Beer lovers in Japan faced with many lager options have turned to craft beers to find flavor, but with increased demand has come a challenge for small brewers who now have to discard huge amounts of malt leftovers.

To tackle the waste problem, a startup in Yokohama began an upcycling operation using brewers' dregs to produce "craft beer paper," which is appearing at beer promotion events in various forms, including menus, coasters and drink holders.

Around three years ago when demand for craft beer started to grow, Shoki Matsuzaka, 33, CEO of Kitafuku, was approached by a local brewer with concerns about how much malt lees waste was being produced.