In the second part of this management briefing, which looks at environmental sustainability in the brewing sector, Ben Cooper looks at the role played by sourcing ingredients locally.

Increasing local sourcing has become a critical component in the procurement strategies of the major brewers, particularly in Africa and other parts of the developing world.

Several of the world's largest brewers have targets for local sourcing of raw materials in Africa and, as an area where tangible, measurable progress can be shown and reported regularly, performance against those targets arguably provides a useful index for a company's progress on sustainable agriculture.

Shortening supply chains provides economic and environmental benefits to the brewer, while the economic benefit to local farming communities provides a further sustainability win. Stimulating local agricultural economies allows companies to foster positive and mutually beneficial relationships, not only with those communities but with governments and NGOs who are often important partners in such projects.

Alternative crops and new product development

Increasing the use of crops which are better adapted to local conditions and require less water, or may be in relative abundance but under-utilised, has significant environmental benefits. And this is an interesting moment to be examining this trend. Two recent product launches, one by SABMiller and one by Diageo, show local sourcing strategies in action and underline how sustainability goals can be addressed in harmony with other business priorities.

In late-2011, SABMiller launched the world's first commercial-scale cassava-based beer, called Impala, in Mozambique. SABMiller said at the time that it planned to create "a portfolio of high-quality, affordable beers made using locally-sourced raw materials for lower income consumers in Africa". Last December, Diageo launched a cassava beer in Ghana called Ruut Extra.

While it is an abundant - and under-exploited - crop in Africa, cassava carries some challenges. It is an excellent source of starch, but has a high water content and starts to degrade rapidly after harvesting. It therefore has to be processed quickly after being harvested. Couple that with the other primary challenge for a large brewer, namely the fragmented production - cassava is mainly cultivated by smallholders - and there are some logistical problems to overcome. 

SABMiller partnered with the Dutch Agricultural Development and Trading Company (DADTCO), which developed a mobile processing unit, to overcome the problem of rapid fermentation. SABMiller expects around 40,000 tonnes of raw cassava will be used per year to produce Impala, creating employment for more than 1,500 smallholder farmers.

Diageo is hoping that the launch of Ruut Extra will prompt some larger Ghanaian farmers to move into cassava production.

"At the moment there are very few big cassava growers and that needs to be stimulated," says Diageo sustainable agriculture director Jos Van Oostrum. "The only challenge we have here is commercialising the supply chain to a degree, that it goes from a crop that people have in their back garden and occasionally use, to something that becomes a real commercial contender as a cash crop."

While Diageo needs larger farmers to move into cassava, it is interesting to note that as much as 60% of the 9-10m tonnes of cassava currently being grown in Ghana goes to waste, which in the context of global concerns over food security is a telling statistic and, in Van Oostrum's view "a crying shame".

Both SABMiller and Diageo believe there is strong potential to introduce more cassava-based beers in Africa. "The opportunity for cassava across Africa is huge," says Gerry van den Houten, technical supply chain and enterprise development director at SABMiller Africa, adding that as it is rolled out over the next five years cassava will contribute around 4m hectolitres to SABMiller's total production. "Impala has shown that you can use local raw materials to make a really good product."

The other crop that brewers are looking to utilise far more for brewing in Africa is sorghum, principally because it requires less water than crops traditionally used in brewing, and as it is a local staple crop in so many African countries reduces the need to import barley or malted barley. 

The sustainability benefits therefore speak for themselves. However, Jos Van Oostrum points out that there are some technical problems to overcome. "With cassava I would say it's the number one choice here because it's a fantastic clean source of starch. With sorghum you need to be a little bit careful because it comes with, shall we say, a few off flavours so you need to do an element of processing there."

While in most cases brewers are seeking to utilise less thirsty crops or varieties in water-stressed areas, in the Democratic Republic of Congo (DRC), a country which has one of the most abundant supplies of fresh water in the world,  Heineken is making beer from an extremely water-intensive crop, namely rice. 

Heineken has set a target to source 60% of the raw materials for its African production locally by 2020."We have our commitments for local sourcing in Africa where you always look at what would be the most viable crop in a country, and it differs by country which crops grow better," says Heineken global sustainable development manager Vera Zandbergen.

Speaking about the programme in DRC, Zandbergen adds: "Supporting the use of rice as a viable ingredient for our brewing process has delivered some fantastic results, allowing local communities to be more economically independent, sharing expertise and developing local farmers' knowledge of good crop management."

Working with farmers and other stakeholders 

Whether sourcing alternative crops and developing new supply chains or seeking to make existing supply chains for barley or maize more sustainable, it is clear that working closely with farmers is crucial. 

Setting up new supply chains for crops such as cassava and sorghum involves working with smallholders but establishing such supply chains requires support from other partners, such as NGOs and government agencies, says Van Oostrum.

While pointing out that Diageo has a history of working with smallholders in Africa, notably in Kenya, he says it is an "extremely challenging" process. Diageo, he says, "can't commit to putting an army of people out there who would be linking with every little smallholder; that's just not going to happen". However, government agencies and other partners can provide that link "given the right brief and the right investment".

Indeed, collaboration with external stakeholders is seen as critical to the brewers' sustainable agriculture missions in all markets, whether in the developing world or mature economies.

"Collaborations with a wide variety of stakeholders are important, especially because these issues are very complex," says Alessandro Sperotto, director global procurement, raw materials at Anheuser-Busch InBev. "Our barley grower programme depends on collaboration with our family of growers and sharing best practices from research and academia organisations, suppliers and government agriculture agencies."

Morten Nielsen, CSR director at Carlsberg, adds: "We strongly believe that efficient solutions require public-private partnerships and engagement with multiple stakeholders."

Where there is a strong development element to an initiative, governments can often be particularly important partners. In recognition of the potential long-term contribution that Impala could make to the agricultural and economic development of the country, the Mozambique government gave SABMiller a tax break in the form of a lower excise rate.

The sustainable agriculture programmes of each of the major global brewers are examined in greater depth in the final two sections of this briefing.

To return to the contents page of this management briefing, click here.