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. 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 â Carlsberg, Bacardi, Diageo
and SABMiller among them â recently-published
a Joint Commitment on Climate Change.
It states that the businesses recognise climate
change to be âone of the greatest challenges
facing the continued prosperity of society,
particularly to those in emerging marketsâ and
commits them to âcontinuing to do our partâ
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 â 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
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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
Sustainabledrinksâhow
tocreateopportunity
frominnovation
MANAGEMENT BRIEFING:BEVERAGE SECTOR â JANUARY 2016
For full details about Innovation Forumâs sustainable drinks conference on 15th March in London click here
2. MANAGEMENT BRIEFING: SUSTAINABLE DRINKS PAGE 02
Guidance launched for responsible
advertising
In 2014, the UKâs 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 worldâs 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
drinksâ 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, Diageoâs global
sustainability director, the company is
running out of âlow-hanging fruitâ 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. âWe have been
continuing to improve our performance on
carbon and water â and have created some
transformational improvements, particularly
on carbon with our investments in
alternative energy,â he says. âBut we also have
to look at how we can help activate the same
improvements through our supply chain.â
Acknowledging the companyâs
âresponsibilityâ to show leadership in
helping not only its 30 biggest suppliers but
also the smaller companies to become more
efficient, it is about securing Diageoâs future
supply chain, Croft argues. âWe already help
thousands of smallholder farmers improve
their productivity by between 50 and 100%,â
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 stateâs ongoing drought
concerns could be resolved by the
stateâs Sustainable Groundwater
Management Act, a new piece of regulation
that will demand the agricultural sector â
which uses around 80% of the groundwater
extracted â to actively manage and protect
water resources in a way it never has before.
In a normal year, groundwater provides
a third of Californiaâs urban and agricultural
water. But in dry years, it provides up to
nearly two-thirds. And it is this âsafety netâ
that the industry is being asked to protect â
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 â made up of
around 6,000 wine grape growers and more
than 4,000 wineries â 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 Forumâs sustainable drinks conference on 15th March in London click here
3. PAGE 03
âModerationâ has long been the watchword
of the alcohol drinksâ 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 âBeer, Wine
and Spirits Producersâ Commitments to
Reduce Harmful Drinkingâ. 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 industryâs 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 Bacardiâs
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 firmâs 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 ÂŁ27.5m (equivalent to
22.2m litres). The Co-op, whose Fairtrade
wine range extends to 25 brands, controls
two-thirds of the UKâs Fairtrade wine
market.
Other supermarkets stocking Fairtrade
wine in the UK include Sainsburyâs, 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 worldâs Fairtrade-
certified producers. Other producing
countries include Chile, Argentina, Brazil
and Lebanon. In 2013, small farmers and
workers on plantations received ÂŁ635,000 in
the additional Fairtrade Premium.
RESEARCH AND REPORTING
Sustainabledrinksdatadigest
By Oliver Balch
Weâve read all the reports and research so that you donât have to
How to make âsafe drinkingâ 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 Forumâs sustainable drinks conference on 15th March in London click here
4. PAGE 04
Focus on liver disease and obesity
Deaths from liver disease are likely to
increase because of the UKâs 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 alcoholâs 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 industryâs efforts
have seen changes in advertising practices
and a raising of the dangers of excess
drinking, the so-called âresponsibility
dealâ 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,
âlabelling information frequently falls
short of best practice, with fonts and logos
smaller than would be accepted on other
products with health effectsâ.
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 â equivalent to a
small glass of wine â 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 Forumâs sustainable drinks conference on 15th March in London click here