment to minimizing environmental impact. In 1999, NBB became
the first brewery to purchase 100% of their electricity from wind-generated power. The latest
expansion, which was completed in 2002, displayed the intent of NBB to continue growing in a
way that is environmentally sustainable and their commitment to maintain the quality of their
products as batch sizes increased to help supply a wider range of distribution and greater overall
demand.


The Brewing Industry

The brewing industry in the United States had evolved from an industry dominated by
numerous small local breweries (pre-Prohibition), into one dominated by few very large
companies that had survived Prohibition. From the 1930s, until the late 1980s, large domestic
brewers dominated the market, and beer drinkers did not have many options on the shelf. Then
the introduction of Sam Adams, by the Boston Beer Company, in the early 1990s helped spur a
microbrew craze that spawned over a thousand breweries in the United States in the next decade.
The Boston Beer Company used clever radio advertisements featuring the company’s founder,
James Koch, to help educate beer drinkers about the difference between all-malt craft brews and

the mass-produced domestic beers made with only about 60% barley malt and 40% rice, or corn
(as a cheap substitute). In the following 20 years the craft brew market matured, with many
breweries going out of business, and others consolidating operations or merging with other small
operations.

While the entire beer market did not grow significantly during the 1990s, the market
share of craft brewers grew every year between 1980 and 2001 (Beertown.org, 2002) (Exhibit 1
displays the craft brewing industry facts from 2001, as well as industry definitions.) Even though
craft brews only accounted for about 3% market share of the national beer market in 2001, large
domestic brewers paid close attention to this movement that had carved a $3.35 billion dollar

2
market out of a pie that wasn’t getting any larger. In 2001 craft brewers received 6.5% of the
revenue in a $51 billion market, and only produced 3% of the country’s volume.

Since the inception of the craft brew industry, major brewers branched out into several
new specialty products, many successful microbreweries expanded to become regional specialty
brewers, and the number of other brewpubs and microbreweries around the country continued to
grow. These two trends resulted in the U.S. having the largest number of specialty brewers in the
world. While California boasted the largest number of breweries (over 100), Colorado produced
the largest volume of beer with just over 80 breweries (partly due to the production at Coors and
Anheuser-Busch breweries.)

Colorado has some of the purest water in the country as a result of being in such close
proximity of the continental divide, and is close to many of the top grain producing states;
making it an ideal location for brewing operations. Denver, Colorado was also home of the Great
American Beer Festival, America’s premier industry showcase; over 1,500 beers from 300
breweries around the country are judged by category and awarded medals. (Beertown.org, 2002)

Environmental Issues and Sustainability in the Brewing Industry

Some of the major inputs involved in the brewing process are water, electricity, malted
barley, natural gas, and packaging materials such as glass, cardboard, and plastic. The major
outputs are wastewater, spent grains, carbon dioxide, heat, and recyclable packaging materials
(see Figure 1 for beer production life-cycle analysis model; see Exhibit 2 for the Asahi Brewery
Environmental Output model, which is the result of life-cycle analysis.) Spent grains, mixed with
other by-products (yeast slurry and trub), were generally sold to cattle farmers for feed.
Wastewater is one of the most significant by-products, with a large amount resulting from
cleaning tanks and other equipment. Breweries can use up to 8 gallons of water for every gallon
of beer packaged.

More and more breweries, both domestically and worldwide, attempted to modify their
processes to minimize the environmental impact from their operations. To accomplish this, many
breweries attempted to “close the loop” by converting waste into sellable products, or inputs for
other production processes. While new technologies made the brewing process more efficient, it
remained an energy- and water-intensive process that required continuous improvement.












3

Figure 1


4
New Belgium Brewing Company

Everyone loves a good “rags-to-riches” story, and in terms of turning a dream into a
business, the New Belgium Brewing Company is a classic. Jeff Lebesch came up with idea of
brewing fine Belgian-style ales while mountain biking across Europe in 1986. Jeff, an electrical
engineer, had always dreamed of opening a brewery back home in Colorado. As soon as he
arrived home, he began developing home-brewed trials of ales inspired by those he had
experienced in Belgium. Not long after these trials began, the taste tests of these pilot brews
began to earn enthusiastic approvals from all of Jeff’s friends.

Jeff knew, however, that there was more to a successful commercial brewery than good
beer. Kim Jordan, his wife, had always suspected that Jeff saw more than just a wife in her; she
speculated he also saw his brewery’s marketing arm. In 1991, Jeff and Kim brewed their first
commercial batch of New Belgium beer in the kitchen and basement of their home. The brewing
operation had a capacity of 8½ barrels per week, and Jeff and Kim did all of the work, with some
help on bottling days from their son Zack. A neighbor created the watercolors that were used as
artwork for beer labels. Kim, who was also in charge of calling on the accounts and delivering
the beer, would often pull up between two 16-bay Budweiser trucks in her Toyota station wagon
to make the delivery. Kim commented on the early days, “The contrast was amusing, to say the
least.” (Wann, 2001)

The Fat Tire Amber Ale (named after Jeff’s memorable bike ride) and the other New
Belgium beers quickly developed a small but steadily expanding following first in Fort Collins
and then in the rest of Colorado. Soon, Jeff and Kim had to hire a small crew, including the first
employee-owner, to help with the brewing operations. The brewery quickly outgrew its
basement operation and then overflowed a second location at a former railroad depot. Finally, in

1995, NBB moved into a new brewing facility, which quickly became a nationally recognized
paradigm for energy efficiency. In 1998, the entire NBB staff agreed to the financial
commitment to make their facility the first wind powered brewery in America. (Source:
NewBelgium.com).

New Belgium’s Growth

Fueled by the success of their flagship beer, Fat Tire (which accounted for about 75% of
production), New Belgium Brewing Company’s growth had been exceptional in an industry that
exploded on the U.S. scene in the early 1990s. By 1996 there were over a hundred breweries in
Colorado, and competition was getting fierce. While many breweries in Colorado slashed prices
in an attempt to increase sales volumes, NBB maintained their high price-points on all of their
products. Slashing prices in the beer industry can easily turn into a vicious downward spiral.
Once a brewery starts selling kegs at $50, their perceived quality is lowered and no one will be
willing to pay higher prices in the future. Not only did NBB maintain their high price point, but
achieved growth rates that have made them the largest specialty brewer in Colorado and the
entire Mountain West Region (New Brewer, Aug. 2002). Table 1 displays their production
volumes for 1992-2001:



5
Table 1



(Source: The New Brewer)

In 1998, as demand for Fat Tire increased, and the brewery’s capacity became strained,
NBB began construction of a "tank farm" that would house eight new 600-barrel fermentation

tanks and allow plenty of room to add more tanks in the future. This addition to the Fort Collins
plant almost doubled New Belgium's capacity from 75,000 barrels to 140,000 at a cost of about
$3.5 million. (BCBR, 1997) In 2001, the New Belgium Brewing Company was ranked the #6
regional specialty brewer in the United States, based on volume produced. (Jones, 2002) NBB’s
Belgian-style ales have won numerous awards at such well-known events as the Great American
Beer Festival and the World Beer Cup.


New Belgium’s Commitment to Sustainability

After a year of working at NBB employees were rewarded with a new cruiser bicycle.
This bike symbolized much more than just the company’s flagship beer, Fat Tire, but also the
founder’s commitment to running a sustainable business. On a nice day, typically a third of
NBB’s employees could be seen riding their cruisers to work, usually including one of the
founders, Jeff or Kim. The company’s focus on energy efficient brewing processes and
environmentally friendly technologies and practices were reflected in the company’s mission
statement: “to operate a profitable company which is socially, ethically, and environmentally
responsible, that produces high quality beer true to Belgian styles.” (Farrell) By holding true
to their mission statement, NBB had been setting new standards for brewing operations,
environmental stewardship, and employee happiness. Their commitment to sustainability and
environmental stewardship had been recognized with several environmental awards and
certifications (listed in Exhibit 3).

Visitors to the New Belgium Brewery quickly realized that there was something very
different going on. Besides the enormous fermentation vessels, shiny copper kettle and maze of
stainless steel piping, there was an obvious vibe about the place that was unique to the 150
employees who worked there every day. As you walked up to the beautiful facility, you would
notice the several dozen bicycles occupying the well-used employee bicycle racks outside the
front door. Once inside the brewery, after speaking with employees, it would be easily apparent
that they enjoyed their work and took great pride in their beers.

Describing the mindset during the early years, Jeff said, “There were never aspirations to
shoot for the big bucks; it really was beer passion at the top of the list and still is.” Kim added,
New Belgium Brewing Co. Yearly Production (in 31gal bbls.)
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Barrels
993
5,837
18,951
31,770
55,000
80,028
104,835
147,950
165,000
230,000
% Growth

488% 225% 68% 73% 46% 31% 41% 12% 39%

6
“We talked about being environmental stewards before we ever made beer.” From this humble
idea, NBB developed a list of ten “core values and beliefs” that became the threshold for all
company decisions. The employees of NBB have helped maintain the culture originally
envisioned by the founders, and many of the original employees are now employee-owners that
continue to place importance on environmental stewardship. NBB’s core values and beliefs are
as follows:

“At New Belgium Brewing Company, We Believe In:
- Producing world-class beers.

- Promoting beer culture and the responsible enjoyment of beer.
- Continuous, innovative quality and efficiency improvements.
- Transcending our customers' expectations.
- Environmental stewardship: minimizing resource consumption, maximizing energy
efficiency and recycling.
- Kindling social, environmental and cultural change as a business role model.
- Cultivating potential: through learning, participative management and the pursuit of
opportunities.
- Balancing the myriad needs of the company, staff, and their families.
- Committing ourselves to authentic relationships, communications, and promises.
- Having fun! “
(Source: NewBelgium.com)


Choosing Sustainability Over Profit: Wind Power

In 1998, NBB conducted an in-house environmental audit of their brewery to determine
what their largest source of CO
2
emissions was. Most in the company had previously thought
that their largest source of emissions would come from the CO
2
that is emitted as a by-product of
fermentation. However, it was discovered that the electricity NBB consumed during the brewing
process had the largest adverse impact on the environment. (Figure 2 displays the result of the
environmental audit. The focus of the electricity analysis was the CO
2
emissions from the coal-
burning generating plants of the local utility company.)

Figure 2












Total: 22.5 kg/hl
electric
34%
purchased
15%
fermentation
23%
natural gas
combustion
28%

7
When the audit team presented these facts at a subsequent staff meeting of owners and
employee-owners, where 72 employee owners were present, Lebesch proposed the idea of
meeting the facility’s entire electrical needs with wind power. He explained that the company
would have to pay a premium for the power, and that the expenses would come out of the
company’s profits, possibly affecting employee-owner wages and bonuses. (The switch to wind

power would increase their power costs by roughly $.025 per kWh.) “There was stone silence in
the group as they thought about it,” described Lebesch. “But the silence didn’t last long. Within
a minute or so we had decided to become the world’s largest single user of wind power.” (Wann,
2001)

In 1999, NBB became the first brewery to power all the electrical needs of their business
with electricity generated from wind power. (Figure 3 shows the results of the same
environmental audit, with wind power replacing conventional power generation methods.)

Figure 3

The ten-year contract to buy wind power at a premium price from the City of Fort Collins
allowed the Platte River Power Authority wind site near Medicine Bow, Wyoming to build a
new 660 kW wind turbine to support NBB’s power needs. Since becoming 100% wind powered
in 1999 through August of 2001, NBB has saved 8,277,998 pounds of coal from burning and
reduced CO
2
emissions by 15,231,515 pounds. (NBB)

The unanimous employee-owner decision to use 100% wind power was important to the
company for many reasons. It was a defining moment for the culture of the company, and
solidified NBB’s stance as an environmental steward by staying true to their Core Values and
Beliefs. The company has not only served as a role model for the sustainable industrial practices,
but also for employees, of which 15% subscribed to wind power at home. (NBB)




Total: 14.9 kg/hl
electric

0%
natural gas
combustion
42%
fermentation
36%
purchased
22%

8
Employee Ownership an “Open Book Management Philosophy”

Since early in the history of the company, NBB desired to create a living, learning
community amongst the staff. Essential to this principle, the company provided an “Employee-
Owner Plan” which allowed the employees actual ownership in the company. In addition, the
company practiced a unique and innovative combination of an “open book management
philosophy,” and a “consensus model” for decision-making. “Open book management
philosophy” includes employees in the financial planning of the company, and the “consensus
model” is used to aid decision-making and conflict resolution; thus providing the information
and voice to complement an employee’s financial interest.

Heavy investments were also made in employee education as evidenced by the advanced
taste training in the “sensory laboratory.” Each employee underwent tasting sessions in order to
determine those with “advanced palate capabilities” who could be used for quality control.
Employees with 5 years of experience were also sent to Europe to visit breweries and gain a
better understanding of the German and Belgian approach to brewing beer.

These philosophies have allowed many of the original employees to move up in the
company and earn better salaries, buy a piece of the company, and learn new roles in the
company. Examples of people moving up in the company by learning new roles included the

CFO who started on the NBB packaging line, and one of the first bartenders ever to serve a Fat
Tire draft has moved up to regional director of Beer Rangers (distribution managers).
(NewBelgium.com)


Quality Beer = Employee Pride

When asked to describe how they felt about NBB and the beer they produced, employees
often used the word “pride.” Environmental responsibility was important to the employees, and
they were proud of being both a community and an industry leader in actually putting into action
what everyone else was merely talking about. Even with all the interest generated by the
environmentally friendly practices, innovative brewing methods, the state of the art facility, and
the creative management, NBB maintained that these were never necessary as a selling point
because the beers had won plenty of gold medals and loyal customers on the basis of taste alone.

NBB’s commitment to producing the best beer could be seen not only in the company’s
rigid enforcement of daily test panels in three separate labs on site, but also in the extraordinary
decision to produce a collection of proprietary yeast strains in order to make sure that the quality
of such an important variable in the brewing of their beer was preserved. In fact, in 2001, the
Brewery was voted the “best mid-sized brewery in the U.S.” at the industry’s largest gathering,
the Great American Beer Festival – a huge honor among those in the industry, and a source of
great pride for those at NBB.



9
Fun Atmosphere

While the innovative processes and infrastructure received the majority of the attention, it
was the people of NBB and how they treated each other that really made NBB’s culture

apparent. The company prided itself on maintaining a “fun” atmosphere at work. Besides her
role as CEO, Kim also handled duties as the Chairman of Fun. It was not uncommon to hear the
tunes of Pink Floyd blaring from the sound system in the bottling room. At other times, the
music of choice may have even been “The Wedding March”, during one of the four intra-
brewery marriages the Warehouse Manager officiated.


Philanthropy and Community Participation

While much of the effort at NBB appeared to focus on the company, the company
actually went one step further by reaching out to the various communities they were a part of in
order to share their knowledge. Several of NBB’s core values focused on participation in and
contribution back to the brewing and business communities, as well as the local community in
general. The brewery pledged that $1 per barrel brewed each year would be donated to
philanthropic causes, including cultural, social, environmental, and alcohol awareness programs.
Commented Jeff of the program, “In 1999, we had $104,000 to contribute to organizations such
as The Nature Conservancy, Emily Griffith Center, The Hope Center, and other non-profit
organizations.” (Wann, 2002). NBB was also a common sponsor of many local events including
bicycle races and musical events. In addition to typical contributions of products and money, the
brewery took advantage of the event to set up information booths at these events to present the
brewing processes and the environmental practices used at NBB. The purpose of these
presentations was always to encourage audiences to take personal environmental steps in their
own lives.

The New Belgium Guest Relations Team also traveled to various conferences and
corporate meetings to make similar presentations in order to demonstrate how the company was
bringing its corporate values to a reality. The primary message in these presentations was that
any company could demonstrate environmental stewardship by minimizing resource
consumption and maximizing energy efficiency and recycling.

Innovative Design and Techniques

Innovation was always one of the key components of any corporate action at NBB. From
the executive offices to the bottling line, the company was not afraid of being the first to try an
unproven way of doing things. When the company built a new facility in 1995, NBB’s design
team insisted on a higher level of innovation than is typical for a brewing facility. “Design by
default was not what we wanted”, said Lebesch. “If ideas such as natural day lighting with
‘light-pipes’ are included in the design phase, they are much less expensive than if they are later
added on, and they can begin to save money right away.” (Wann, 2002)


10
As a result, these sun light-pipes were incorporated into the design of the brewery to help
lower energy costs. Natural day lighting was further utilized with large windows and skylights
around the brewery coated with a special glaze that allow large amounts of light in, but
minimized glare and heat. Where (or when) additional lighting was needed, fluorescent light
fixtures and bulbs were used in conjunction with motion detectors to further enhance energy
savings. (NBB)
As of October 2002, New Belgium finished its latest building expansion phase. In line
with New Belgium’s environmental agenda, its newest facility was designed and built complete
with features that would increase energy efficiency. For example, the truck dock area
incorporates a hydronic snowmelt system that utilizes waste process heat. The warehouse is
cooled with a highly efficient, custom-designed glycol cooling system and the brew-house is
naturally cooled using thermal chimneys. Radiant floor heating was utilized with steam produced
from a boiler and circulated through a series of pipes buried in the floor of the tasting room. The
heat could be kept 10 degrees cooler than other heating methods and achieve the same level of
comfort. They also had two swamp cooling systems: one in the office addition, and one to cool
off the condenser for the glycol (cooling) system. The construction company was also able to
incorporate green building materials - wood structure, floor coverings, paint, tacking surfaces

and systems furniture from 98 percent recycled materials - not only to be environmentally
correct, but also to create a "hip, fun and funky" image for the company (Neenan, 2002).

Operational Efficiencies

This proactive approach was not only applied to the plan of the building, but also to the
design and layout of the brewing process. When researching more efficient operational methods,
NBB looked to the German beer industry for inspiration. In Germany breweries had been forced
to be more efficient due to the high costs of energy and water discharge.

From these and other sources, NBB researched innovative methods of heat exchange and
refrigeration. They decided to invest in a cooling system using ammonia (rather than traditional
Freon-cooled) that would cut energy consumption in half and pay for itself in five years.
Ammonia can be toxic when inhaled, but it is less harmful than Freon exposure, and the closed
system used in refrigeration reduces this risk. Other efforts to research and implement more
efficient methods of refrigeration included, “natural draft cooling,” that draws air from the
outside when the temperature is below 40 degrees Fahrenheit, rather than using refrigerated air.
(NBB)

A heat exchanger was also installed on the stack of the kettle to utilize the heat and steam
that is discharged from the kettle (water is heated and the steam is condensed to recover the
water). Another heat exchanger was used to cool the wort (unfermented beer) to proper
fermentation temperatures on the way from the kettle to the fermentation vessel with cold tap
water. The hot water resulting from these two processes was then used for brewing and cleaning
tanks. (NBB)


11
Waste Water Treatment

NBB has also made efforts to reduce the amount of water used in the production process.
Most breweries typically use 7-8 gallons of water for every gallon of beer produced; New
Belgium used 3-4 times the amount they packaged. (NBB) Obviously, brewing is a water-
intensive process, and NBB had made significant efforts to reduce their water consumption. By
use of mathematical models they also attempted to determine the minimum amounts of water
needed for cleaning and rinsing tanks.

Despite their efforts to reduce water consumption, the fact was, a brewery of their size
created a considerable amount of water waste. At the 2001 production rate of 230,000 bbl/yr,
they produced approximately 24 millions gallons of wastewater from brewing operations at the
NBB facility. Obviously concerned with having to treat an increasingly large amount of
wastewater, the City of Fort Collins approached NBB to resolve the issue. The City told them
how much it would cost to build a new water treatment facility to treat their output, which NBB
would have to fund.

Instead of funding this new facility, NBB conducted a financial analysis and discovered
they could build their own treatment facility for much less. An onsite wastewater treatment
facility would not only pre-treat the brewing waste to reduce solids before release in the city
sewer, but also the methane generated in this process can be captured and used to co-generate
electricity at the brewery (projected to provide 80 percent of annual power needs). (Neenan,
2002) In May of 2002 they finished construction of their biological process water treatment
facility, which used a combination of anaerobic and aerobic digestion ponds, commonly known
as a “bio-digester.” The methane gathered from the anaerobic ponds is then used to run a co-
generation plant for an additional power source used to reduce energy consumption from the grid
during peak hours when it is more expensive, or to use in the case of a power outage. Just the
savings in power expenses were expected to pay back the initial investment of the project in just
2 to 3 years. (NBB)


Other Miscellaneous Green Practices at New Belgium

Recyclable and reusable:

• Brewing by-products. Spent grain, trub (protein and hops left in kettle), and yeast slurry
were combined and sold as cattle feed. Spent DE (diatomaceous earth) was sent to local
organic farmers for use as a soil amendment.

• Brewery-wide waste. Recycling of materials included: cardboard, aluminum, glass,
plastic, Styrofoam, chipboard, wood, wire, paper, and many others.

• Cleaning products. Many citrus-based cleaners were used in the packaging area. Spent
chemicals went through a neutralization process that broke them down into salt and
water.

12

Recycled, reused, and friendly:

• Office furniture. Office furniture was made from compressed newspaper and woodchips,
recycled tires and cardboard. Carpets were provided by Interface and were “cradle to
cradle.” Wall hangings were made from recycled and recyclable fibers and cellulose.
Computers used thin screen monitors, which were made from less hazardous materials
and resulted in less waste.

• Office supplies. All paper products used were made from recycled materials (from office
paper to toilet paper.) Spent ink cartridges were given to local non-profits and children of
employees who could redeem them for funds.

• Packaging materials. Bottles, mother cartons, chipboard dividers and 6 pack carriers all
contained recycled materials and were recyclable.

• Organic Patagonia T-shirts. Most T-shirts sold by NBB were Patagonia Beneficial T’s,
which were made from organic cotton and used non-toxic dyes. They were the largest
corporate consumer of organic shirts from Patagonia in the country.

(Source: NBB)


Zero Emissions Research Initiative (ZERI)

The New Belgium staff also closely examined the concept of “Zero Emissions,” which is
a production model that seeks to eliminate all waste products. As Gunter Pauli, founder of the
Zero Emissions Research Initiative (ZERI) stated, “Zero Emissions” represents a shift in our
concept of industry to integrated systems in which everything has its use. “Sustainable industry
of the future will mimic nature’s cycles and industry—rather than expecting the Earth to produce
more, we’ll learn to do more with what the Earth produces,” In respect to the brewing industry
specifically, Pauli explained that, “An integrated bio-systems approach to the brewing of beer
demonstrates that competitiveness, jobs and sustainability go hand in hand.” (Wann, 2002. The
ZERI methodology is outlined in Exhibit 4.)

Pauli and the ZERI foundation developed a model of zero emissions production for the
brewing industry. The Tunweni Brewery in Namibia was the brewery that the ZERI foundation
constructed to produce beer using this model. It was the only existing commercial brewery in the
world in operation using this zero emissions model. (The model is outlined in Figure 4.)


13
Figure 4

Although the model appealed to the New Belgium staff, applying zero emissions to New
Belgium required a further expansion of expertise into the generation of energy and farming.
Major output factors from the brewing operations could be used for mushroom farming, chicken
farming, biogas generation, algae production, and fish farming. The net result would have been
no generated waste, only sellable products. (Woidasky and Wolf, 1998)

Spent grain can be used for cultivation of mushrooms, and is also an excellent source of
protein. By introducing earthworms to spent grain, it is possible to extract that protein. The
earthworms eat it, converting vegetable protein into animal protein, and the worms can be used
(or sold) as high-quality chicken feed. Marketable algae can be produced in the alkaline
wastewater. Wastewater from the plant could return beer production after treatment and other
waste could be processed in an anaerobic bio-digester, which generates methane gas that
produces steam for the brewing process. The waste from the digester can be then used as feed for
fish farming, and treated wastewater can also be used in the fish ponds (Butler, 1996). Carbon
dioxide from beer production can also be captured and used as a heating source for greenhouse

14
vegetable cultivation. These vegetables can be then either sold to local eateries or used onsite
(for example, in the case of brewpubs.) (Taylor, 1999/2000)


Opportunities for Improvement Identified by New Belgium

New Belgium has 50 acres on-site, and Jeff and Kim are interested in further resource
integration at the brewery. They have researched the ideas of a farm or greenhouse to add on to
their cornerstone brewery for more efficient utilization of their waste stream. The spent solid
wastes from brewing are currently sold to local farmers for feed. Other possibilities for
utilization for the spent grain that have been researched include: growing mushrooms, raising
earthworms, and composting. A problem Jeff encountered was that, “When we researched the

growing of mushrooms, it seemed like our re-used resources could supply enough shitake
mushrooms for the whole country. I don’t know if we want to take on a venture of that scale.”
(Wann, 2002)

The most likely short-term element to emerge from this analysis would be a greenhouse
that would be “heated with process waste heat, irrigated with recovered wastewater, and supplied
with CO
2
(from fermentation) for consumption by the growing plants.” (Wann, 2002)


Other Possibilities for New Belgium

PET Bottles and Aluminum Cans

Concerns about the energy costs of manufacturing and shipping glass has inspired New
Belgium to research the use of plastic, PET (polyethylene terephthalate) bottles, which are now
being used by a few large American brewers and several European brewers. While this would
considerably reduce the weight of bottled beer, the shelf life is cut in half because oxygen
permeates the plastic bottles. Plastic bottles could also contribute to a lower quality perception
by consumers.
Aluminum cans would probably have the same effect of lowered perceived quality by
consumers. A canning line would also represent a huge capital investment, whereas the PET
bottles could be easily substituted for the glass ones used on their existing bottling line.

Organic Ingredients

New Belgium uses organic ingredients when they can, but unfortunately there is not a readily
available supply of organic barley of consistent quality to support their relatively high volume
consumption of malt. (Soref, 2000) For a significant change to be made here, NBB would have

to influence the supply chain of barley farmers to shift to organic farming methods and for malt
suppliers to purchase organic barley. This would be a difficult task, but not impossible.
They do use organic hops, which tend to be more acidic, and many breweries (including
New Belgium) have found that they could use less hops to get the same bittering effect (Hill,
2001). In addition, they do use organic fruit in many of their seasonal beers.


15
CO
2
Recovery

In 1998 the Alaskan Brewing Company became the first microbrewery in the country to
install a CO
2
recovery system. The system recovers the CO
2
that is generated as a by-product of
fermentation. Not only does this eliminate CO
2
emissions during fermentation, but the CO
2
is
also reused for purging tanks and carbonating beer later in the process. The Alaskan Brewing Co.
had been spending about $100,000 a year for CO
2
purchasing, storage, and distribution. (Alaskan
Brewing press release, May 4, 1998) In the event of an implementation of the Kyoto Protocol or
other carbon trading markets, these could be easily measurable reductions of CO
2

emissions for
potential sale.
(*Note: CO
2
recovery systems vary in size and cost, and are custom installed, therefore it
is difficult to determine what this would cost NBB without a specific supplier estimate.)

Water Re-use and Air Rinse Technology

Before bottles are filled with beer, there is generally a water rinse to remove any dust that
may have settled in the bottles (to prevent contamination). A typical bottle rinser discharges
9,600 gallons of water in an eight-hour shift (OxiDyn, 1998) There are methods of filtration,
involving the use of ozone modules, so that this water can be re-used. In addition, Miller, Pepsi,
and Coke have greatly reduced their water consumption by using air rinse technology on their
bottling and canning lines. (Payne, 2001)

Supply Chain

There is an opportunity of leasing pallets and kegs or using transportation alternatives for
cleaner distribution. By outsourcing some of these services to environmentally conscious firms,
NBB could possibly save costs and reduce their environmental footprint.

Third Party Certification

A logical next step could be certification with CERES or other institution that vouches
for environmental sustainability.

“Green Marketing”

Are the goals of being an environmental steward and an award-winning brewery

compatible in the competitive brewing industry? NBB was created with the purpose of
producing top quality beers; the reduction of environmental impacts was ancillary. Does this
split of NBB’s focus have positive or negative consequences on the quality of the final product?
What about the company as a whole? What are NBB’s core competencies? How does
environmental stewardship fit in? Are NBB’s sustainable practices going to help or hinder a
high-growth strategy?

There are some risks (real or perceived) that can be readily associated with “green
marketing” for NBB. “Green marketing” could potentially lead to a lower perception of quality
among consumers. Moreover, NBB would be running a risk of alienating the “browns,” who

16
may perceive “green”-marketed products as being only suitable for environmentalists. Of course
that would lead to the question of where the “browns” are even a part of NBB’s target market.
Many companies did not promote their green practices due to a fear that consumers would equate
“green” with inferior quality. A good example of this practice could be observed in the wine
industry, where many producers utilize sustainable practices, but never mention this in any
marketing material targeted to the general public.

NBB also need to consider whether environmental claims would result in more scrutiny
of their practices, and create the potential for a backlash of negative publicity. Consumers do not
look favorably upon companies that misrepresent, or even exaggerate, their environmental
practices. This breach of trust can easily alienate a substantial portion of the company’s core
market. Many companies have decided the risk of this backlash far outweighs any potential gain
from making the claim in the first place. NBB would have to consider carefully every claim they
made, how they made it, and what benefits and risks are involved with each of those claims.



17

EXHIBIT 1

Annual Craft Brewing Growth Statistics, 2001




Craft Brewing Industry Definitions

Microbrewery: A brewery that produces less than 15,000 barrels (17,600 hectoliters) of beer per
year. Microbreweries sell to the public by one or more of the following methods: the traditional
three-tier system (brewer to wholesaler to retailer to consumer); the two-tier system (brewer
acting as wholesaler to retailer to consumer); and, directly to the consumer through carryouts
and/or on-site tap-room or restaurant sales.

Brewpub: A restaurant-brewery that sells the majority of its beer on site. The beer is brewed
primarily for sale in the restaurant and bar. The beer is often dispensed directly from the
brewery’s storage tanks. Where allowed by law, brewpubs often sell beer “to go” and /or
distribute to off-site accounts.

Contract Brewing Company: A business that hires another company to produce its beer. The
contract brewing company handles marketing, sales, and distribution of its beer, while generally
leaving the brewing and packaging to its producer-brewery.

Regional Brewery: A brewery with the capacity to brew between 15,000 and 2,000,000 barrels.

Regional Specialty Brewery: A regional brewery whose flagship brand is an all-malt or
specialty beer.

Craft Beers: Generally, “all-malt,” domestic beers produced using 100 percent malted barley.

Craft beers that are not all-malt sometimes substitute a percentage of malted wheat (for wheat
beers) or malted rye (for rye beers). Their inspiration can be traced to British, German or Belgian

18
traditions or is often uniquely American. Craft beers range from pale to dark in color and from
mild to strong in alcohol content. Sometimes they include unusual ingredients such as fruit, herbs
or spices. Compared with other beers, their emphasis is more on flavor, and less on appealing to
a mass market. (The best-selling American beers are brewed using 30 to 40 percent rice or corn
“adjunct,” resulting in a paler, lighter-bodied and lighter-flavored beer).

Craft Brewer: A brewpub, microbrewery, regional specialty brewery or contract brewing
company whose majority of sales is considered craft beer.

Source: Beertown.org

19
EXHIBIT 2

Asahi Brewery Environmental Output




20
EXHIBIT 3

Environmental Awards and Certifications (from 1999 on)

Certificate of Achievement in Pollution Prevention, awarded in 1999 by The Pollution
Prevention Partnership, Colorado Pollution Prevention Advisory Board and Colorado Pollution

Prevention Forum.

Environmental Stewardship Award, given in 1999 by the Larimer County
Commissioners/Environmental Advisory Board.

Climate Wise Certificate of Participation, awarded in 2000 by Climate Wise.

Thank You for Supporting Public Lands, awarded in 2000 by the U.S. Forest Service,
Headwaters Trails Alliance, Park Service and Bureau of Land Management.

Green Power Partnership “Founding Partner” Award, given in 2001 by the Environmental
Protection Agency and the Department of Energy.

Waste Saver Award, given in 2001 by the North Front Range Solid Waste Action Group.

Green Business Practices in Education Award, given in 2001 by the Colorado Alliance for
Environmental Education.

Special Recognition Award in Business, given in 2002 by the Wirth Chair and its Advisory
Board.

LEED-EB Pilot Program Participant, accepted in 2002 by the U.S. Green Building Council.

Special Recognition Award in Outstanding Business or Commercial Recycling, given in
2002 by Colorado Recycles.

CO-OP America Member, beginning summer 2002.

21
EXHIBIT 4

ZERI Methodology

The 'Zero Emissions Research Initiative' (ZERI), developed at the United Nations University
in Tokyo, has as its goal 'zero global emissions, zero water waste, zero solid waste, and zero
waste in the air'. This can be done by using nature as a model for process and product design, and
by increasing resource productivity through industrial 'clustering'.
The concept of zero emissions has been developed into a methodology that can be applied to any
industry sector.
The ZERI methodology, as proposed by United Nations University, is as follows:

1. 'Total throughput'
A review of the industry identifies opportunities to minimize inputs and maximize outputs. The
aim is to make full use of all the inputs; i.e. total throughput. If this cannot be achieved, the next
step of the methodology is applied.

2. Output-input models
An inventory is created of all 'wastes' - i.e. outputs not consumed in the final product or in its
process of manufacture. An active search is then initiated to identify industries which could use
these outputs, or modified versions of them, as inputs.

3. Industrial clusters
The output-input models are used to determine potential candidates for industry 'clustering'. The
next step is to identify optimal clusters in terms of size and number of participants.

4. Breakthrough technologies
In cases where current engineering expertise and process technologies are not able to secure
effective and economical coupling of outputs and inputs, research into 'breakthrough
technologies' or system designs is initiated.

5. Industrial policy
The identification of suitable industry clusters, and of the breakthroughs required, must be
accompanied by appropriate government policies. Where sectors with no previous history of
working together are combined, collaborative efforts involving policy makers, industry
representatives and academics are needed.
This methodology has been applied to over 50 sectors of the economy, ranging from beer to
coconuts, textiles, steel scrap, vegetable oils, pulp and electronics. The first commercial
application of the ZERI methodology was in a brewery in Namibia.

22
Bibliography

Aubrey, D. “New Belgium Brewing Co.,” RateBeer Feature (August 2002),


Butler, S. “Green Machine,” Fast Company (June 1996), No. 3, p. 112

“Beertown: Home of the Association of Brewers,”

“Beverage Industry,”

“Colorado brewer puts ‘green’ beer on tap,” Environmental News Network (March 1999),


“Colorado brewery becomes largest private consumer of wind energy,” Wind Energy Weekly
(March 1999), Vol. 18, No. 838

Farrell, J. “Colorado brewery focuses on efficiency,” Energy Services Bulletin (June 1998), Vol.
16, No. 3

Farrell, J. “PRPA expands wind energy program as demand grows,” Energy Services Bulletin
(December 1999), Vol. 19, No. 1

Fort Collins Utilities. “Congratulations, New Belgium!” Watts in the Wind (Winter 1999),


Gleeson, C. “Organic Beer and Wine,” Shared Vision (August 2000), red-
vision.com/old_site/y00m08/storyc01.html

Hill, M. “Founders Brewery Organic Beer,” Soil & Health Association of New Zealand Inc.
(March 2001),

Institute for Brewing Studies. “Craft Brewing Fact Sheet,” (November 1999),


Jones, C. “Statistics Show Craft Brewing Industry at an All Time High,” Association of Brewers
press release (April 2002),

Motavalli, J. “Green Beer: Delicious Organic Brews Offer Healthier Alternative,” eMagazine
(January 2002),

“NBB’s Steps to Being Green” – company brochure

Neenan Co. “Outstanding Environmental Project: Gold Hard Hat Award,” Colorado
Construction (October 2002), />Oct02.htm

23

New Belgium Brewing Company, Inc. – website,

New Belgium Brewing Company, Incorporated – “What in the Wind?,” “NBB Steps to being
Green,” and company brochure

“New Belgium Brewing Wind Power Plan Makes Mother Earth Happy,” Northwest Beer Notes
(August 1999),

“New Belgium Brewing Company Yearly Production, 1992-1996.” The New Brewer (May/June
1997), Vol. 10 (56).

“New Belgium Brewing Company Yearly Production, 1997-2001.” The New Brewer (May/June
2002), Vol. 19 (56).

Payne, D., et. al. “Memo Re: Natural Capitalism Potentials in the Beer Brewing Industry,”
Rocky Mountain Institute (May 2001)

Settle, E. “Blue Watts: A Different Shade of Green,” EnergyPulse (October 2002),


Soref, A. “It Ain’t Easy Brewing Green,” New Hope Natural Media Online (October 2000),


Taylor, R. B. “From Micro-Brew to Eco-Brew,” From the Ground Up (December 1999/January
2000),

The Boulder County Business Report (BCBR). “Northern Colorado Briefs,” online edition
(November 1997),

“The big pitcher,” The Economist (January 2001), online edition,

Trail, R. “The New Belgium Brewing Wind Program,” The Student Association of the Institute
of Food Technologists (January 2001),

U.N. University. “Zero-emission processes,” Business and Sustainable Development: A Global
Guide,

Wann, D. “Brewing a Sustainable Industry: New Belgium Brewing Company Aims for Zero
Emissions,” Terrain.org (Spring/Summer 2001), No. 9,


Wann, D. “The Winds of Change Across Colorado,” Terrain.org (Spring/Summer 2001), No. 9,