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Beverage sector supply chain climate
impacts
The global beverage sector accounts for
some 0.4% of global greenhouse gases
...
MANAGEMENT BRIEFING: SUSTAINABLE DRINKS PAGE 02
Guidance launched for responsible
advertising
In 2014, the UK’s Advertisin...
PAGE 03
“Moderation” has long been the watchword
of the alcohol drinks’ industry, but the
message is taking longer to get ...
PAGE 04
Focus on liver disease and obesity
Deaths from liver disease are likely to
increase because of the UK’s relaxation...
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Briefing: Sustainable drinks, how to create opportunity from innovation

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Free management briefing from Innovation Forum on sustainability issues - and how they are being tackled - in the global alcoholic drinks industry. March 15 2016 London conference also being held. Details at: http://innovation-forum.co.uk/sustainable-drinks.php

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Briefing: Sustainable drinks, how to create opportunity from innovation

  1. 1. Beverage sector supply chain climate impacts The global beverage sector accounts for some 0.4% of global greenhouse gases (GHGs), according to the Beverage Industry Environmental Roundtable (BIER). In this context, and against a backdrop of the COP21 UN climate change talks in Paris, member companies of BIER – Carlsberg, Bacardi, Diageo and SABMiller among them – recently-published a Joint Commitment on Climate Change. It states that the businesses recognise climate change to be “one of the greatest challenges facing the continued prosperity of society, particularly to those in emerging markets” and commits them to “continuing to do our part” to reduce GHGs, not only across their own operations, but also by driving action through their supply chains. Central to this effort, says BIER, is reducing carbon, but there will also be a real focus on how companies can adapt to a changing climate by using water more responsibly – particularly among suppliers and agricultural producers. In 2016, the organisation says, it will begin a benchmarking process on the carbon emissions of its members, alongside its already established benchmarking mechanisms for energy and water efficiency. The most recent 2014 Water & Energy Use Benchmarking Study noted an 11% improvement in energy intensity over the previous four years among its members. CONTENTS PAGE 01 Trends and insight PAGE 03 Data digest PAGE 04 Activists and campaigning Produced by Innovation Forum www.innovation-forum.co.uk 1 Rivington Place, London EC2A 3BA +44 (0)20 3780 7430 Editor: Ian Welsh Writer: Tom Idle Innovation Forum is a London-based company focusing on sustainable business analysis and debate around the world via events, research, advisory services and publishing. Design: Alex Chilton Design LATEST TRENDS Reducingsupplychainimpacts whileencouragingresponsibility The drinks industry must address its environmental footprints and how to engage consumers responsibly Sustainabledrinks–how tocreateopportunity frominnovation MANAGEMENT BRIEFING:BEVERAGE SECTOR – JANUARY 2016 For full details about Innovation Forum’s sustainable drinks conference on 15th March in London click here
  2. 2. MANAGEMENT BRIEFING: SUSTAINABLE DRINKS PAGE 02 Guidance launched for responsible advertising In 2014, the UK’s Advertising Standards Authority (ASA) received 187 complaints about 140 advertisements by companies across the alcoholic drinks sector. As a result, 27 ads had to be changed or withdrawn. In 2015 there were another 47 complaints, with two ads being formally investigated and banned, and another six cases where the advertisers agreed to amend or withdraw their ads. This has driven the advertising standards industry to develop some guidance. The Committee of Advertising Practice has launched a paid-for e-learning module to help marketing teams get to grips with the UK alcohol rules and to save time and money by creating more responsible advertising campaigns. The module will also help avoid the reputational damage of having a campaign investigated and, potentially, banned by the ASA. The alcohol advertising rules have been tightened in recent years to prevent ads using creative content which might appeal to young people. Indonesia the latest to consider sugar tax Finance officials in the world’s fourth most populous nation of Indonesia have reportedly asked the health ministry to study whether sugary drinks contribute to health risks such obesity and diabetes. Indonesians consumed an average of 14.4 grams of sugar a day in 2014, well below the global average of 35.9, according to market research firm Euromonitor. Yet sugar consumption in the country is growing by an average of 5.7% per year. If the measure is passed, Indonesia will be following Mexico, which introduced a sugar tax in 2014. The one-peso per litre tax has resulted in a 6% reduction in soft drinks’ consumption. Norway and Denmark have introduced similar taxes, as have the US cities of New York and Berkeley. A recent analysis of 274 sugar-sweetened soft drinks by Action on Sugar, a UK campaign group, found that 88% of the products contain more than the entire recommendation for the day (25g) in a 330ml can. In more than half (57%) of the products selected, either Canada or the US was found to have the highest free sugars content per 330ml. Focus on SME supplier footprints According to David Croft, Diageo’s global sustainability director, the company is running out of “low-hanging fruit” when it comes reducing energy and water use at their plants and sites across the world. It is now time to leverage its size and scale to support the companies within its supply chain to go on a similar environmental impact-reduction journey. “We have been continuing to improve our performance on carbon and water – and have created some transformational improvements, particularly on carbon with our investments in alternative energy,” he says. “But we also have to look at how we can help activate the same improvements through our supply chain.” Acknowledging the company’s “responsibility” to show leadership in helping not only its 30 biggest suppliers but also the smaller companies to become more efficient, it is about securing Diageo’s future supply chain, Croft argues. “We already help thousands of smallholder farmers improve their productivity by between 50 and 100%,” he says, and now the focus is on working with SME suppliers. Californian wine sector grappling with water efficiency Water is a big concern for the Californian wine industry. The US state’s ongoing drought concerns could be resolved by the state’s Sustainable Groundwater Management Act, a new piece of regulation that will demand the agricultural sector – which uses around 80% of the groundwater extracted – to actively manage and protect water resources in a way it never has before. In a normal year, groundwater provides a third of California’s urban and agricultural water. But in dry years, it provides up to nearly two-thirds. And it is this ‘safety net’ that the industry is being asked to protect – learning how to simultaneously grow crops while protecting groundwater quality and refilling underground basins with clean water. Just what the new legislation means for the Californian wine sector – made up of around 6,000 wine grape growers and more than 4,000 wineries – is not yet known. The law will, in effect, create micro-states for groundwater, whereby companies will need to work more closely with local agencies to strike up effective management plans, rather than risk state intervention. Diageohas helpedboost smallholders productivity byupto100% The Committee of Advertising Practice e-learning module helps marketers get to grips with ad rules and avoid the reputational damage of having a campaign investigated For full details about Innovation Forum’s sustainable drinks conference on 15th March in London click here
  3. 3. PAGE 03 “Moderation” has long been the watchword of the alcohol drinks’ industry, but the message is taking longer to get through to some sections of society than others. A recent study by the National Institute on Alcohol Abuse and Alcoholism finds that instances of binge drinking among young US adult women (18-25 years old) who are not in college rose by 3.5 percentage points (to 32.6%) between 2002 and 2012. In contrast, the incidence rate among their male peers dropped by 4.5 percentage points (to 45.4%) over the same period. The findings follow a recent update by signatories to the 2013 “Beer, Wine and Spirits Producers’ Commitments to Reduce Harmful Drinking”. During its first two years, educational initiatives by the 12 international alcohol manufacturers signed up to the commitments reached 2,580,000 underage people and 3,260,000 adults. At the beginning of 2015, the Washington DC-based International Alliance for Responsible Drinking was established to accelerate the industry’s advocacy efforts around the world regarding safe drinking. Beverage manufacturers are increasingly investing in production efficiencies that bring down the embedded water and energy in their products. An important part of this effort at holistic management focuses on product distribution, an area in which Bacardi USA has invested heavily. The US spirits and wine producer was recently awarded a SmartWay Excellence Award by the US Environmental Protection Agency for its freight management system. Two-thirds of shipments out of Bacardi’s Jacksonville, Florida, bottling facility are by train and one third by road. In 2009, that ratio was the other way around. Other low-energy innovations in the family- owned firm’s logistics operations are the use of battery-operated forklifts and motion sensing lighting in its warehouses. Medium and heavy-duty trucks are responsible for an estimated 22% of all US transport-related greenhouse gas emissions, compared to 2% for rail, according to the Environmental Protection Agency. For the first time since its founding 20 years before, sales of Fairtrade-certified goods fell in 2014. Wine bucked the trend, however. According to a new study by the Co-op, a UK retailer, global sales of wine under the Fairtrade Foundation label rose by 9% in 2014 to a record £27.5m (equivalent to 22.2m litres). The Co-op, whose Fairtrade wine range extends to 25 brands, controls two-thirds of the UK’s Fairtrade wine market. Other supermarkets stocking Fairtrade wine in the UK include Sainsbury’s, Marks & Spencer and Waitrose. According to the Co-op, more than three in four (78%) UK consumers say they would buy a bottle of fairly-traded wine. A separate study by the Fairtrade Foundation finds that sales of fairly-traded wine in South Africa increased by 18% in 2014. With 26 certified producers, South Africa is home to more than half (57%) of the world’s Fairtrade- certified producers. Other producing countries include Chile, Argentina, Brazil and Lebanon. In 2013, small farmers and workers on plantations received £635,000 in the additional Fairtrade Premium. RESEARCH AND REPORTING Sustainabledrinksdatadigest By Oliver Balch We’ve read all the reports and research so that you don’t have to How to make ‘safe drinking’ a reality Resource efficiency tops agenda for Bacardi Global sales of Fairtrade wine hit all-time high MANAGEMENT BRIEFING: SUSTAINABLE DRINKS 78% of UK consumers would buy a bottle of fairly-traded wine 2.6m underage and 3.3m adults reached by industry alcohol education initiatives in the US Bacardi: two-thirds of shipments from Florida facility by train For full details about Innovation Forum’s sustainable drinks conference on 15th March in London click here
  4. 4. PAGE 04 Focus on liver disease and obesity Deaths from liver disease are likely to increase because of the UK’s relaxation of alcohol taxation policies, according to the British Liver Trust. It argues that deaths from liver disease quadrupled between 1980 and 2013 as alcohol became more and more affordable, as a result of government policy. The trust argues that alcohol, along with obesity, presents the biggest challenge to the UK National Health Service today and that there is convincing evidence to suggest that measures such as minimum unit pricing for alcohol and curbing advertisement and promotional offers for high sugar products work to reduce consumption. The drinks industry has pledged to tackle alcohol’s health-related concerns. The UK industry sector body the Portman Group, and Drinkaware, a charity that promotes responsible drinking (predominantly funded by the industry and retailers), have relevant campaigns focusing on these issues. Meanwhile, groups such as the British Liver Trust and other health charities will ensure liver health is going to remain a major industry concern. Efforts to fight alcohol abuse challenged While the UK alcohol industry’s efforts have seen changes in advertising practices and a raising of the dangers of excess drinking, the so-called “responsibility deal” struck between the UK government and the alcoholic drinks industry has been accused of not working and not leading to improvements in public health. That is the view of a critical independent report which says the voluntary action taken to get to grips with drink-related health issues has failed resulting in too little being done to reduce problems such as underage drinking. The Institute of Alcohol Studies claims that the responsibility deal has been used by companies across the sector to resist more stringent regulation and policies. While the report praises drinks firms for agreeing to stop advertising within 100 metres of schools and for introducing warning labels on products about drinking during pregnancy, it also points to UK Department of Health-funded research by the London School of Hygiene and Tropical Medicine that claims, on the whole, “labelling information frequently falls short of best practice, with fonts and logos smaller than would be accepted on other products with health effects”. While no beverage companies have responded to the IAS report, the Portman Group, an industry-funded body, has criticised the assessment for not taking into account official government data. It says that under the responsibility deal, drinks producers and retailers have taken 1.3bn alcohol units – equivalent to a small glass of wine – out of the market, limited the number of units of alcohol in single-serve cans, and voluntarily labelled 80% of products with important health information. Sector support for LGBT workers in the US The food, beverage and grocery sector in the US is leading the charge for fostering inclusivity in the workplace. The 2016 Corporate Equality Index, produced by the Human Rights Campaign Foundation, assessed the policies of more than 800 companies to establish whether they have benefits and protections that support workplace equality for lesbian, gay, bisexual and transgender workers. And the food and drinks sector came out on top with more companies across the industry scoring a perfect 100-point score than any other. Diageo North America, based in Connecticut, has received a perfect score for the past eight years. ACTIVISTS & CAMPAIGNING Drinksindustryinthespotlight By Tom Idle Taking responsibility for drinks marketing and addressing continuing health concerns THE HUMAN RIGHTS CAMPAIGN FOUNDATION: FOOD AND BEVERAGE SECTOR LEADS THE WAY IN US WORKPLACE INCLUSIVITY In store pricing sensitivity essential MANAGEMENT BRIEFING: SUSTAINABLE DRINKS For full details about Innovation Forum’s sustainable drinks conference on 15th March in London click here

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