Friday, April 24, 2009

Beeronomics and Eco-nomics: Globalization and the Cost of Bottling

[Photo Credit: Angelo De Ieso II of Brewpublic]

Mike Weksler of Portland's Green Bottling e-mailed me yesterday with this dilemma:

In January of this year my cost to purchase a case of 12 22oz amber beer bottles went up $.65. It is less expensive for me to purchase my bottles from China, ship them here, and rent a facility to store them than it is for me to purchase them from the local distributor.

What is worse is that the local distributor gets the bottles from an OI plant that is in NE PDX, 3 miles from our HQ.

I don't like the idea of sending our money away from the local economy, and the extra fossil fuels that I would have to consume to get my glass shipped to PDX.

I could also choose to buy my bottles from a plant in OK for $1.20 per case less than I spend now as well.

I am rushing off to Eugene so don't have time to comment too much, but will try and do so later. The standard trade argument would be: well, we should not want to make bottles here, just the high value-added beer and by letting China make the bottles we are all better off (us and the Chinese) . A rejoinder to this is that the cost of shipping is artificially low as the shippers do not have to pay the true cost of carbon usage, so while it may be privately profitable to source bottles from China it is not socially profitable. [This assumes, by the way, that the China plant is not more energy efficient than the PDX plant, which I think is a safe assumption]

The answer? Well, a global carbon tax that accurately reflected the cost of carbon emissions would get the prices right, but let's get real, that 'aint gonna happen anytime soon. So what do you tell a guy like Mike, who is trying to do the right thing, but who knows that if he goes local, some other person could start another bottling business that sources from China?

What do you think?


Mike said...

Buy the glass from China and purchase carbon off-sets from a company like Carbon Fund. This offers the glass at the right price and a nod to reduce the potentially larger carbon foot print of buying the glass from China.

Robert said...

Offsets... see:

Can Mike buy direct from the factory 3 miles away and cut out the distributor?

Maybe there is a way to show his customers the value of a local bottle and sell this as an added value (local/low carbon bottles?) or as a choice in his pricing - although having 2 sets of inventory may be limiting.

sechrest said...

Perhaps this is an opportunity to go to the local producers and to the Portland Development commission and to explore what makes the local costs higher, and find ways to make the current process more efficient. Would more automation help? Would larger scale help? Would material cost changes help?

What would it take to make the local companies to be price competative? Is there any kind of investment into the companies that would alter their efficiencies?

Now with PDC and ARRA resources available, what kind of transformation is possible?

Ralph said...

Can someone point me to a place to learn about the "true cost" of carbon?

I want to know if Mike is paying the "true cost" to run his business.

Jessica said...

Personally, I always choose local when the choice exists and I can tell which option is local. I don't care if it costs more, it's the right thing to do. So, I would advise him to buy locally but to also be sure and advertise that on his packaging so that others like me can vote with their dollars.

Swordboarder said...

Buy Locally, Distribute Globally. It's how you make your community money.

Why should you buy bottles from the Chinese if they aren't going to drink your beer?

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