Sustainability in Spirits - Part I - Taking a Value Chain Approach
just-drinks continues its management briefing series on environmental sustainability this month, with a focus on the spirits industry. Part one of this four-part briefing considers the broader value chain for spirits producers.
Spirits producers have made considerable headway in addressing and mitigating environmental impacts within the distillery, notably in increasing energy and water efficiency, reducing carbon emissions and improving waste management.
However, notwithstanding the considerable progress that has been made, as in all manufacturing sectors there is now an increasing emphasis on the environmental footprint along the entire value chain, of which the impacts within the four walls of the distillery are but one part.
As sustainability strategies have developed, an holistic, 'entire value chain' approach to environmental sustainability has been required. And, an important first step is to examine the value chain and establish where the environmental 'hotspots' are.
A significant amount of footprinting research has been undertaken by the world's principal spirits manufacturers over the past few years, to evaluate where the greatest environmental impacts are to be found along the value chain.
Life cycle analysis that Diageo has conducted for Johnnie Walker, the biggest-selling Scotch whisky brand in the world, underlines perfectly why a value chain approach is so vital. The research examined five key environmental criteria, namely:
- energy consumption
- greenhouse gas emissions
- water consumption
- waste water polluting power, and
- solid waste to landfill
Diageo says the research on Johnnie Walker was indicative of patterns for its spirits brands in general. The research, says Michael Alexander, head of environment communications and policy at Diageo, "gave us the insights to drive our sustainability strategy".
With regard to energy consumption, the production process only accounts for 34% of total usage with some 35% coming from upstream supply chains. Distribution and use/disposal account for 23% and 8% respectively.
Carbon emissions follow a similar pattern, with raw materials accounting for 35%, production for 34%, distribution for 24% and use/disposal for 9%. The production process accounts for 56% of the water used in the Johnnie Walker value chain, while raw materials only account for 21%, which is significantly lower than the proportion observed in other beverage categories, most notably in beer.
The production process accounts for the majority (74%) of the waste water polluting power, while use/disposal, as also would be expected, accounts for the majority (88%) of solid waste to landfill.
Meanwhile, a breakdown of the carbon footprint for Pernod Ricard's spirits production shows a similar proportional split in carbon emissions between production, raw materials and distribution. According to information supplied to just-drinks by Pernod, raw materials account for 33% of carbon emissions in its spirits production, with dry materials (packaging) accounting for 30%. Direct energy use in production accounts for only 20%, while transportation represents 16% of emissions.
Research drawn together by the Beverage Industry Environmental Roundtable (BIER), a coalition of companies from all beverage sectors that works collectively at quantification and mitigation of environmental impacts, produced two carbon footprint breakdowns for a typical 75cl bottle of spirits; one when column-distillation is used and one where pot distillation is used.
This research once again suggested that the actual production process only accounted for a little over a third of the total carbon footprint. BIER found that, for the column-distilled spirit, distillation represented 36% of carbon emissions, with the production of a glass bottle accounting for 20%, warehousing for 10% and corn production and transport representing 9%. When pot distillation is used, distillation accounts for 40% of emissions and the bottle for 19%, with the other contributors little changed.
The carbon footprint analyses produced by different companies and for specific brands will naturally show some variation, reflecting, for example, the type and provenance of agricultural raw materials and methods of packaging and distribution. However, the proportion of carbon emissions represented specifically by the production process, or more importantly the larger proportion found to be represented outside of that process, remains consistent.
The fact that such a significant proportion of environmental impacts are found either upstream or downstream in the value chain underlines why it has become so important for spirits companies to work collaboratively with their suppliers and service providers in their bids to reduce the environmental impacts of their products.
For example, in its 'Sustainability & Responsibility Report 2013', Diageo states that, alongside its commitment to reduce the environmental impacts from its own operations, the company is "increasingly looking at impacts from our supply chain".
"For example," the report says, "we are assessing the way our ingredients are grown in terms of the implications for water use, and we are aiming to make our packaging more sustainable through partnerships with suppliers."
In its 'Corporate Responsibility Report 2013-2014', published last month, Brown-Forman reports on the evolution of its Environmental Sustainability Roadmap for 2020, which the company launched in 2010.
"The first two years of our roadmap, we focused our resources on managing our direct impacts through production sites and other activities that we own and control. Now that we are beginning to make greater progress in those areas, we're working to understand how best to include and influence our supply chain," the company states.
"As a first step, we're meeting with our contract manufacturing partners across the globe to educate them about our Sustainability Roadmap and gain an understanding of where they are with their sustainability programmes. We're also beginning to audit our non-owned production sites, and are integrating sustainability into the audit.
"This year, we audited two sites in the US, and have plans to audit two international sites in 2013. The results of our initial audits show that, while all of our co-pack partners are working to reduce their environmental impact in some way, there are opportunities to improve, share best practices and learn together from joint projects."
Like other companies, Brown-Forman refers specifically to how sustainability criteria are being included in the supplier negotiation. The company states: "We're also integrating sustainability into the decision making process for new potential contract manufacturing partners by including environmental sustainability questions in the selection checklist, and are in the process of developing sustainable purchasing guidelines to use across our business."
Diageo and Brown-Forman are certainly not the only spirits producers to have moved in this direction. The following section of this briefing looks at how companies are approaching the challenge of closer supplier collaboration.
In the third part of this month's management briefing, Ben Cooper reviews the environmental sustainability of three of the world's biggest brewers: Anheuser-Busch InBev, Carlsberg and Diageo....
"The Future of the Wine Market in the United Arab Emirates to 2017: Market Size, Distribution and Brand Share, Key Events and Competitive Landscape" is the result of Canadean’s extensive market and co...
I'm calling it, people. Today is the day that I feel confident enough to conclude that the China 'crisis' is not a blip....
"The Future of the Spirits Market in India to 2017: Market Size, Distribution and Brand Share, Key Events and Competitive Landscape" is the result of Canadean’s extensive market and company research. ...
- Six key trends for alcoholic drinks in 2016
- Aus wine industry pays price for past failures
- Ten things to know about spirits in the US
- What's in store for Super Bowl 5 - Focus
- Will value-sharing in Travel Retail become reality
- SABMiller hits back in UK corporation tax row
- William Grant & Sons restructures US team
- Diageo's Orphan Barrel The Gifted Horse - NPD
- American rye whiskey sales leap 600% in five years
- Moet Hennessy sees China rebound in strong FY
- What Next for Beer and Brewers Following the MegaBrew Deal?
- Global travel retail insights - market forecasts, product innovation and consumer trends
- Global Beer Trends 2015 : Global Beer Trends and Long-term Forecasts
- Global Whiskey Market 2016-2020
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research