Sustainability in Beer - Part IV: Company by Company - Heineken, Molson Coors, SABMiller
The penultimate part of this month's management briefing sees Ben Cooper continue his review of the environmental efforts of the larger brewers. Here, he looks at Heineken, Molson Coors and SABMiller.
In its latest Sustainability Report, Heineken reported on a raft of targets for 2012 which marked the third year, and the "first major milestone", in its comprehensive Brewing a Better Future sustainability strategy.
Heineken has also made sustainability one of its six global business priorities which Michael Dickstein, director global sustainable development, says is "crucial".
Heineken had set out interim targets to 2012 along the way to its overall 2020 targets. The brewer had set itself a target of reducing specific total energy consumption to below 155 MJ/hl, and reported this was "partly achieved, with specific total energy consumption falling to 157MJ/hl. When newly acquired businesses are discounted, specific total energy use was put at 153 MJ/hl.
The company reached its 2012 targets on greenhouse gas (GHG) emissions and specific water use. Aiming to reduce average GHG emissions to below 8.5 kg of CO2 equivalents per hectolitre produced (CO2 -eq/hl), it reached 8.4 kg CO -eq/hl, while specific water consumption fell to 4.2 hl/hl, against a goal of reducing this to below 4.3 hl/hl .
The next milestone on the journey to its 2020 targets will be in 2015, and Heineken has committed to a further group of interim targets for 2015. For instance, it aims to reduce specific water consumption at its breweries to 3.9 hl/hl by 2015, along the way to reaching its goal of 3.7 hl/hl by 2020.
Heineken has the broadest international profile of any brewer and therefore has a significant exposure in many developing countries.
While Dickstein stresses that the company has "a lot to offer" communities and economies in developing countries, the particular sensitivities involved in working in developing countries are reflected in the Brewing a Better Future strategy, notably with regard to local sourcing and water stewardship.
Heineken has pledged to source at least 60% of all raw materials for its African operations from the African continent by 2020, and has so far reached about 45%. The company has set an interim target of 50% for 2015.
"Growing our ability to source locally means we are actively collaborating with governments, NGOs and other companies to improve agriculture techniques and yields in a number of countries where we operate," says Dickstein, "thereby not only increasing the access to food for the communities we operate in, but also improving our own access to reliable supply of ingredients. If applied properly, sustainability is a win-win situation for all parties involved."
Going forward, as part of its overall water balancing aims for water-scarce areas, the company aims for all its production sites in water-scarce and distressed areas to have source water protection plans in place by 2015.
Given that credibility and transparency are so important in the sustainability arena, reporting as openly and comprehensively when targets are missed as when they are achieved is vital.
In its latest Corporate Responsibility "Beer Print" Report, Molson Coors concedes that it did not achieve its 2012 targets on water and energy intensity, owing to soft beer volumes which had made striving for greater efficiency a challenge.
Aiming for a reduction in energy efficiency of 15% from a 2008 baseline, the company achieved an 11% decrease. The reduction in water intensity from 2008 to 2012 was 7%, against a target of 15%. Molson Coors also missed its global landfill diversion target, sending 1.9% more waste to landfill in 2012.
However, corporate responsibility manager Debbie Read stresses that the company strives to be "really transparent about all our targets", even when they are missed, as there is a tendency in sustainability to "talk up the positive pieces and hide the not so good things".
Read also stresses that Molson Coors has targets set out to 2020, and would not necessarily expect a completely smooth progression towards long-range targets. Among the company's 2020 targets is a goal to improve energy efficiency by 25%, water efficiency by 20%, and greenhouse gas intensity by 15%, all from a 2011 baseline.
"They're long-term, they're ambitious," says Read. "If we knew we were going to hit every year, year-on-year between now and then I would argue that we hadn't set them ambitious enough." Not being "where we wanted to be in 2012 makes us nervous", Read concedes, but she stresses that the company is "in this for the long run".
On the positive side, Read says maintaining beverage sector leadership on the Dow Jones Sustainability Index (DJSI) was "an extraordinary achievement" for Molson Coors, "particularly if you look at our size compared with some of the other beverage sector organisations we're up against".
She cites retaining leadership of the DJSI as among the company's biggest achievements from a sustainability standpoint over the past year, adding that this success was "borne out of a lot of internal work we've been doing around really trying to set and establish internal processes". Read also cites achieving zero waste to landfill in the UK as "a great piece of work".
Embedding sustainability into functions and operations and giving people on the ground a degree of ownership concerning a company's sustainability aims is considered to be an extremely effective means of driving progress.
Andy Wales, senior vice president, sustainable development at SABMiller, believes this has certainly played a part in the progress SABMiller has made on key environmental metrics. The company reports that water efficiency in beer production has improved by 20% since 2008 to 3.7hl/hl, while the business used 8% less energy per hectolitre of lager produced in 2013 compared to 2012. Its CO2 equivalent emissions are now 26% less per hectolitre than in 2008.
Wales says the company is "quite pleased" with the progress on water and carbon. "I think in both cases it's because our operations and technical communities around the world are driving this very hard as part of their technical excellence and sustainability agenda. They see the economic value opportunity of reducing utility costs and they've got some very creative ways of doing it."
For example, Wales explains, instead of one finance person signing the monthly water and energy bills, SABMiller is integrating water and energy performance into the key performance indicators of people that run each part of the line.
SABMiller's continuing work on water risk in water-stressed locations is also continuing, Wales states. "We are in the first year of rolling out our second iteration of our detailed site-by-site water risk analysis, and that is a very powerful tool," Wales tells just-drinks. "It has been giving us a lot of insight into future water risk and it's a strong platform for further developing the very strong partnerships we already have in place like the Water Resources Group or the Water Futures Partnership."
The focus SABMiller places on water, the partnerships it has formed in this area and the leadership role it has aimed to take derive to a significant degree from its footprint in the developing world.
The company derives around 75% of its income from emerging and developing markets, and this has a key bearing on its sustainability priorities. In addition to the strong focus on water stewardship, SABMiller places great emphasis on improving livelihoods in the developing countries in which it operates. Central to the company's approach to sustainability, says Wales, "is the GDP growth and social development we can drive through the way our business and value chains are designed".
In that context, Wales highlights the launch last year of its "4e, Camino al Progreso" programme as an "exciting" project for the company. Aimed at improving the livelihoods of 40,000 small retailers across Latin America, this four-year, US$17m programme has been designed in collaboration with the Multilateral Investment Fund of the Inter-American Development Bank and will be launched in six core markets in the region.
just-drinks on-trend: Craft beer - fortunes and future
This latest 'on-trend' report from just-drinks provides a strategic summary of where the craft beer category is at present, and where it might be heading in the short-term. Through a combination of sp...read more
MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organi...
Synopsis Canadean's "SABMiller plc : Consumer Packaged Goods - Company Profile, SWOT & Financial Report" contains in depth information and data about the company and its operations. The profile contai...
This month, Ben Cooper considers the need for healthy competition among drinks companies when it comes to driving industry-wide sustainability....
Molson Coors Brewing Company (TAP) - Financial and Strategic SWOT Analysis Review provides you an in-depth strategic SWOT analysis of the company’s businesses and operations. The profile has been comp...
- Diageo's future brighter than present suggests
- Diageo's Q1 Results by Region
- Analysis - Remy's Cognac "dead-cat bounce"
- Focus - Remy Cointreau's H1 Performance by Brand
- Three Questions for the Drinks Industry
- Moët Hennessy unveils first Travel Retail outlet
- Diageo puts Beckham centre stage in Haig Club ad
- United Spirits sees Q1 net loss
- Diageo Q1 sales dip "in line with expectations"
- TWE unveils Penfolds range after CEO's "bold move"