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Adnams
Consultancy
Project Imperial College London Hannah Griffiths, Oliver Lawder, Sarah
Robertson, Mark Scott, Animesh Sourabh
Acknowledgements
We would like to thank Adnams for the opportunity to work on this project. In particular, we couldn’t
have succeeded without the help of Andrew Brookes and Emma Hibbert. We also appreciate the time
both Andy Wood and Kevin Wells took to show us around the Southwold distribution centre. Special
thanks go to Mike Tennant – our fearless leader – whose insight and feedback kept us on the right
track. Finally, we’re grateful to our colleagues on the Business & Environment Option who gave us
much-needed advice and lifted our spirits when the going got tough.
Table of Contents
EXECUTIVE SUMMARY: ________________________________________________ 1
PROJECT SCOPE: ______________________________________________________ 3
HISTORY AND ACHIEVEMENTS : ______________________________________________ 3 VALUES AND APPROACH TO THE ENVIRONMENT: _________________________________ 3 THE BRIEF: _____________________________________________________________ 5 DELIVERABLES: __________________________________________________________ 5 REFINING THE DELIVERABLES: _______________________________________________ 6 OVERARCHING STRATEGY: _________________________________________________ 7
MARKET RESEARCH AND TRENDS: ______________________________________ 9
THE DRINKS INDUSTRY: ___________________________________________________ 9 SUSTAINABLE SUPPLY CHAIN BEST PRACTICE: __________________________________ 12 ADNAMS’ BUSINESS: ____________________________________________________ 16 ADNAMS’ SUPPLY CHAIN: _________________________________________________ 17 ADNAMS’ SUSTAINABLE SUPPLY-CHAIN BEST PRACTICE: __________________________ 18 SUPPLY CHAIN CHALLENGE & STRATEGY: _____________________________________ 20 THE BITC MAYDAY NETWORK: ____________________________________________ 21
THREATS AND OPPORTUN ITIES: _______________________________________ 22
PESTLE: _____________________________________________________________ 22 MATERIAL ISSUES TO ADNAMS AND ITS SUPPLY CHAIN: ___________________________ 23 CONCLUSIONS & IMPLICATIONS: ____________________________________________ 26
RECOMMENDATIONS: ________________________________________________ 27
FIRST PHASE (ENCOURAGE, EXEMPLIFY, REWARD): ______________________________ 28 SECOND PHASE (EXPANSION): _____________________________________________ 32 RISKS & MITIGATION STRATEGIES (ENCOURAGE, REWARD, EXEMPLIFY): ______________ 34
THEORY (BEHIND RECOMMENDATIONS): ______________________________ 36
AREAS OF FURTHER RESEARCH: _______________________________________ 40
REFERENCES_________________________________________________________ 42
APPENDICES_________________________________________________________ 46
COMMUNICATIONS LITERATURE:____________________________________________ 46 ADNAMS’ BEST PRACTICE (RECOMMENDATIONS):_______________________________ 48 POTENTIAL REWARDS (RECOMMENDATIONS):__________________________________ 50 COMPETITION LAW: _____________________________________________________ 52 BEST PRACTICE ACROSS INDUSTRIES:_________________________________________ 54 SECONDARY RESEARCH OVERVIEW:__________________________________________ 59
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Executive Summary:
Adnams has been brewing ales in Southwold since 1872. It’s a values-led company with a brand
identity based on pride and passion, a sense of place, innovation, and quality. The company already has
one of the most energy efficient and water efficient breweries and distribution centres in Britain.
Adnams’ brief presented us with the goals and expected deliverables from the project. In the scoping
section, we identify the project’s challenges, and explain how we refined the deliverables in light of
these to maximise the desired impacts and meet Adnams’ strategic goals.
Business goals:
Focus on ‘win-win’ solutions that also minimise cost and/or mitigate risk.
Minimise the operational and implementation cost of potential supply-chain solutions;
Maintain existing supplier relationships.
Avoid replication of existing efforts.
Grow markets overseas.
Refined Deliverables:
Research best practice to identify what can be learnt from others.
Create a cost-effective strategy for influencing the supply chain to adopt more sustainable
practices.
Design incentives targeted at specific areas of Adnams’ supply chain.
Write communications literature to support the roll-out of the above supply-chain strategy and
encourage sign-up to the project, including the BITC MayDay Network.
At the heart of the brief is the need to both influence and incentivise. Adnams requested the following
constraint: Suppliers are not to be ‘dropped’ or threatened with contract termination to bring about
change. The solutions we propose integrate collaborative approaches, reward rather than punish
suppliers, and establish a collective vision across Adnams’ supply chain.
Adnams has a diverse supply chain, and it was clear from the project’s start that a ‘one-size-fits-all’
approach would not be feasible. This presented two challenges:
How to develop an overarching strategy that could accommodate for this diversity over time
and allow Adnams influence the entire chain.
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Where to focus our efforts when developing incentives to maximise return on investment.
It was important to avoid replication of existing initiatives or focus on areas that already are being
successfully managed by Adnams. We, therefore, have focused on suppliers involved in the company’s
core business operations of brewing and distributing beer. But, as will be explored later, many of the
recommendations can be applied more broadly across the supply chain.
We conducted secondary research into the key market trends influencing the drinks industry. We
identified best practice across applicable sectors, and available platforms and supporting bodies to
gather inspiration and understand the best mechanisms for delivery. We undertook a detailed analysis
of Adnams’ supply chain using perceptual mapping to identify the material challenges to the business.
Our key findings were that the greatest potential for greening the supply chain will come through
cooperation with other regional brewers. Because of Adnams’ size, the integrated nature of the supply
chain, and the mutual threat from large and micro-brewers, it is only by acting as one that regional
brewers can maximize the returns form sustainability efforts.
We recommend Adnams build a peer-led network of regional brewers that develops a shared vision for
sustainability. The company should use BrewFIT, a current collaboration focusing on finance and IT
approaches, as an initial starting point, so that Adnams can influence its supply chain. We have
delivered example communication literature that can help persuade other regional brewers.
Our recommendations also detail the structure for delivering an incentive system deployable within
BrewFIT and across the supply chain when supported by the BITC Mayday Network. The incentives are
broken down into a three-stage process: Encourage Change, Reward Action, Exemplify Results. We also
have included key risks and mitigation strategies needed for successful implementation.
We also detail the theoretical underpinnings of our recommendations. We cover human behavioural
psychology linked to spreading and sharing ideas, and the foundations of cooperation. We identify the
power of creating frameworks for supporting collective progress, the benefit of collective power, and
the need for divergent thinking to deliver system-level solutions.
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Project Scope:
History and Achievements:
Adnams has been brewing ales at the Sole Bay Brewery on the Suffolk coast in Southwold since 1872.
Renowned for its cask conditioned ales and bottled beers, Adnams can be found widely in East Anglia,
across Britain, and in international markets. Its locally sourced ingredients produce beers such as
Broadside, Explorer, and Lighthouse, which are available in more than 2,000 UK stockists. Moreover,
Adnams’ beers are growing in popularity abroad, particularly in the United States and Scandinavia.
The company has distilled its own spirits – vodka and gin – since 2010, soon to be followed by whisky in
2013. In addition, Adnams sells wine found from all over the world. The company owns: An estate of
seventy-four pubs in Suffolk, Cambridge, Essex, Norfolk and London; Five hotels and self-catering
accommodations; and a Chain of ten wine and kitchenware stores.
Quality and innovation pervades the Adnams brewing heritage: The company has won countless
awards and medals since the company was founded. For example, Adnams was named “Business of the
Year” in 2002, and was the first small company to win top honours in Business and the Community’s
annual Awards for Excellence – the 2003 Impact on Society Award. More recently, Adnams won “Beer
of the Year” in 2011, awarded by The Good Pub Guide.
Adnams is an active member of Business in the Community (BITC), and is keen to share, influence, and
learn from others. The Adnams charity was founded in 1990 to celebrate Adnams’ centenary as a
public company. It awards grants to causes within a 25-mile radius of Southwold. Grants are funded
from a percentage of Adnams’ profits and go towards projects in education, health and social welfare,
the arts, recreation, building facilities, and environment/conservation.
Values and Approach to the Environment:
Adnams believes ‘doing the right thing makes business sense’, and is committed to managing its
operations to make sure the company’s impact on the environment and society is a positive one.
Adnams’ connections to Southwold are of fundamental importance to its brand. The company
associates itself with the tranquil landscape and traditional sense of community. Adnams’ values are
rooted in making great products without costing the earth, combining social and business benefits with
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long-term sustainable success. The company strives to continuously improve environmental
performance through capital investment and driving business efficiencies.
The company’s values are: Working towards a sustainable future; Encouraging diversity of choice,
experience and employment; Fulfilling customers and employees; Offering the best quality products
and services; Managing environmental impact; Building strong relationships; Committing to values, and
translating them into everyday realities; Taking pride in the local community; and Inspiring others.
Adnams’ values were strengthened in 2000 when the company’s organisational structure changed
(more detail below in ‘Market Trends’ section). Adnams builds its staff’s self-esteem and encourages
them to lead from its values and beliefs. The staff is committed to the quality and character of the
Adnams brand, and contributes within a progressive and values-driven environment. An employee
survey conducted in 2003 revealed nearly 90% of respondents were ‘motivated’, or ‘extremely
motivated,’ to work for Adnams, and ‘proud’, or ‘extremely proud,’ to be part of the company. The
brand is based on pride and passion, a sense of place, innovation and quali ty. It is clear from the
Adnams’ accessible advertising that the company does not take itself too seriously.
Furthermore, in recent years, Adnams has won acclaim as a leading company in the area of
sustainability and carbon reduction. It has one of the most energy efficient and water efficient
breweries and distribution centres in Britain with equipment such as: A steam capture and storage
system; Solar-thermal panels; a Green roof; and an Anaerobic bio-digester, which not only powers the
production of Adnams’ beer and spirits, but also returns green methane gas to the national grid. In
2008, the company also has launched ‘East Green’, the Britain’s first carbon neutral beer.
Adnams works closely with the Carbon Trust to achieve the big changes and it also has an
Environmental Action Group with representatives across the business constantly looking at ways to
reduce Adnams’ impact on the environment in smaller ways. For example: Replacing standard light
bulbs with low energy versions; Introducing a policy to maximise tyre usage on HGVs; Ordering
biodegradable plastic bags for the wine cellar and kitchen stores; and Formulating an internal
education campaign to encourage changing behaviour.
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The Brief:
The brief presented us with a specific business need, Adnams’ desired positioning towards their supply
chain, and the expected deliverables from the project. In this section, we outline those elements and
explain how we refined the scope to maximise the desired impacts to meet Adnams’ strategic goals, as
well as identify the project’s challenges that helped refine the deliverables.
As outlined above, Adnams is a leader in environmental practice in the drinks industry. Its
environmental practice is driven by an understanding that “taking sustainable decisions for the long
term makes good business sense” (Adnams, 2011). It is based on two core assumptions:
The cost of fossil fuels is going to rise
The polluter is going to pay (Wood, 2011)
Adnams’ strategy to pursue sustainable capital investment today for long-term benefit tomorrow is,
therefore, both a cost saving and risk-mitigation exercise. The current focus on the supply chain is an
extension of Adnams’ corporate strategy, which identifies the need to avoid “working with
partners/suppliers who go against everything we have built our reputation on” (Adnams, 2009).
Adnams recognises the reputational benefits of a strong environmental record. In response, this
project has identified cost-effective measures that will help strengthen and secure Adnams’ bottom-
line and brand reputation.
Adnams values-led approach has implications for how the company wishes to position itself relative to
the suppliers and partners it works with: “This is not about Adnams looking smug, or wagging our
finger in a telling way, it’s more about passing on the message” (Adnams, 2011). Adnams is a medium-
sized business with roughly 400 employees. Its ethos, therefore, appropriately recognises the
company’s relative size (£51 million turnover in 2009 (Adnams, 2009), compared to £12.7 billion for
Heineken (Heineken Annual Report 2010 - Home. , 2010)) and limited leverage with larger suppliers.
The company pursues its sustainability agenda through collaboration and based on the need to have a
balanced approach of “shar*ing+, influenc*ing+ and learn*ing+ from others” (Adnams, 2011).
Deliverables:
Over the course of the project, Adnams gave us a clear sense of the business objectives. These
included:
Focus on ‘win-win’ solutions that also minimise cost and/or mitigate risk.
Maintain existing supplier relationships.
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Avoid replication of existing efforts.
Grow markets overseas.
To spread the Adnams message to meet these business objectives, and reflect and reinforce Adnams’
positioning, several deliverables were outlined:
Research what others have done in this area.
Develop minimum standards sign up for new suppliers.
Develop an incentive plan for customers.
As a minimum, we would like to encourage sign-up to the BITC MayDay Network.
These deliverables were discussed and explored with Adnams’ senior staff to identify how they related
to business objectives and practical management constraints within which any solution would have to
operate. In light of these discussions, we refined the deliverables to better meet the desired outcome
(for more detail, see ‘Refining the Deliverables’):
Research best practice to identify what can be learnt from others.
Create a cost-effective strategy for influencing the supply chain to adopt more sustainable
practices.
Design incentives targeted at specific areas of Adnams’ supply chain.
Write communications literature to support the roll-out of the above supply-chain strategy
and encourage sign-up to the project, including the BITC MayDay Network.
Refining the Deliverables:
At the heart of the brief is the need to both influence and incentivise. Adnams’ environmental strategy
focuses on ‘win-win’ solutions where both the environment and the business benefit. ‘Greening’ its
supply chain, therefore, does not require significant direct investment from Adnams or a process of
vertical integration through acquisition. The business case for environmental practice can, and should,
be made to suppliers. Incentives should encourage and reward best practice , where necessary.
Adnams has an extensive supply chain due to the diversification of its interests across beer, wine, tied-
estate pubs, hotels and shops. It was clear from the project’s start that a ‘one-size-fits-all’ approach
would fail to account for the diversity among the supply chain. The relative sizes of different suppliers,
and the variety of products and processes involved made such an approach infeasible. This presented
two challenges:
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How to develop an overarching strategy that could accommodate for this diversity over time
and allow Adnams influence over the entire chain.
Where to focus our efforts when developing incentives in order to maximise return on
investment.
Full detail is provided in the ‘Recommendations’ section, but it is important to mention other
constraints that were identified during the scoping process. These are primarily related to resourcing
priorities, such as minimising the cost of implementation and operation in both direct financial terms
and employee working hours. Any proposed solution was to require minimal management and very
few, if any, additional personnel.
Alongside operational constraints, past attempts to spread environmental practice through the supply
chain had failed largely due to overly complex processes of form-filling during contract negotiations
with new suppliers. To avoid this approach and to reduce our recommendation’s administrative
burden, we have moved away from formal process-orientated solutions to a more strategic approach
based on encouragement and cooperation (for more detail, see ‘Recommendations’). Adnams, which
chairs the Leadership team for East of England Business in The Community (BITC) Group, also wanted
to assess the BITC Mayday Network’s potential to provide a platform for supply chain engagement.
A further constraint arose due to Adnams’ positioning as a ‘values-led’ business. Adnams is driven by a
desire to work in partnership and to collaborate with those who share its vision for a more sustainable
and efficient sector. It was made clear to us suppliers are not to be ‘dropped’ or threatened with
contract termination to bring about change. However, all constrains contain opportunities, and this has
been fundamental to shaping the project. The solutions we propose integrate collaborative
approaches, reward rather than punish suppliers, and establish a collective vision across Adnams’
supply chain.
Overarching Strategy:
Focus Areas:
It was important to avoid replication of existing initiatives or focus on areas that already are being
successfully managed by Adnams. The University of East Anglia is currently involved in a project to
assess and propose environmental gains across Adnams’ tied estate by focusing on technological
opportunities to improve the properties (Planning for conversion to organic , 2010). Adnams also has
an existing strategy focused on energy reduction in its pubs and hotels, as well as communicating
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responsible drinking messages to its customers. These activities limited the potential for our project to
contribute significant and new impact to these business divisions.
Adnams’ relatively new expansion into retail through its Cellar and Kitchen brand also was considered
beyond the scope of this project. It is still a relatively small proportion of the business, and the re are
existing efforts to work with wine suppliers (including the development of the ‘green leaf’ standard) –
the main product category – towards more sustainable practices.
For these reasons, our project has focused on suppliers involved in the core activity of brewing and
distributing beer. But, as will be explored later, many of the recommendations can be applied more
broadly across the supply chain.
Spreading the Word:
Adnams’ sustainability journey makes for a compelling story. While the company has been careful to
tell the story to customers in a way that harmonises with its brand, Adnams CEO Andy Wood said the
majority of benefits had come from B2B relationships, in particular with supermarkets (eg Tesco, rather
than B2C) (Wood, 2011). Since this project is concerned with ‘spreading the message’ to supply chain
partners, the scoping exercise identified a clear need for supporting communications material targeted
at existing and potential B2B partners to tell Adnams’ sustainability story, highlighting the business
benefits of environmental systems that would encourage them to become involved.
While the Adnams brand has a strong ‘sense of place’ and draws most of its beer sales from the South
East of England, it is nonetheless keen to grow its market both in Britain and overseas. It has been an
important consideration to identify how it can support this key business goal. In response, we have
considered how our recommendations can help grow Adnams’ market share both at home and further
afield.
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Market Research and Trends:
The goal is to encourage members of the Adnams supply chain to reduce their harmful impacts on the
environment. As a minimum, the brief asked for sign-up of supply chain to the BITC MayDay Network.
To create the best strategy, we needed to gain understanding of the following areas:
The Drinks Industry.
Best Practice in Sustainable Supply Chain.
Adnams’ Supply Chain.
The BITC MayDay Network.
The Drinks Industry:
To understand the drinks industry, the group undertook secondary research from recent industry
publications and market research reports, and primary research through interviews with key Adnams
staff.
Secondary Research -- Market Reports and Articles
Reports by Mintel, EBLEX, and Key Note covered the following aspects of the industry: Beer, Wines &
Spirits, Sales, Consumption, Consumer behaviour, Public houses and Research & Development (R&D).
For more detail, see Appendix ‘Secondary Research Overview’. Further analysis of these trends, and
how they affect Adnams, are included in the ‘Threats and Opportunities’ section below.
The key findings from the reports are as follows:
Alcohol is a highly legislated industry: Changes in government policies have the potential for
huge impact on the industry’s future security. For example, the ‘Alcohol tax escalator’ has
increased duty by two percentage points above inflation each year, and the smoking ban has
reduced footfall in pubs. Recent government action, including the launch in 2007 of its ‘Safe
Sensible Social’ campaign, the 2010 NHS review of spending on alcohol problems, and the
sharpened criminal justice system on alcohol indicate a growing concern with binge-drinking
and alcohol related health problems (Key Note, 2008).
Alcohol consumption continues to fall: Since its peak in 1975, alcohol consumption has fallen
year-on-year (Key Note, 2010a). The sharpest decline since 1948 was recorded by the BBPA
between 2003 and 2009 with a total decline of 13% (Key Note, 2008). The recent recession has
had a negative effect on pub incomes. The price of beer has risen in pubs and bars much faster
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than it has in shops and supermarkets (Key Note, 2010b). This has contributed to the rise in
home drinking, which threatens the security of pubs and smaller brewers, which do not have
bargaining power with the supermarket giants (Muir, 2009)
Consumer trends are evolving: The changing roles of men and women, immigration and
evolving societal norms, changes in family life, globalization that enables new global, growing
appreciation of wine, and the emphasis on eating, rather than just drinking alcohol (Key Note,
2010b) all fall under this category (British Beer & Pub Association - News. , 2010)
A move away from beer to higher-alcohol drinks: Recently released figures from the British
Beer and Pub Association show there is a move away from lower-strength drinks towards
higher-alcohol drinks. Beer producers believe this is due to unfavourable tax treatment for
beer (British Beer & Pub Association - News. , 2010). Over the last thirty years, there has been a
decline in ale drinkers. From 1978 to 1998, the proportion of ale to lager drinkers changed
from 73:27 to 40:60 (UK Beer Statistics. , 2010). However, in the last few years, ale
consumption has begun to rise. In 2010, ale's share of the overall beer market grew 0.2% to
20.6% (Real ale makes a comeback - Telegraph. , 2010).
CAMRA (The Campaign for Real Ale) says that over 8.6 million people drink cask beer
and the number of 18-24 year old consumers grew by 17% in 2009. Their recently published
statistics from CGA Strategy 2009 show regional and local cask ale brewers increased volume
by 1% and 5%, respectively, over recent years. CAMRA says: “Cask drinkers typically have a
higher disposable income than non-cask drinkers, visit pubs more often, and spend more in
them, not just on beer but on other drinks and food. Add to this the fact that it's usually the
cask drinker who chooses the pub when groups of friends go out, and it's clear that cask ale
can be a valuable sales and profit booster for our beleaguered pubs.” (Cask Report 2010-2011 -
27/09/10 - CAMRA. , 2010).
There has been a change in pub culture: Small ‘wet-led’ pubs – those whose offer is built
around only drink – continue to close as the trend for ‘dry-led’ pubs offering food and
entertainment, as well as their core drinks business, is growing. The closure of pubs in
industrial communities has been growing for decades, but with rapid increase in the last two
years. Today, 39 pubs close every week (Muir, 2009).
The growth of general health awareness: Beer, cider, and flavoured alcoholic drinks have
declined in popularity as they are increasingly viewed as unhealthy. Wine and spirits, on the
other hand, are seen as healthier options as they have fewer calories (Key Note, 2010a). This
trend directly links to obesity, an issue of growing concern with strong potential for future
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government policy in this area (Key Note, 2008).Many producers are adding low alcohol,
infused, organic, or fair-trade products to their beer to tackle this issue. Examples include:
o Asali Japanese ginger-infused beer, aimed at the health conscious and youth market
(Key Note, 2010a).
o Butte Creek Brewing Organic Pilsner and Wells' Banana Bread Beer released in Britain
in 2009, which were brewed using fair-trade bananas (Key Note, 2010a).
A trend towards both globalisation and micro-brewing: The British market illustrates the move
towards global brewing: In the 1990s, foreign multinationals constituted less than 25% of the
market, but following the acquisition of Scottish & Newcastle in 2008, they now make up 85%
of the market. Smaller brands that don’t have the marketing and distribution operations are
under threat (Key Note, 2008). There is also competition from the fast growing trend for
microbrewers. According to Peter Swann, Professor of Industrial Economics at Nottingham
University, the number of breweries in England fell from 1,324 in 1900 to 141 in 1975. This
grew slowly to 480 in 2004, and is thought to have rocked to too today (Big beer producers
caught on the hop, 2010).
The growth of R&D in Alcohol Packaging: Work in the last 20 years has lightened glass bottles.
Several drinks manufacturers have created lighter bottles using embossing technology,
including Coors, which has reduced its bottle weight by 13%. In 2009, Owens Illinois, the
world’s largest glass container manufacturers, created a light-weight ‘lean green’ wine bottle
using 25% less material. It also was responsible for the ‘Multi-layer plastic beer bottle’,
introduced in 1998 by Heineken in Europe and Miller Brewing in the United States. This new
bottle solved the problem of negative visual appeal, linked to Polyethylene terephthalate (PET),
which until then was seen as the revolutionary alternative to glass for beer. Finally, Amcor
created ‘Bind-Ox’, a material that prevents oxygen from reaching beer thereby adding to its
shelf life, used to launch Beck's Gold in 2005 (Key Note, 2010a).
Primary Research -- Interviews and Company Presentations:
To test the relevance of market trends to Adnams, we held informal interviews with key Adnams staff
Andrew Brookes (Management Accountant), Emma Hibbert (Head of Corporate Affairs), and Kevin
Wells (Head of Supply Chain). A brief Q&A with Chief Executive Andy Wood also was conducted on
February 15 following a presentation on the business’ history, current stories , and future projects.
These interviews were informal and carried out during a site visit, over the phone , and at Imperial
College London. The group would have liked to conduct further interviews with sales representatives,
12
farmers, and wholesalers, but it was not possible for Adnams to facilitate these meetings within the
time frame. The aim of the interviews was three-fold:
To probe into issues central to Adnams operations.
To attain a clear picture of day-to-day operations and the structure behind its green
successes.
To explore Adnams’ motivation behind the supply chain project and any barriers to
success.
Information from interviews with Adnams staff mostly mirrored our findings from the secondary
research. However, two details differed:
Adnams reported a growth in customer demand for cask beers and dark ales, bucking the
overall market trend towards lighter ale and lager. This is possibly linked to the consumption of
cask beer with food in Adnams tied estate.
Adnams did not suffer pub closures that beset the larger pub groups such as Enterprise Inns
and Punch Taverns plc (Death of the British pub: Punch Taverns warns 1,300 locals have no
future, 2010). The company ascribes this to continued investment in the business, ‘good old-
fashioned service,’ and a quality business offering.
Sustainable Supply Chain Best Practice:
We have produced an extensive list of best practices. We analysed over 70 different case studies across
diverse sectors. The sectors include: Food and Beverages, Brewery and Spirits, Construction,
Hospitality, Retail, Home Improvement, and Packaging. We have highlighted examples from Britain and
overseas. The case studies were divided into 11 broad themes (for more detail, see Appendix ‘Best
Practice Across Industries’).
The themes and number of case studies covered per theme are:
1) Supply Chain Management (17)
2) Use of Renewable Energy/Energy
through Waste (11)
3) Energy Efficiency (9)
4) Packaging Reduction and Innovation (9)
5) Water Efficiency (6)
6) Responsible Drinking/Serving (5)
7) Recycling (4)
8) Transportation (including Load Sharing) (4)
9) Fair Trade/Organic (4)
10) Community Programs (2)
11) Rainwater Harvesting (1)
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Best Practice: Summary (for more, see ‘Best Practice Across Industries’).
1) Supply Chain Management: One of the most widely used tools is providing the suppliers with an
accreditation system, followed by regular audits. In some cases, the audit reports are uploaded onto
SEDEX – an online platform to share ethical data within supply chains, which can be seen by other
companies. Other policies include investing upstream to maintain a constant supply of raw
materials and adopting a policy of using local produce wherever possible.
2) Use of Renewable Energy/Energy through Waste: Renewable energy technologies used by
different companies include solar, wind power, fuel cell biodiesel, and light-motion sensors. The
most common practice in the brewing sector is to use the nutrient-rich wastewater to generate
electricity in a bio energy recovery facility, and use it in companies’ operations. This process avoided
waste from going to landfill. Used vegetable oil also was converted to produce biodiesel.
3) Energy Efficiency: Energy efficiency is usually achieved by installing a new technology, which uses
less energy. A commonly-used (passive) measure was to monitor energy use at each site and set
targets for improvement. Performance league tables induce competition between different
suppliers/sites.
4) Packaging Reduction and Innovation: Embossing instead of labelling has been used to light-weight
bottles. Oxo-degradable and biodegradable materials have been used to reduce waste. Innovations
in PET bottle technology have increased the visual appeal of bottle and shelf life of beer.
5) Water Efficiency: Companies have introduced advanced technology to either use less water or to
reuse/recycle processed water. This included the use of air under high pressure in place of water to
clean bottles. Water usage is monitored and figures are published regularly to inform the
stakeholders of progress made.
6) Responsible Drinking/Serving: Responsible Drinking Campaigns are especially targeted at students.
Bartenders’ training programs are run to equip them with responsible serving techniques.
Communications are also produced and distributed to pub drinkers informing them on unit
allowances.
7) Recycling: Aluminium cans are usually recycled. In some instances, waste from brewing can be used
as an alternative cattle feed or aqua farm food.
8) Transportation (including Load Sharing): Pooling of transport arrangements with suppliers,
customers, and competitors has been applied, and led to improved customer service, reduced
stockholding, saving in fuel and vehicle costs, and carbon savings. Hybrid electric trucks have
provided savings in both fuel and carbon emissions.
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9) Fair Trade/Organic: Some organic products used in the brewing process include Pilsner malt (Key
Note, 2010) and Acai berries, while fair-trade products included are banana and Demerara sugar.
10) Community Programs: Community programs have involved water, sanitation, and health issues.
11) Rainwater Harvesting: Companies collect rainwater to rejuvenate surrounding aquifers and to
reuse in their manufacturing plants.
Other Issues – Labour and Food Security:
Supply chain is a difficult area: Traceability of materials is a complex; Influence over suppliers is
tenuous; and the implementation of codes and standards is difficult. That goes some way to explaining
why companies have been slow off the mark to broach this aspect of their sustainability. Historically,
certain industries have moved faster in this field. Amongst the first to tackle the social, economic, and
environmental impacts within supply chain were the clothing and the food industry. Both can be linked
to customer and NGO stakeholder pressure.
A series of press exposes in the late 1990s unearthed inhuman conditions for workers, who were
creating garments for household brands, such as Nike and Gap. The ensuing public out-cry lead to swift
action to improve transparency, management, and conditions within textiles supply chains. Today, the
Sustainable Apparel Coalition (SAC) whose members include Gap and Nike strive for ‘an apparel
industry that produces no unnecessary environmental harm and has a positive impact on the people
and communities associated with its activities’ (Clothing Industry Giants Launch Sustainable Apparel
Coalition. , 2010). Equally, public awareness and concern for food safety, fair wages for producers, and
a general rise in health consciousness can be attributed to the increased transparency within the food
supply chain.
Emphasis on ‘Stick,’ not ‘Carrot’:
The most commonly-known success stories in supply chain improvement, such as Walmart (Wal-Mart:
Making Its Suppliers Go Green - BusinessWeek. , 2010), have come from the ‘stick-’, not ‘carrot-’led
approach. Companies have created strict measures and scoring systems on which they rank their
suppliers. The threat of supply-chain expulsion or demotion to a less prominent shelf is a large
incentive for compliance. However, Adnams has requested a soft approach to supplier action, which
excludes expulsion due to non-compliance. We, therefore, will need to look for alternative ‘carrot-’led
strategies of cooperation and relationship building to succeed.
15
Best Practices – Possibilities for Regional Brewers:
To manage supply chain partners, regional brewers can devise their own supply chain accreditation
schemes suited to the beer industry. They also can use online supply-chain portal SEDEX to manage the
supply chain data. This data is public and, therefore, available to other regional brewers, which can use
it while making supply chain decisions. Using local suppliers, wherever possible, can be used as a
branding strategy. Brewers also can provide forward contracts and pre-financing schemes to barley and
hops farmers to ensure security of supply for raw materials. A platform like BrewFIT or the BITC
MayDay Network can be used to share best practices in a non competitive space.
Energy and Water efficiency can be achieved in two ways:
Active measures involve investing in a technology which uses less water and energy, or recycles
waste water from the brewing process. Passive measures involve setting targets, measuring
energy/water usage, publishing the figures, and ensuring targets are met – just like any other
corporate targets.
Passive measures provide easy wins for any brewery, especially in their office space and
warehouse establishments. They do not require any additional investment and can be achieved
in shorter duration with support from staff. Pressurised air, for example, could be used in place
of water to wash beer bottles to save water.
To meet a percentage of their energy usage, brewers can invest in renewable energy technologies
(solar, wind, biodiesel, fuel cells). Waste water from brewing process is nutrient-rich and can be used
to produce electricity. The payback period is usually shortened given the likelihood of future increases
in oil and natural gas prices. The CO2 produced during fermentation process can be captured and used
later for bottling beer to save energy. Energy usage also can be cut through joint logistics with other
suppliers, which may lead to less vehicle and fuel costs, as well as a reduction in greenhouse emissions.
The leftover grain from the brewing process can be used as cattle feed to provide an extra source of
income.
To promote responsible drinking, brewers can initiate regional awareness campaigns, similar to
Adnams’ existing campaigns, to increase their reputations with customers. They also can partner with
the 'Drinkaware Trust,' which delivers educational guidance on responsible drinking.
Brewers can demand light-weight packaging and innovations from their packaging partners. They can
call for innovations like PET, biodegradable or oxo-degradable packaging, all of which have a low
16
environmental footprint. These transformational changes can help brewers cut down their energy use,
solid waste, and greenhouse gas emissions.
Fair trade or organic contents can be adopted if they are both price neutral and available in sufficient
quantities. They should be proactively sourced, and provide another opportunity for product
differentiation and branding.
Adnams’ Business:
For the past decade, Adnams has been ahead of its direct competitors and the majority of their supply
chain on ‘greening’ its operations. The company has become synonymous with an environmentally-
friendly and innovative way of doing business. Although Adnams’ environmental and ethical values are
ingrained in its operations, it is clear the key driver behind successful green initiatives has been
financial savings.
This ‘green’ leadership can be explained by Adnams’ change in operational structure in 2000. The move
from a silo-based business structure to a meritocracy in which embedded values and market lead
innovation drive decisions set the platform for the promotion of green project ideas. The open
structure means ideas from all staff are given equal weight.
Although new areas of operation are thriving, Adnams continues to see brewing at the heart of its
business. The company does, however, see the international export market as a key area for growth.
Adnams is also acutely aware that it cannot compete with multinational brewers on price . It views its
unique selling point and brand strength in its excellent service, passion, expertise, quality products , and
sense of place.
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Adnams’ Supply Chain:
The Adnams products supply chain can be depicted by the following diagram:
Raw materials for brewing are mainly sourced from large farms in Europe and the United States. Hops,
in particular, have distinctive flavours depending on their country of origin and the specific species
grown. While Adnams sources locally as much as possible, the company has little ability to influence
growers overseas, and it was stated that organic beer was not a current aspiration for Adnams due to
lack of supply of organic certified ingredients (Hibbert, 2011). Transitioning a farm to organic methods
can take three years (Planning for conversion to organic, 2010) and involves financial risk due to loss of
yield during this period. There also is a concern regarding the impact on flavour, particularly if different
variants were needed to suit organic methods.
Brewing and distilling is both energy and water intensive. Adnams has made efficiency improvements
in both categories a priority. It has reduced water use to below the industry average and now reuses
steam to decrease energy intensity. Efficiency savings in this category tend to require technological
solutions and involve capital expenditure.
In terms of packaging, Adnams fills its own barrels, kegs, and firkins on-site at the brewery, but
outsources its bottling operations to a nearby company. While the company has created a light-weight
bottle, this process requires a close working relationship with the bottling company, as well as
investment in research and development. Furthermore, bottle shape is considered an important part of
the brand image, so standardisation across the industry is likely to be resisted, although this would
greatly increase the viability of a collection and re-use scheme.
Sourcing of Raw
Materials
Brewing/
Distilling
Packaging
Storage
Transportation
Pubs/Hotels/ Supermarkets
/Cellar & Kitchen
Stores/Other Breweries
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Beers need to be stored at around 13°C to maintain their shelf-life (Wells, 2011). Ales are ‘live’ beers,
which continue to ferment after they are sealed. Bottles, however, have a longer life. The key
environmental implication is the temperature control of warehouses, particularly during loading and
unloading deliveries where buildings are open to the external environment. Adnams have combating
this problem by building double door entry areas to their eco designed distribution centre to maintain
temperatures.
Because customers demand a range of brands in their pubs, storage and distribution will involve
product from various manufactures. This means the nature of the drinks supply chain is highly-
integrated and everyone has product in others distribution systems. The upside is there are occasional
opportunities for doing each other’s deliveries where there is an obvious efficiency saving. However, it
also means it is difficult for companies to act in isolation if significant changes to the system are to be
achieved. The presence of major multinational companies, such as Britvic and Carlsberg, can make it
more difficult for smaller companies to innovate because of the significant leverage and public demand
for large companies’ products. This has had a significant impact on our recommendations.
Transportation is a key area for all distribution industries, and a focus on efficient logistics has been a
long-standing concern across industries. Fuel options for delivery lorries remain fairly limited and
Adnams’ investment in using biogas from their anaerobic digester is highly innovative. Efficiencies are
also constrained by their customers’ locations, which are unevenly distributed. In Norwich, for
example, Adnams makes almost daily deliveries due to the concentration of customers. This leads
customers to be less efficient with their ordering as they know Adnams’ focus on customer service will
mean they will make the effort to deliver regardless of order size.
Adnams’ Sustainable Supply-Chain Best Practice:
Data sourced on Adnams supply chain came from internal documents, senior management interviews,
and a Q&A session with Supply Chain Manager Kevin Wells during a walk-around at the company’s
distribution centre. When questioning Kevin, we explored the potential hurdles to Adnams ambition to
green the supply chain, and the opportunities to optimise green behaviour already in place.
Adnams has addressed different parts of its business operations and its supply chain. Below is a table
and summary of initiatives from across the company:
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Supply Chain Component Initiative
Raw Materials Sourcing of Bodicea hops in Suffolk, Barley malted
in East Anglia, Long-term contracts with Local
farmers. Organic or Biodynamic wine
Brewing Energy & Water Efficient Brewery, The Copper
House Distillery
Packaging Lightweight Bottle
Storage Eco-distribution Centre
Anaerobic Digester Renewable Energy For Production and Sale
Transportation Renewable Gas powered Trucks (in progress)
Carbon Neutral Beer ‘East Green’ Beer Production with Tesco
(Adnams, 2010)
Raw Materials: Adnams has secured specific commodities needed in the beer-making process by
engaging local, Suffolk farmers in long-term contracts. It also sources locally-grown hops and barley
(where appropriate). The company employs two wine-buyers that work with small-scale vineyards
that have similar environmental values. Adnams attempts to sell a proportion of wine that is either
organically-grown or that is the result of biodynamic agricultural methods.
Brewing: In 2008, Adnams opened an energy-efficient brewery, which recovers 100% of the heat
from each brew to reheat the next. It has reduced the amount of gas needed during the brewing
process by 30% (Hibbert, 2010). The company has improved its overall water efficiency: It now
takes 3.2 pints of water to make a pint of beer, compared to an industry standard of five pints of
water (Hibbert, 2010).
Packaging: In 2007, Adnams light-weighted its beer bottle from 445g to 299g. The packaging
reduction cut the company’s CO2 emissions by 415 metric tons a year – the equivalent of taking
132 cars off the road (Hibbert, 2010).
Storage: In 2006, Adnams designed and built an eco-distribution centre, which has reduced the
company’s annual energy consumption by over 50% (Adnams, 2007). The building uses 58% less
gas and 67% less electricity per square metre compared to the old warehouse, and was one of the
first industrial buildings to attain an ‘excellent’ rating under the BREEAM green-building standard
(Adnams, 2007).
Anaerobic Digester: Energy and fuel: Adnams is planning to run its fleet of trucks on renewable
energy produced by an on-site anaerobic digester. Opened in 2010, the facility cost £2.75 million,
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and generates enough electricity to heat 235 homes each year (Hibbert, 2010). The company has
teamed with Waitrose, which supplies waste to the anaerobic digester from seven of its nearby
branches and from a John Lewis department store.
Carbon Neutral Beer: In 2008, Adnams launched East Green, the Britain’s first carbon neutral beer,
which was distributed exclusively by Tesco nationwide. Every stage in the development of East
Green – from the growing of the hops to the packaging – was designed to minimise carbon
emissions. The remaining carbon, which equates to less than 1 penny per bottle, was offset
through Climate Care (Hibbert, 2010).
Supply Chain Challenge & Strategy:
The challenge for Adnams is to take appropriate measures to engage its supply chain partners and
bring them together on the same platform to monitor environmental performance. This is an uphill
task because of the breadth of its suppliers. Adnams has about 760 suppliers. The big players include
Carlsberg, Heineken, Diageo and Coca-Cola, and regional partners, such as are Thwaites, Sheppard
Neame, Fuller’s, and Charles Wells.
Adnams has limited bargaining power to persuade big brands to fall in line with their requirements.
The company’s relationship with other mid-sized breweries is complementary as they stock or sell each
other’s products. This limits Adnams ability to force partners to comply with its supply chain guidelines.
It can only persuade its new partners to follow guidelines that are incorporated into contracts.
Given the breadth of its supply chain, it will be difficult for Adnams to have a ‘one size fits all’ supply
chain guidelines. As a start, the company can concentrate on mid-sized regional partners. It maintains
good relationship with them through BrewFIT – a body comprising major regional brands. The
organisation currently meets three times a year to discuss finance and IT issues. This forum can be
utilised by Adnams to expand the scope of discussions and include supply chain policy/guidelines to
make a business case for environmental improvements (for more detail, see ‘Recommendations’
section below).
Adnams can approach the regional brewers with the following set of steps:
Share its own examples and show the savings achieved.
Showcase examples of other major names in the food and beverage industry.
Provide a set of recommendations in the short- and long-term.
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Demonstrate the usefulness of tools like the BITC MayDay Network.
The BITC MayDay Network:
The Business in The Community (BITC) Princes’ Mayday Network is “a collaboration of businesses at all
stages on the low carbon journey.” It offers support for businesses, which are trying to reduce their
environmental impact. It does this by creating a non-competitive forum for peer-to-peer learning
where companies can ask each other for help and advice as well as share best practice and post case
studies.
The Mayday network is a voluntary scheme based on the spirit of collaboration and, as such, does not
impose mandatory targets (although it aims to achieve a 10% reduction in emissions by 2012 from a
2008 baseline). We were initially concerned this would be off-putting for Adnams’ suppliers as it leaves
relatively little time to have impact. However, after discussion with The Mayday Network Director Matt
Millian, it is clear the target is only an aspirational, and is meant to help give direction to the group as a
whole, rather than a strict goal for each individual member. After 2012, there are no current plans to
refine or replace the target, but the rest of the scheme will continue as it currently operates.
The Mayday Network also enables companies to share information on their emissions reductions, and
the software that supports the members ‘journey’ from high to low carbon currently is being updated.
This will allow Adnams to create an online group within which suppliers can communicate and report
on their progress. However, The Mayday Network does not provide an independent validation scheme
for members reporting, which could pose difficulties for incentivising members as the absence of third
party assurance may lead to free-riders.
We also have considered ISO standards and the use of carbon-footprinting agencies to support efforts
to green Adnams’ supply chain. While both may be useful, they will impose a higher burden on both
Adnams and its suppliers in both financial and bureaucratic terms.
ISO standards require annual monitoring and reporting, as well as continuous efficiency gains. This will
not only prove challenging for smaller suppliers, but also may not lead to the most efficient use of
funds. It would be most effective, for example, to target the big-wins across the chain rather than
focusing on marginal improvements within a specific area. Furthermore, this approach fails to
recognise and encourage additional benefits gained by taking a systemic approach to improving the
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environmental impact of the chain: For example, increasing emissions in one part of the chain to have a
net saving across the chain elsewhere.
Carbon-footprinting is an effective way of identifying key areas to focus attention on reducing
emissions. There are broader consultations available that would include water and waste impact,
among other environmental issues beyond GHGs. There is, of course, a cost involved and the existing
work done by Adnams, as well as other best practice in the sector, will serve to encourage supply chain
partners to start reconsidering their operations. Nonetheless, the use of these services would be a
valuable way to measure success, verify emissions savings, and bring fresh ideas to those involved
should progress slow.
Threats and Opportunities:
To make our research valuable to the project, we needed to analyse and synthesise it into meaningful
recommendations that suit market conditions. The following section describes this process, and draws
a series of conclusions from which we built the strategy and structure of our recommendations.
PESTLE:
First, we used the PESTLE tool to build a clear picture of the key threats and opportunities to Adnams
and its supply chain. We identified and categorised the macro-environmental factors (political,
economic, social, technical, environmental and legal) that could potentially impact on Adnams current
and future success. We selected the PESTLE analysis over a SWOT because of its focus on wider
external factors. A SWOT (Strengths, Weaknesses, Opportunities and Threats) focuses on factors that
affect the business directly. The PESTLE looks at issues on a local, regional and global level, while a
SWOT looks at factors on a company level (Similarities Between SWOT & PEST Analysis, 2010).
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1(Key Note, 2008); 2(Key Note, 2010b); 3(Key Note, 2010a);5 (Key Note, 2010c);6(Wood, 2011);7(The Publican - Home - Pub
Food Trends: Back to the future, 2010);8(Small business, 2010);
The PESTLE shows the most prominent issues to the Adnams business. The data is taken from market
research and interviews with key Adnams staff. Please see the Appendix ‘Secondary Research
Overview’ for an enlarged, referenced version.
Material Issues to Adnams and its Supply Chain:
Having identified the opportunities and threats, and macro market trends, we established the most
material concerns to Adnams and its supply chain. If left unaddressed, these issues that could have
disastrous operational, reputation, or financial impacts. The purpose was to select a specific group
within Adnams supply chain on which to focus our strategy.
Initially, we wanted to carry out a materiality analysis. Materiality is a risk analysis tool used to identify,
assess, and manage social, environmental, and economic issues. It ranks the identified issues by their
internal significance to the business, their external significance to stakeholders, and the degree to
which the company has control over the issues. External and internal significance ranks are then
mapped against each other. Those issues ranked as high significance to both business and stakeholders
are selected as a priority to accept, avoid, mitigate, or manage. However, when we tried to rank the
issues in order of significance and level of control to stakeholders, we were reduced to basing positions
24
on our own assumptions (due to lack of available data from the client). We therefore decided any
conclusions would not be sufficiently objective.
Instead, we elected to use perceptual mapping. This approach identifies two dimensions, (for example
internal significance and internal control), and plots issues on a matrix. The resulting plot allows
comparison of the importance of the issue and the level of control the company has. From the PESTLE
and market trends research, we identified a list of ten key issues pertinent both to Adams and the
wider brewing industry:
Sector security for medium sized, regional brewers.
Growth of small microbrewers.
Globalization & big brand take-overs.
Growing utilities costs due to finite resource scarcity.
Security of raw materials threatened by climate change.
Growing fuel prices due to finite resource scarcity.
Alcohol consumption decline and the rise of health trends.
Recession & reduced customer spend.
Closure of pubs.
Increased ethical & organic demand.
We ranked these in order of their importance to Adnams, and in order of the influence that Adnams
has over the issue. The issues were then ranked in order of importance to the industry and the
influence of the sector over the issues. To determine which areas of Adnams complex supply chain to
focus.
The two perceptual maps and ranking scales can be seen and compared below. Please note these
issues have been ranked by the project team and not based on previous discussions with Adnams staff.
Importance Ranking Scale
1.0 Irrelevant
2.0 Awareness but no concern
3.0 Broad awareness and some concern
4.0 Considerable concern among a few
5.0 Widespread concern
Influence Ranking Scale
1.0 None
2.0 Very small
3.0 Small
4.0 Average
5.0 Large
25
Significance/Control of issues (Adnams):
Significance/Control of Issues (Other Brewers):
26
Conclusions & Implications:
• Security of regional brewers is important to Adnams and similarly positioned regional brands.
Through collaboration, it is an issue that regional brewers could have a large impact on. The threat
to the security comes predominantly from the rise of microbrewers and the growth of the
globalised large sector players like Carlsberg & Heineken.
• There is opportunity to add value to regional brewers through the creation of a peer group network.
This would enable the sharing of best practice and innovation, where together members can
strengthen their overall market positioning, brand value, and future revenues.
• Rising commodity prices threaten regional brewers’ ability to stay competitive. Brewing is an energy
and water intensive process. In the United States, brewers’ energy consumption is equal to 3 – 8%
of their production costs (Industrial Energy Analysis, 2010), and the average pint of beer is up to 95
per cent water (Why beer needs watering down - Times Online., 2010). Any rise in gas, oil, or water
prices will have financial implications on profit margins. Companies of all sizes are working to
reduce their carbon and water footprints such as Shephard Neame, Kent (Why beer needs watering
down - Times Online. , 2010).The continued adoption of energy and water efficiency measures and
technological alternatives will keep Adnams and others regional brewers competitive. Investing in
these changes now will also mitigate future costs, as finite resources become scarcer and the
likelihood of stricter water and carbon regulations come to fruition.
• Security of raw ingredients is the next big issue for brewers to tackle . Adverse weather conditions
and changes in arable land bought on by climate change are growing concerns to suppliers. This
relates not just for crop security, but also for changes in customer demand. With altered weather
patterns come different tastes (Key Note, 2008). This is an issue we believe Adnams and its supply
chain can tackle through investment in environmental progress.
• Adnams holds little influence or bargaining power with large global drinks players. Adnams is a small
player in the global drinks industry. When dealing with global suppliers like Heineken, Carlsberg, or
Coca-Cola, it holds little influence on their behaviour. In general, Adnams has to comply with their
demands on standards and prices. Big companies are clearly an important part of the supply chain,
and a section that we would like to tackle in the future when we regional brewers joint negotiation
power (see ‘Areas of Further Research’ section).
• Expansion of Adnams export to the international market is high on the agenda. Widening the peer
support group and the Adnams brand beyond Britain would not only add to the environmental
efficiency knowledge, but also would open up new opportunities for trade abroad (e.g. guest
27
promotion of beer if the company puts beers from environmentally-conscience global partners in its
tied states).
• Social issues linked with drinking are a growing concern. Although we believe this issue falls out of
the project’s scope, tackling social issues within the supply chain could be an area of interest for
Adnams in the future (see ‘Areas of Further Research’ section). A large number of drinks
multinationals, such as Diageo, Bacardi, and Heineken (Key Note, 2010a) already are working in this
area, but no one is steering the agenda.
• Downstream supply chain members are already being tackled. Adnams, in collaboration with the
University of East Anglia, already has invested time and resources to ‘green’ its tied pubs and hotels.
Projects such as roof insulation, energy monitoring, and reverse logistics are already in place .
Recommendations:
Incentivizing Adnams’ supply chain and customers to ‘go green’ will be a three -stage process:
Encourage Change, Reward Action, Exemplify Results. It is focused on promoting best practice and
highlighting potential ‘win-wins’ to alter people’s behaviour (The Do Lectures, 2010).
The strategy draws upon our market research and the PESTLE analysis of Adnams’ supply chain. The
decline in pubs and ‘wet-let’ alcohol sales, the threat of multinational acquisitions, and expansion of
craft micro-brewers has created a ‘perfect storm’ that threatens to engulf Adnams and other regional
brewers. Rising commodity prices and the impact on supply chain security also has placed companies’
environmental strategies at the heart of business operations.
Adnams’ position in its supply chain (eg: limited bargaining power with multinational suppliers, but
with long-term, collaborative relationships with fellow regional brewers) provides an existing structure
that can be expanded to include the sharing of environmental best practice (dependent on competition
restrictions, see below).
This collaborative approach has multiple benefits. By working within existing structures, additional
expense and working hours can be kept to a minimum. It also promotes reciprocity across regional
brewers: While they compete for national market share, each company is dominant within its own
region of the country. This ensures collaboration can promote cost-savings across the BrewFIT
28
network, while having a limited impact on businesses’ competitive positions: Regional brewers will still
compete on taste, brand, and changes in consumer trends.
We haven’t provided a specific timeframe for the three-stage process, but could envisage the initial
project to last between three-to-five years, depending on industry acceptance/participation and
improvement in the wider economic environment. All three elements can be promoted in parallel to
reflect the different stages of development in environmental systems within the regional brewing
sector. The project’s potential risks are outlined at the end of this section.
The steps:
Encourage Change: Adnams will use its environmental leadership to encourage fellow regional
brewers to share best practice to develop and share a vision. The existing BrewFIT network will
be extended to cover supply chain issues, and be used to promote sign up to the BITC MayDay
Network by showing the business benefits of improved environmental management.
Communications literature will promote the business case for environmental management.
Reward Action: Adnams and fellow BrewFIT members will reward each other’s environmental
improvements through the sharing of best practice, employee-led workshops, and potentially
more capital intensive schemes (in the mid-term, see below). Primarily, rewards are not
financial: Knowledge sharing and mutual cooperation around similar environmental problems
will be the focus.
Exemplify Results: To encourage greater participation, Adnams and fellow BrewFIT members
will promote best practice to internal and external stakeholders. The goal is to build brand
reputation, to find new market opportunities, and to spread environmental best practice.
Promotion will include to the broader MayDay Network, to companies’ supply chains, and to
the general public.
First Phase (Encourage, Exemplify, Reward):
Below are the detailed steps related to Phase One (potentially years one-to-two). The priority is to
engage with BrewFIT members and to encourage sign up to the BITC MayDay Network.
29
Encourage Change:
Adnams’ green credentials are both extensive and exemplary. They offer a business case for
implementing environmental improvements, which can help similar regional brewers to understand
the financial savings that result from incorporating sustainability into their operations. Encouraging
change focuses on creating excitement within the BrewFIT membership about the business effi ciencies
available through sharing environmental best practice. It also will highlight the benefits of sign-up to
the BITC MayDay Network.
To engage fellow regional brewers, communications literature (see below and Appendix
‘Communications Literature’) will highlight the ‘Adnams Shared Vision’ towards a more
environmentally-friendly business. The material’s tone will not be preachy, but will offer potential
partners concrete examples of projects’ short-, medium-, and long-term financial benefits, as well as
their impact on Adnams’ environmental footprint. It will centre on creating a shared sense of direction,
and will be targeted at regional brewers’ financial directors, accountants, and board-members.
Example Communications Literature:
The literature will highlight low-cost examples of environmental best practice, as well as long-term
investment opportunities: (See Appendix -- ‘Adnams’ Best Practice’).
Low-cost, Effective Early Wins:
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Offer simple, cost-neutral examples to engage BrewFIT members (eg: Blankets at
Adnams’ hotels, Converting pubs’ used cooking oil to biodiesel, etc).
Long-term Investment Wins:
The redevelopment of Adnams’ distribution centre and brewery, and resulting cost
savings and environmental improvements.
The installation of Adnams’ anaerobic digester and its impact on energy bills and
carbon footprint.
The launch of Adnams’ East Green carbon neutral beer and its effect on improving
the relationship with Tesco.
The financial and environmental payback resulting from investing in the French
vineyard.
To maximize its impact, the communications literature will be launched when Adnams next hosts the
meeting of the industry working group BrewFIT in early 2012. To allow brewers’ sufficient time to
prepare and ensure the necessary people can attend (such as companies’ chairmen, CEOs, board-
members, and supply chain managers), Adnams will announce the agenda at an earlier BrewFIT
meeting and provide background material on the business efficiencies created through environmental
best practice. Adnams’ management will talk with their counterparts at other regional brewers to build
consensus between willing partners that can potentially be consolidated at the meeting. Other regional
brewers also will be given the opportunity to highlight their own environmental programs within the
BrewFIT organization.
By sharing environmental best practice at the BrewFIT meeting in early 2012, Adnams can also
champion an open letter, signed by members, to Government and the Office of Fair Trading. This will
focus on promoting increased collaboration within the regional brewers’ network, which may currently
run afoul of competition law. Sector cooperation is a potential risk (see ‘Risk & Mitigation Strategies’
below) due to perceived collusion over such issues as price fixing.
By lobbying government to highlight the environmental benefits of sharing best practice, Adnams and
fellow BrewFIT members can address this concern head-on. The company also can draw upon similar
associations in other sectors (eg: Sustainable Apparel Coalition, more detail found in ‘Risk & Mitigation
Strategies’ below) to convince government of the social benefits provided through the sharing of best
practice.
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Reward Action:
To encourage collaboration between regional brewers, Adnams will propose a rewards scheme
overseen through the BrewFIT network (potentially incorporated into the BTIC MayDay Network). To
provide mutual benefits from sharing best practice, the rewards won’t focus on financial incentives.
The goal is to institutionalize pre-existing relationships between regional brewers without creating
onerous bureaucracy. The reward for sharing of best practice (reduced operational costs, for example,
by implementing warehouse retrofits) will bring initially-sceptical BrewFIT members on board. The
more breweries adopt mutually-shared values, the more pressure there will be on other companies to
adopt industry standards on environmental protection and sustainability.
While initially non-financial, rewards could extend to capital investments in the mid-term (three to five
years), depending on competition issues. We have divided rewards into four categories (See Appendix
‘Potential Rewards’). The different schemes vary on implementation time, cost, and needed working
hours and oversight. Examples of potential rewards include:
Knowledge Sharing: Collaborate through BrewFIT to share best practice (eg: anaerobic
digester, eco-distribution centre).
Training: Offer other brewers knowledge and experience from Adnams’ employees on
implementing green projects.
Discounts / Promotion: Give mutual preferential treatment on contracts and payment
lead-times to BrewFIT members that fulfil green promises, dependent on competition
law.
Financial Investment: Partner with NGOs and/or energy services companies to finance
joint energy efficient improvements or energy projects.
For the reward scheme to operate successfully, Adnams must not be the sole engine for environmental
best practice. Initially, the company’s successful track record should be used to engage others to follow
suit. And by highlighting environmental benefits from other brewers, Adnams also will benefit from
other best-practice knowledge within the sector.
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Exemplify Results:
To maximize the financial benefits and environmental improvements of sharing best practice, Adnams
and its fellow brewers must highlight their actions to stakeholders. This will have multiple benefits:
Early adopters will gain a competitive advantage through increased brand awareness and
improved business efficiency.
Concrete examples of potential ‘win-wins’ will build support with brewers either wary of
either sharing their practices or incorporating environmental strategies into operations.
Promotion will spread the message across the regional brewers’ network and
institutionalize collaboration and knowledge-sharing.
Regional brewers can strengthen their bargaining power with suppliers and other
potential collaborators eager to benefit from the industry’s increased brand value.
The promotion of best practice falls into two categories:
Within BrewFIT: Early adopters can share environmental and business ‘win wins’ with others in the
industry. That will incentivize regional brewers to adopt best practice, provide new opportunities
for collaboration, and offer increased financial returns and new market opportunities to companies
that adopt environmental initiatives.
To the wider community: Promotion of environmental improvements to the general public will
increase individual regional brewers’ brand value. The association of BrewF IT members with
environmental best practice provides a competitive advantage against both multinational brewing
companies and local microbrewers: The sector will be linked to the sustainability movement,
which will act as a market differentiator between regional brewers and multinational and local
competitors.
Second Phase (Expansion):
Below are the detailed steps related to Phase Two (potentially years three-to-five). The priority is
spread best practice of BrewFIT members to their broader supply chains and build relationships with
international brewers.
Expand BrewFIT and BITC MayDay Network:
The collaboration across regional brewers on environmental best practice could be extended across the
industry’s supply chain. That may include bringing strategic partners into the BrewFIT structure or
expand the existing BITC MayDay Network (either on an adhoc or institutionalized basis). Their
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inclusion will allow understanding of stakeholders’ business and environmental issues. By engaging
upstream and downstream partners, Adnams could increase the stability of its own supply chain,
solidify partnerships with existing suppliers, and identify potential new market opportunities.
More capital-intensive rewards, such as mutual financing agreements, can be promoted through
reciprocal actions across the industry, dependent on competition law. Examples include:
Cooperation in product distribution (beyond current reverse logistics arrangements).
Promotion of other companies’ beers across tied estates.
Share standardized bottles and/or casks.
This will reward environmentally-friendly behaviour, while free-riders and/or broken promises can be
excluded through collective ostracisation (eg: removal of beer from pubs or reduced payment lead-
time on deliveries). It will be more beneficial, however, to reward best practice: Creating an industry-
wide standard will encourage companies to toe the line.
Global Expansion to Access New Markets:
In the mid-term, Adnams can extend its collaboration within BrewFIT and the BITC MayDay network to
Europe, North America, and other global markets. This can be conducted through formal
institutionalized meetings or informal one-off events. Market research (see above) shows regional
brewers around the world are carrying out environmental improvements to increase business
efficiency. Cooperation with these companies (which aren’t direct competitors) has multiple benefits:
Expand Adnams’ global sales through agreements with overseas brewers to promote
each other’s product as a reward for environmental improvements.
Reduce costs and improve efficiency through knowledge-sharing with like-minded
companies to implement new environmental best practice.
Consulting – Potential New Revenue Stream:
Adnams could expand its collaborative network into other industries through a separate consultancy
division (similar to an existing structure at carpet company Interface). The company could offer its
environmental expertise to others looking to green their own operations. Sharing employee knowledge
could offer an additional revenue stream through monetizing Adnams’ expertise in implementing
change management across its business and through collaboration. This business opportunity would
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incur additional costs in time and manpower, which could be offset through the potential new revenue
stream.
Risks & Mitigation Strategies (Encourage, Reward, Exemplify):
The creation and adoption of green incentives across Adnams’ supply chains will not be without risk. A
primary concern is the loss of Adnams’ competitive advantage. The company has built brand value by
taking a proactive stance towards environmental management. Allowing other regional brewers to
adopt similar practices potentially could detract from Adnams’ market position.
Yet knowledge-sharing across the regional brewers sector need not dilute Adnams’ environmental
credentials. Indeed, the company’s brand value based on regionality, customer service, and a high-
quality product can be strengthened through BrewFIT’s adoption of environmental best practice. By
incorporating sustainable business techniques within member brewers’ operations (and promoting
them to the wider public), Adnams can benefit financially from the entire sector increasing its market
share against multinational and micro-brewers.
Below are specific risks to the three-stage process and steps to mitigate them.
Encourage Change:
Risk: Solution:
Lack of sign-up by BrewFIT members. Promotion of Adnams’ environmental ‘win-wins’
in a collaborative way that doesn’t become too
preachy. Discuss environmental targets with
willing BrewFIT stakeholders to find consensus
ahead of main meeting. Team with engaged
BrewFIT members to push ahead with knowledge-
sharing despite lack of sign-up.
Scepticism by other regional brewers about the
business case for environmental management.
Use the communications literature to tell the
‘Adnams’ Story,’ highlighting the financial savings,
new market opportunities, and increased brand
value resulting from environment-related
investments.
35
Reward Action:
Risk: Solution:
Free-Riders benefiting from BrewFIT early-
adopters’ sharing of best practice.
Use BrewFIT and BITC MayDay Network meetings
to highlight the benefits of sharing best practice.
Reward fellow early-adopters through work-
shops, and create group mentality (eg: “I’ll have
what she’s having”) by making the business case
for investment.
Competition law restricts potential rewards. Write an open letter to Government (see above)
highlighting the benefits of sharing environmental
best practice. Challenge competition barriers by
highlighting social benefits of environmental
knowledge-sharing. Consult with lawyers to
ensure potential rewards don’t conflict with
competition restrictions. Use examples in other
industries to highlight the social benefits: The
Sustainable Apparel Coalition, for example, was
founded by global apparel and footwear
companies (Nike, Levi Strauss, Gap, etc) to build a
common approach for measuring and evaluating
apparel and footwear product sustainability
performance, and spotlight priorities for action
and opportunities for technological innovation.
Lack of BrewFIT institutional structure limits the
monitoring/measuring of environmental projects.
BrewFIT meetings allow for regular updates on
companies’ performance. Mutual benefits, such as
reduction lead-time on contract payments, ensure
reciprocity: Individual brewers face ostracization
and increased financial costs if they don’t meet
industry standards.
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Exemplify Results:
Risk: Solution:
Criticism from other companies over BrewFIT’s
‘green-washing’.
Engage with stakeholders (NGOs, media,
government) to highlight individual brewers’
actions to promote transparency and
understanding of BrewFIT’s programs.
Collaboration doesn’t strengthen bargaining
position with supply chain.
Promote BrewFIT’s best practice to link regional
brewers sector with organic, sustainable, and
environmentally-friendly practices. Maximize
brand value from environmental investments to
increase companies’ overall market share, which
will provide financial muscle during contract
negotiations.
Other companies and/or sectors copy and out-
compete BrewFIT’s early adoption.
Collaborate with other companies and/or sectors
to spread knowledge-sharing through the BITC
MayDay Network. That will spread best practice
across industries, and reduce competition issues
as Adnams will be partnering with companies
from outside its sector.
Theory (Behind Recommendations):
Adnams advised that our approach to incentivising its supply chain should be carried out in such a
manner that was encouraging and gentle, not prescriptive or forceful. Thus, we focussed on a ‘carrot’
rather than ‘stick’ approach. After extensive market and trend research (see above), we identified the
need for collaboration among the supply chain to meet the project objective.
There are several prominent and relevant theories that support our strategy, which come under the
broad umbrella of “Change Management”. Emma Bollan from WSP (Bollan, 2011) maintains changing
behaviour through encouragement is more powerful than relying on discipline. Moreover, Dot Griffiths
from Imperial College Business School (Griffiths, 2011) believes sustainable development should be
37
communicated in such a way that empowers others to act by forming a powerful guiding coalition and
establishing a sense of urgency.
The following theories further emphasise the importance and relevance of encouraging change
through a supportive, collaborative network:
“I’ll Have What She’s Having:”
The first appropriate theory arose from Earls (The Do Lectures, 2010), a consultant on human
behaviour who believes the most effective way to change peoples’ behaviour is through individuals
spreading and sharing ideas. He maintains government campaigns and marketing has little effect in
terms of getting people to embrace a new idea, or a different way of doing things. Instead, change
occurs more naturally.
Humans are fundamentally social, and our lives are a chain reaction of interactions with others,
reacting and responding to individuals and their ideas. Earl (The Do Lectures, 2010) suggests human
thinking is actually a social phenomenon in that we do not think individually, but as a collective.
Humans outsource vast amounts of knowledge from the individual brain to the many brains around us.
We think with other people and are more intelligent together than we are separately.
He compares our cognitive activity to that of a gorilla. Like these animals, we do not use our brain
entirely for thinking, but for empathising and copying others. Humans are always keeping an eye on
what others are doing, understanding them and the nature of their relationship. This means that
behaviour and perceptions are fundamentally shaped by others.
This theory of thinking collectively and copying can be applied to behavioural change. The catch line ‘I’ll
have what she’s having’ has been used to spread fashions, names, brands, songs and messages. Such a
slogan (from the film ‘When Harry Met Sally’) conjures up notions of doing things together and being
involved with what everyone else is doing. This is very powerful as it feeds our natural desire to copy
others without being too forceful in making people do something. It is the art of gentle persuasion.
This effective tool of engagement forms the basis of the project strategy to incentivise supply chain
members to adopt Adams’ green credentials. It supports the idea that if a peer group network was
created, businesses would naturally copy others so as not to be left behind and be out-competed.
38
Those who go above and beyond in greening their businesses will shine out above the rest, and will be
rewarded in peer and consumer recognition, and brand value. The network will provide an avenue to
encourage behavioural change instead of being outright told what to do.
Evolution of Cooperation:
The second relevant theory to the project is cooperation. It is widely understood that the pursuit of
self-interest by individuals leads to a poor outcome for all (the prisoners’ dilemma). Our civilisation is
heavily based on cooperation: between individuals, companies, organisations and countries (Axelrod,
1984). The peer-led network will facilitate cooperation between regional brewers without the need for
a central authority. Cooperation does not require trust as mutual reciprocity and the threat of
ostracism can be enough to discourage people from defecting. It is self-policing, and there would
therefore be no need for Adnams to step in as mediator.
The key factor to cooperation is that the participants know they will be dealing with each other again
and again, and so are discouraged to misbehave. Working within the existing structure of BrewFIT
means Adnams will not have to police cooperation and therefore investment in any additional time and
expenses will be kept to a minimum.
Sustainable Consumption: ‘I will if you will’
A report by the National Consumer Council and Sustainable Development Commission (Sustainable
Consumption Roundtable, 2006) discusses the ‘good life’. That is, a life where everyone – individuals,
business and government – shares responsibility for moving forward to a sustainable future. It is based
on progress towards a more sustainable world, which depends on finding ways to allow people to work
in collaboration. It cannot just be down to government to regulate our behaviour; there needs to be
commitment from everyone.
The focus should be on creating frameworks for supporting collective progress. This was identified by
both consumers and businesses in the above report, and was encapsulated in the phrase, ‘I will if you
will’. Businesses will become more responsible if consumers do the same; and vice versa. Cooperation
and thinking together also can help build space for more mandatory policies to tackle the most difficult
issues. Consumers and business have more leverage and a louder voice as a group than they do
individually, and they can work together to push government for policy changes.
39
The report (Sustainable Consumption Roundtable, 2006) indicates business leaders are keen to act
towards becoming more sustainable, but cannot do it in isolation or without the support of a business
case. The peer group network for regional brewers addresses such a need as it provides a framework
for supporting collective progress. It encourages businesses to work together on certain issues, rather
than seeing each other purely as competitors.
The network allows easy access to business cases that demonstrate cost savings, carbon savings,
greater efficiency (and building brand reputation). Case studies on good environmental performance –
such as Adnams’ – will give others the confidence to make positive changes as they have proof that it
can be done.
Reciprocity:
According to anthropologist Alan Fiske (RSA - The Stuff of Thought: Language as a window into human
nature. , 2010), there are three major human relationship types: dominance, communality, and
reciprocity. Each prescribes a distinct way of distributing resources. Reciprocity is characterised by
having mutual knowledge. The difference between mutual knowledge and individual knowledge has
profound consequences.
An example, given by Pinker (RSA - The Stuff of Thought: Language as a window into human nature. ,
2010), is that mutual knowledge has triggered political revolutions simply by people gathering in a
public square. People in their own homes may know they loathe the dictator, but they do not know
that others loathe him too. Once people assemble in a place where everyone can see everyone else,
they soon know that everyone else loathes the dictator and that gives them the collective power to
challenge the authority of the dictator.
Such an example is reinforced by the power of social media in spurring the recent revolution in Egypt
and Tunisia. It provided a platform for people to hear, understand, and share opinions in opposition to
the political system, and helped stimulate transformation. Social networks give people the confidence
to know that they are not alone in their views and that they can facilitate change. We believe the peer
network will provide the same sort of support and leverage for regional brewers to green their supply
chain.
40
Divergent Thinking:
Divergent thinking is the ability to see lots of possible answers to the question. It emerged from
Edward De Bono’s work on lateral thinking (RSA - Changing Paradigms. , 2010). It is the opposite of
thinking in a linear or convergent way. This provided inspiration for the project as it prompted us to
think not just of each individual environmental problem as part of the supply chain, and the potential
solutions for each and the stages with which to get there. Instead, we broadened our thinking to
encompass wider issues, which allow for a more holistic solution.
It was realised that businesses’ main barriers to improving environmental performance – a lack of
information, time, money, motivation, and inspiration – could be overcome by providing a mechanism
for sharing ideas, case studies, and contacts. The barriers should not be seen as individual issues to be
addressed, nor should the solutions to each be separated. Instead, sharing environmental practice
through the BrewFIT network allows for all these obstacles to be minimised simply through effective
communication and collaboration. Sir Ken Robinson (international advisor on education in the arts)
believes copying leads towards collaboration and most great learning happens in groups:
“Collaboration is the stuff of growth” (RSA - Changing Paradigms. , 2010).
These theories inform and support our recommendations of the support network through BrewFIT and
the communications literature. The approach we have chosen to incentivise Adnams’ supply chain is
based on changing behaviour through sharing ideas and encouraging participation. Adnams has limited
bargaining power with large suppliers’ such as Carlsberg, which means the company must avoid an
aggressive approach to altering the large brewers’ behaviour. Therefore, a collaborative relationship
with fellow regional brewers (Fulller’s, Marston’s and Greenwich Meantime) is much more appropriate.
The existing platform of BrewFIT can be built upon to include the sharing of environmental practice.
Areas of Further Research:
To meet Adnams’ requirements, we narrowed our focus to a specific section of the company’s supply
chain: Regional brewers. There are areas of further research that also would drive economic,
environmental, and social improvements within Adnams’ supply change. They include:
Measuring Compliance: The ‘Rewards’ section of our recommendations relies on companies
monitoring each other’s environment systems. We haven’t included specific mechanisms to
measure compliance as that would involve a long-term restructuring of the regional brewers’
41
network. To institutionalize cooperation, however, more work is needed to understand how
compliance can be measured, monitored, and used as a benchmark across the regional sector.
That could be undertaken through (water, energy, waste) efficiency management systems, as
well as the sharing of IT infrastructure, dependent on competition restrictions.
Including Social Issues: Our work focused on ‘greening’ Adnams’ supply chain, and didn’t
extend to the company’s social impact (eg: responsible drinking, etc). While Adnams has long-
standing policies to engage its customers on social issues, the company could extend this
approach across its supply chain. Social implications, such as local unemployment and
underage drinking, are concerns for Adnams’ suppliers. Work to address potential problems
could mitigate reputational risks for Adnams, and improve the company’s relationships with
suppliers.
Expanding to Entire Supply Chain: Due to Adnams’ relative size compared to multinational
drinks companies, our project has centred on engagement with regional brewers where the
company can have a short-term, effective impact. As the sectors’ strength and bargaining
power grows (through sharing best practice, for example), Adnams and other regional brewers
can undertake market research on ways to engage with larger companies within the drinks
industry. That has the opportunity to expand Adnams’ environmental best practice across its
entire supply chain – from regional brewers to multinational food and drinks companies
42
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Appendices
Communications Literature:
Open Letter to Regional Brewers:
We have a great opportunity. Regional brewers have the potential to dominate the UK beer market
and build a resilience that will see our companies grow in an uncertain future.
Because we face significant threats from craft brewers, multinational drinks companies and increasing
pressures on our margins we have an imperative to act for our future survival. Because we create great
beers, respect the communities we live in and have the foresight to see what’s coming we have the
means to grow, prosper and out-compete.
The price of fossil fuels is going to rise, affecting the cost of manufacturing and distributing
every pint we brew. Increased overheads, transport and storage costs will be felt at the same time as
raw materials/commodity prices rise (due to industrialised farming’s dependence on hydrocarbons and
the uncertainty of yields brought about by climate change). As the cost of living rises in the UK and
47
increasing health concerns and punitive policies erode our market, the next ten years potentially
present a ‘perfect storm’ of increased costs, uncertain supply and decreased sales.
Adnams thinks that, together, regional brewers are best place to make the most of these
challenges. We can offer customers great drinks, exceptional service through tied-estates and a quality
that the micro-brewers cannot emulate. However, we face a real challenge keeping costs down and
improving the efficiency of our supply chains to stay competitive with the larger companies. At Adnams
we know we are one of many and that it’s hard for one company to tackle these issues alone. That’s
why we think cooperation between regional brewers is the key to securing our future and a strong
market share for us all.
A rich heritage is something we all share, our breweries are embedded in their communities,
our beers are loved in their home regions and across this (great) country. Our customers, employees,
communities and owners are all relying on us to make the most of the challenges ahead. Adnams
believes that by working together we can thrive (and bring great beer to the next generation).
If regional brewers come together to improve the efficiency and security of our shared supply
chain, we can ensure our current and future needs are met in a way that increases and protects our
competitive advantage. Sustainability is not about being good for goodness sake. Sustainability is about
saying ‘we’ve been here for fifty, one hundred or several hundred years and we’re going to do business
as if we intend to be here for hundreds more’. There are efficiency savings we can all achieve, waste
we can eliminate and many ways to build resilience into our businesses. In short, there’s money to be
made and money to be saved.
There are lots of examples of good practice around and Adnams has had its experiments with
green technology, but we are coming to you with a question rather than all the answers. That question
is ‘what should our future look like?’ For the reasons we outlined the future could be tough but, to
steal a famous advertising slogan, we think ‘the future’s bright the future’s green!’
Adnams is proposing that regional brewers work together by defining a common vision of
sustainability for our industry so that all our partners and suppliers know what we want from them. By
speaking as one voice we can provide direction and clarity that serves our business needs and builds a
stronger sector. By sharing our ideas, experience and knowledge we can make the advances we need
without baring the full costs of acting individually. Not only will this strengthen our operations and
reduce our costs, the return on our reputation would be considerable. We are all keen to encourage
the next generation to enjoy real beer responsibly and issues of social and environmental performance
are strong concerns for our future customers.
48
In many ways we are, of course, competitors. However, by acting as collaborators we can
enhance the reputation of darker beers as a whole and grow the total market share we have to divide
between us.
While this is innovative, cooperation between us is not new. We already have BrewFIT, among
others, and we think this is a great place to start developing our collective vision and sharing
experience. Adnams plans to engage its suppliers through the BiTC Mayday network and would like to
invite you all to join so that we can make the most of this existing forum. These are the first steps that
we would like to put forward as a recommendation. We hope that it will lead to a stronger future for us
all.
Adnams’ Best Practice (Recommendations):
Low-cost, Short-Term Wins:
Adnams has a company-wide recycling scheme, which includes paper, packaging, electrical
equipment, vehicle batteries and tyres, mobile phones and glass (75% of Adnams’ waste is
recycled rather than put landfill).
The cooking oil from Adnams’ hotel kitchens is recycled and converted into biodiesel and spent
grains is used as pig and cattle feed.
At Adnams’ Crown Hotel, rather than harmful patio heaters, employees sourced recycled wool
blankets to wrap around chilly al-fresco diners.
In 2009, Adnams set a challenge – Carbon Combat -- that pitched two hotels against each other
to reduce gas and electricity over a month. They saved 8 tonnes of CO2 and £1,000 throughout
the month.
Adnams has achieved ISO14001 accreditation.
Awards: The Carbon Trust Innovator of the Year 2007, The GoodCorporation Ethical Business
Award in 2007, BITC’s Eco-efficiency award in 2008.
Adnams is asked to speak at a number of conferences and events, which is an excellent vehicle
for promoting the Adnams brand and developing brand advocates.
Long-term Investment Wins:
Redevelopment of distribution centre and brewery: In 2006, Adnams designed and built an
eco-distribution centre, which has reduced our fuel consumption by over 50% per annum. It
uses 58% less gas and 67% less electricity per square metre compared to the old warehouse.
The centre cost a 15% more than a traditional building, and will take 10-12 years to payback
the investment. The building’s sedum roof promotes biodiversity and sequesters up to 80
49
tonnes of carbon per year. It was one of the first industrial buildings to attain a BREEAM
‘excellent’ rating.
In 2008, Adnams opened an energy-efficient brewery, which recovers 100% of the heat
from each brew to reheat the next. It has reduced the amount of gas needed during the
brewing process by 30%. The investment has improved its water efficiency: It now takes 3.2
pints of water to make a pint of beer, compared to an industry norm of 5 pints.
Installation of anaerobic digester: Adnams worked with Cambridge-based Bio Group to build a
£2.75 million anaerobic digester next to its eco-distribution warehouse. The facility opened in
2010, and generates up to 4.8 million kilowatt-hours per year (enough electricity to heat 235
homes). The plant consists of three digesters that can break down up to 12,500 tonnes of
organic waste each year. In the near future, the anaerobic digester will produce enough
renewable gas to power the Adnams brewery and run its fleet of lorries, while still leaving up
to 60% of the output for injection into the National Grid.
Launch of East Green carbon neutral beer: In 2008, Adnams launched East Green, the UK’s
first carbon neutral beer, which was distributed exclusively by Tesco nationwide. The
company’s reputation as a environmentally-friendly brewer led to this commercial relationship,
and resulted in a guaranteed national distribution. Every stage in the development of East
Green -- from the growing of the hops to the packaging -- was designed to minimise its carbon
emissions. The remaining carbon, which equates to less than 1p per bottle, was offset with
Climate Care.
Like all other Adnams beers, East Green is packaged in a new lightweight bottle, which
has reduced Adnams CO2 emissions by over 415 tonnes a year. East Green’s launch resulted in
the equivalent advertising spend of £500,000, and prompted CNN to broadcast live from our
brewery and distribution centre for two days during its environment week.
French Vineyard -- financial and environmental payback: Adnams’ wine-buyers worked with
Château Cluzan to invest in the vineyards’ infrastructure, and health and safety equipment. The
company offered the wine-maker a long-term contact to help guarantee the investment. The
Adnams’ wine team seeks out small-scale producers: Over 25% of the company’s wine is now
either organic or biodynamic.
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Potential Rewards (Recommendations):
Training:
Suppliers:
Provide workshops through BrewFIT and the BITC MayDay Network to explain Adnams’ win-
win examples (sell business case by ‘speaking business’) and how others can follow suit.
Include regional brewers’ chairman and board members to create a wide consensus around
environmental best practice.
Offer fellow brewers Adnams’ knowledge and/or experience in undertaking green projects.
This could be led through BrewFIT meetings, the BITC MayDay Network, a stand-alone Web
Site.
Undertake energy-efficiency driver training (and potentially invest in GPS-oriented logistics
software, depending on pushback from drivers). Look at specific high-traffic regions (eg:
Norwich) to create mechanisms that tighten customer ordering behaviour without denting
perceived customer service.
Customers:
Educate tenants/pub groups about recycling and waste best practice beyond current
mechanisms.
Offer workshops on reading meters, installing energy efficient technology (e.g: lightbulbs), and
offer concrete examples of what other tenants that have done (e.g: monthly electricity bill
reduced from £2000+ to £750). Work with energy consultants to undertake work at neutral
cost. can be included who do this t no additional cost)
Knowledge-Sharing:
Suppliers:
Share delivery between brewers by extending current reverse logistics system across BrewFIT
network, dependent on competition restrictions.
Partner with NGOs and/or Trade Body (eg: CarbonTrust, BrewFIT, etc) to share best practice
(eg: anaerobic digester, green warehouse). Use Adnams’ hosting meeting in early 2012 to
outline what can be done through communications literature.
Form partnerships with other brewers to provide economies of scale to buy organic ingredients
(goal: all regional beer is organic). Adnams must check with competition lawyers to ensure it
doesn’t colluded with other brewers on price.
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Create capacities for local farmers to grow organically or bio-dynamically. Create market
stability by buying regularly from them, and ask farmers to become certificated, and provide
financial and/or capacity support.
Coordinate with other brewers to establish standard bottle design (and potentially combine
resources on R&D projects, dependent on competition restrictions). Expand bottle design to
wine (or borrow from existing industry standard).
Customers:
Promote best practice across pub chain, as well as link similar-minded tenants with local
counterparts on other brewers’ tied estates, potentially through BrewFIT or CAMRA.
Create league table of tied estate tenants, based on energy use (or similar quantifiable
measurement that can be normalized) and other environmental KPIs. Potentially expand across
regional brewer network, which could open up new sponsorship and marketing opportuniti es.
Discount/Gift/Promotion
Suppliers:
Improve payment lead-time: Environmental improvements = shorter pay period).
Promote other brewer’s products in tied estate: Collaborative agreement to encourage green
practices).
Give preferential treatment on contracts to those who fulfill green promises and/or make
energy efficiency improvements, dependent on competition restrictions (eg: longer-term
contracts or a lower wholesale price).
Promote regional brewers through ‘Supplier of the Year’ competition and/or quarterly award
for environmental best practice.
Customers:
Offer product promotions, discounts, ‘green nights’ (on typically slow evenings) for customers
that sign-up to the BITC MayDay Network and/or invest in green projects.
Provide soft-loans or access to companies (eg: Carbon Trust) that offer soft-loans/grants for
energy efficiency (Adnams’ employees could volunteer with their experience). Partner with
energy service companies at a minimal cost.
Institutionalize environmental audits across tied estate on a quarterly or yearly basis. Partner
with energy service companies to keep process cost neutral. (Move from doing it when new
tenant takes over to quarterly/yearly activity across all tenants -- Institutionalize process).
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Finance/Investment:
Suppliers:
Partner with NGOs/energy service companies/Government Bodies to finance energy efficiency
improvements.
Collaborate on regional basis to buy waste-to-energy facilities (and other capital-intensive
infrastructure – e.g: eco-trucks) that wouldn’t make financial sense otherwise. Use the current
infrastructure to reduce waste from going to landfill (to avoid rising landfill taxes).
Join forces on R&D projects (dependent on competition restrictions) related to ‘green
products’ (e.g: bottles, kegs, barrels, etc).
Customers:
Make small loans available for initial easy-wins (eg: metering, insulation) to get tenants
interested in going green.
Partner with NGOs/energy service companies/Government Bodies to finance energy efficiency
improvements.
Competition Law:
EU Competition Law is a law that promotes or maintains market competition by regulating anti-
competitive conduct.
Competition Act 1998: aim is to create a regulatory framework that is tough on those that seek to
restrain competition whilst allowing those who compete fairly the opportunity to survive.
Key aspects of legislation:
Anti-competitive agreements, cartels and abuses of a dominant position are unlawful from the
outset.
Businesses which are found to be in breach of the prohibitions are liable to financial penalties
of up to 10% of UK annual turnover.
Gives those competitors and customers who have been economically harmed as a result of
proven anti-competitive behaviour the power to seek damages from the Competition Appeals
Tribunal.
Gives the Director of the Office of Fair Trading (OFT) significant powers to actively root out
anti-competitive behaviour.
Anti-competitive Agreements: prohibits agreements, arrangements and concerted business practices
which appreciably prevent, restrict or distort competition (or have intention of doing so) and which
53
affect trade in the UK or EU. Verbal and informal ‘gentlemen’s agreements’ are equally capable of
being found to be anti-competitive as formal, written agreements.
Types of arrangements which are generally prohibited:
Those which directly or indirectly fix purchase or selling prices, or any other trading condition
(e.g. discounts, rebates).
Those which control or limit production, markets, technical development or investment.
Agreements which share markets or sources of supply.
Those which apply dissimilar conditions to similar transactions, placing other trading parties at
a disadvantage.
Exemption: An agreement may be individually exempted on the grounds that its restrictions of
competition are outweighed by its beneficial effects.
Achieving Compliance: For any company, it is vitally important to promote an understanding amongst
employees as to what type of behaviour is and is not permissible under competition law.
One practical way to promote an understanding of competition law amongst employees is for a
company to devise and actively implement a competition compliance policy that is specifically tailored
to that company. Not only does this minimise the risk of being non-compliant in the first place, but if a
company is investigated for anti-competitive behaviour, evidence of a competition compliance policy
may be taken into account by the OFT and EU could lead to a reduction in fine.
Likely to be illegal (example): if a group of retailers agree between themselves to impose a charge for
a particular service from a certain date than it is likely to be in breach of competition law.
Likely to be legal (example): if each retailer made their decision independently and there were no
agreements between them.
Department for Business Enterprise and Regulatory Reform (BERR) warn against promoting or
facilitating the exchange of information on commercially sensitive competition matters that should
otherwise be determined individually by the players in the market.
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Encouraging companies to adopt agreements or behaviours for the purpose of achieving a wider
objective may expose them to the risk of enforcement action by the OFT. Businesses should fully
consider the competition implications of any agreements they are asked to make.
Best Practice Across Industries:
Themes Case Studies No. of Cases
Supply Chain Management
17
Anglia Water
1) Verify Scheme (accreditation framework for suppliers and contractors working in the Utility sector) resulted in energy
savings of £125,000 pa, reduced its annual lime consumption by £128,000; £90,000 in fuel usage due to reduced cost and transit
distances for contractors1
1
ARCO
1) Suppliers’ performance was measured and managed through management tools and extensive auditing processing; Arco
joined Ethical Trading Initiative (code of practice)2; 2) Supplier collaborative planning: 20% reduction in overall deliveries and
26% reduction in journey miles2
2
Bettys & Taylors
1) Cost-Modelling matrix - A tool to understand the full cost of production and the profits a farmer needs to invest in his family farm and workforce3; 2) Taylors coffee buyers are qualified social auditors, accredited by the Ethical Trading Initiative. All audit reports are submitted on to the SEDEX system (Supplier Ethical Data Exchange)3; 3) It offers suppliers forward contracts and pre-finances crops;give farmers the stability and the confidence to plan ahead, invest in their crops and provide sustainable and high quality crops3
3
Cadburys
1) The Cadbury Cocoa Partnership was established in 2008 to invest £45 million over ten years - 10,000 farmers in 100
communities invested in directly; 55,000 farmers in 1,300 communities invested in through Fairtrade; Farmer bonuses,
farm equipment and training delivered, resulting in a doubling of productivity and income for some farmers 4
1
Diageo
1) Partnering with Suppliers’ is their supplier standards policy document which must be adhered to by suppliers. Sedex
(Suppliers Ethical Data Exchange) is used to confirm suppliers are maintaining adequate standards5
1
Lend Lease
1) Created a supplier assessment system that can be seen by all companies (buyers) reducing the need for multiple audits and
questionnaires6; 2) A peer-based steering group was created
across the industry to ensure buy-in from suppliers and competitors and was led by Lend Lease’s head of procurement6;
3
55
3) Worked with the FSC to help 10 key suppliers to gain accreditation6
Marriot
1) “Cleaner Production Private Sector Partnership” working with
World Environment Centre in Costa Rica who train SME suppliers to improve efficiencies in their facilities leading to
increased productivity and competitiveness and decreased environmental impact7; 2) Aiming for price neutral products that
reduce energy and resource consumption, decrease waste and increase waste diversion7
2
PepsiCo 1) ReCon (Resource Conservation Outreach) is their best practice sharing programme8
1
United Utilities
1) Focused on 12 areas (3 social/9 environmental); Environmental areas: Materials, Waste to Landfill, Hazardous Waste, Biodiversity, Emissions to Water, Energy, Carbon,
Emissions to Air, Water Use; Social areas: Fair Treatment, Labour Standards, Employment; - Procurement officers received coaching on 12 focus areas; Suppliers were supported through leadership, guidance, training, and workshops; Resulted in £6 million in savings9
1
Waitrose
1) Provides LEAF(Linking Environment & Farming) accreditation
(shown on packaging) for farmers. Farmers have to provide reliable information on where food comes from, how it has been
produced, and what it contains10; 2) Policy of using British suppliers whenever possible - Creation of ‘Small Producers
Charter’ to provide advice/support for small-scale farmers that are interested in supplying multiple retailers, but who are
unable to support a whole store network10
2
Energy Efficiency 4
B&Q 1) Creation of performance league tables, both within its own stores and with suppliers, to compare energy site use - energy reduction led to a combined £1.3 million saving11 1
Heineken 1) Installation of a new refrigeration plant decreased electricity consumption from 8.73 to 8.00 KWH12 1
United Biscuits
1) Monitoring energy use at each office and publishing the figures every four weeks so that all employees can keep a track of their progress against targets13 2) 64,746 tonnes of carbon saved by making factory operations more efficient13
2
Water Efficiency 5
Diageo 1) New barrel washers and recycling techniques have saved 3,800 cubic metres of water a year5
1
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Pepsi
1) They clean bottles with purified air rather than rinsing them with water8; 2) They are using advanced filtration systems to recycle and reuse around 80% of processed water used in production. In 2009 they saved more than 12 billion litres of water through eco-efficient improvements within their operations8
2
Sierra Nevada
Brewing
Company (US)
1) Reduced water wastage by a two-step anaerobic and aerobic
treatment plant for purifying water produced from its brewing
operations14
1
United Biscuits 1) Monitoring Water use at each office and publishing the figures every four weeks so that all employees can keep a track of their progress against targets13
1
Use of Renewable Energy/Energy through Waste
18
Annheuser Busch
1) Bio-Energy Recovery System uses nutrient-rich wastewater from the brewing process to create and capture a renewable
fuel which provides up to 15% of the fuel for 10 of their breweries15
1
Coke
1) Solar panels in bottling facilities16; 2) Biodiesel for energy use16; 3) Wind power generation technologies for energy use
(Biodiesel and Wind power combined provide more than 15% of its energy use)16
3
Diageo
1) Bioenergy plant diverts spent grain and wastewater to make their site largely self-sufficient in electricity5; 2) Solid waste previously destined for landfill is sent to a waste-to-energy plant
and used to generate electricity keeping around 250 tonnes of waste out of landfill each year5
2
Heineken 1) Commissioned biomass plants representing one of the largest single investments in renewable technology by a non-utility
company in the UK12
1
New Belgium Brewing Company
1) Uses wind power for the brewing process14; 2) Treats waste water from brewing. The methane produced during waste water processing is used to power the plant14 2
PepsiCo
1) Quaker is using the power of the oat to power a local university in Iowa8; 2) They have an anaerobic wastewater treatment plant which saves them more than 5,500 MWH of electricity a year8; 3) Solar lighting8; 4) Wind turbines8; 5) Lighting motion sensors8
5
Sierra Nevada Brewing
Company (US)
1) Uses fuel cells to generate energy for the brewing process 14; 2) They also use a heat and carbon dioxide (CO2) recovery system, where the CO2 generated during the fermentation process is used later for bottling beer14; 3) They capture methane generated from the digestor of the fuel boilers 14
3
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United Biscuits 1) Runs its lorries on biodiesel made from waste vegetable oil from its snacks factories13
1
Responsible
Drinking/Serving
5
Carlsberg
1) Committed and proactive member of the 'Portman Group' (self regulatory body) which delivers a code of practice on responsible drinking18 2) They also partner with 'Drinkaware Trust' which delivers educational guidance on responsible drinking18
2
Diageo
1) Launched a national rollout of a campaign to promote
responsible drinking to nearly one million students across the UK delivering both unit guidance and responsible drinking tips in
a visual and creative way5; 2) Over 2,000 bartenders trained through the Diageo-funded scheme in Kenya and the Johnnie
Walker School in Soeul, Korea has graduated 7,000 bartenders since it was founded 14 years ago. Programmes have also been established in Brazil, Nigeria, Scotland, Seychelles and Thailand5
2
Heineken
1) 'Cool@Work' is a programme that seeks to fully embed
responsibility in the marketing and sales activities of their top brands12
1
Recycling 4
Anheuser-Busch 1) Recycle leftover grain from the brewing process and use it for cattle feed; 2) Recycle aluminium beverage containers 15
2
Coke 1) Recycled aluminium cans16 1
New Belgium
Brewing Company
1) Treats waste water from brewing. The sludge is sent to a
neighboring plant that converts it into high-protein aqua-farm food14
1
Packaging Reduction and
Innovation
9
Amcor
1) Bind-Ox(patented technology ) - a material that prevents
oxygen from reaching the beer and offers a shelf life of six to 15 months thus increased the possibility of using PET packaging for beer - adopted by Anheuser-Busch InBev in 2005 to launch its Beck's Gold brand14
1
Coors 1) 13% lighter weight bottles - replacing the label with
embossing got rid of the need for a broad panel14 1
Owens Illinois
1) Light weight ‘lean green’ wine bottles launched in Australia
2009. Product created using embossing technology - Reduced materials by 25%, energy by 20%, water by 4,720 Klitres, CO2
emissions 1,130 tons14; 2) 5 layered PET bottles with 2 layers of SureShield (a patented material) improving visual appeal of PET
bottles - introduced by Heineken in Europe and Miller Brewing in the US14
2
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PepsiCo
1) Implemented use of oxodegradable packaging for Stila baked snacks that reduces waste by degrading when exposed to air8; 2) Bags made from plant-based renewable materials which are fully compostable8; 3) Light weight bottles containing 50% less plastic than their 2002 bottle- saving £75m of plastic per year8
3
Thomas Hussey
(Graduate - University of
Technology, Sydney )
1) 'Beer-in-a-box' - The design comprises solely of a box and a tap, ensuring minimal use of packaging material, and low cost.
The collapsible design of the keg helps maintain CO2 pressure
(imperative for storing carbonated beverages), while also preventing the ingress of oxygen to retain its flavor. The
reduced weight and size of the product allows up to 70% more beer to be transported per pallet, thus reducing costs and
enhancing transport efficiencies. Also, the package can be easily disassembled for disposal and recycling14
1
United Bisuits 1) Compared to 2003 figures 15,870 tonnes of carbon have been saved by reductions in packaging13
1
Transportation (including Load Sharing)
4
ARCO 1) Joint logistics project delivered 20% sales increase, improved
customer service, reduced stockholding from six to two weeks 2 1
Coke 1) Hybrid-electric trucks use 30% less fuel and 30% less emissions16
1
United Biscuits
1) Pooling of transport arrangements with suppliers, customers and competitors - reduction of vehicle mileage by 9 million miles
in four years; direct saving of £13.7million in vehicle and fuel costs in 4 yrs; additional £1.3million of transport revenue per
annum;drivers’ time costs; 15,000 tonnes carbon saved from reducing transport mileage13; 2) Runs its lorries on biodiesel
made from waste vegetable oil from its snacks factories13
2
Rainwater
Harvesting
1
Pepsi 1) Manufacturing plants in India collect rainwater from roofs to use for rejuvenating surrounding aquifers8
1
Community Programs
2
Cadburys 1) The Cadbury Cocoa Partnership was established in 2008 to invest £45 million over ten years - Community projects delivered focusing on water, sanitation and health4
1
PepsiCo
1) They partner with NGOs in water stressed regions to help
install irrigation systems, improve sanitation programmes and construct community cisterns in India8
1
Fairtrade/Organic
4
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Butte Creek Brewing Company
1) Butte Creek Brewing Organic Pilsner - launched in Mexico in 2009; brewed from organic Pilsner malt and whole leaf hops14
1
Eel River Brewing Company (US)
1) Brewer of certified organic Açai Berry Wheat Ale in the Mexican market in 2010. This wheat ale is brewed with organic
acai berries procured from Brazil. The ale is brewed following ethical production practices, the power supplied is 100% bio-
mass renewable energy14
1
Westerham Brewery Company
1) William Wilberforce Freedom Ale - Made with fairtrade Demerara sugar procured from the Malawi plantation in southeast Africa14
1
Wells Young's
Brewing Company
1) Wells' Banana Bread Beer - released in the UK in 2009; The
company uses fairtrade bananas for the flavor14 1
1(Anglian Water Group - Corporate Responsibility in the supply chain - Business in the
Community, 2010); 2 (Arco’s Ethical Supply Chain - Business in the Community, 2010); 3 (Bettys & Taylors of Harrogate - Sustainable Coffee Sourcing Programme - Business in the Community,
2010); 4 (Cadbury's Fairly Traded Cocoa - Highly Commended 2010 - Business in the Community, 2010); 5 (Diageo, 2009); 6 (Lend Lease Sustainability, 2010); 7 (Marriot Corporate Social Responsibility, 2010 ); 8 (PepsiCo Corporate Governance, 2010); 9 (United Utilities – a comprehensive
approach to corporate responsibility - Business in the Community, 2010); 10 (Waitrose, 2006); 11 (Environment & Ethics - B&Q Corporate, 2010); 12 (Enjoy Heineken Responsibly, 2010 ); 13 (United Biscuits - Achieving Sustainability - Business in the Community, 2010); 14(Key Note, 2010); 15 (Anheuser-Busch - Environment, 2010); 16 (Environment : Global Warming : Recycling
: Sustainability - Coca-Cola GB, 2010); 18 (Welcome to Carlsberg, 2010)
Secondary Research Overview:
Keynote Market Research Report: Breweries & Beer Market Report, 2008
Short-term Trends/Policies:
• Higher duties on alcohol: 8 pence per litre.
• ‘Alcohol tax escalator’: Increasing duty 2 percentage points above inflation each year.
• Smoking ban: Need to wait till the end of the decade to see if smokers will tough it out and continue
to leave their drinks at the bar.
• CAMRA (Campaign for Real Ale) blame the smoking ban for the alarming rate at which public hoses
closing down.
• Competition from cider and beer: New tastes as a new generation of drinkers who grew up on alcho-
pops and have a sweeter taste.
• Extraordinary weather: Different tastes that this brings.
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• CAMRA ‘take it to the top Campaign’ a campaign to reduce large heads on beer after government
legislation failed. Members agree to top up to the rim on request.
Long-term trends:
• Beer plays a central role to life in the UK.
• Pubs play a central role to life in the UK.
• Dramatic collapse of the market is not likely.
• Government unlikely to allow a merger of the four largest companies as it would mean they would
have a 32% share of the market.
• Regional mergers are a possibility. They would create larger tied pub estates and marketing brands
outside their original regional e.g. Fuller, London Pride, Green King, IPA.
• Future difficult for smaller beer brands who don’t have the marketing campaigns and distribution to
support them (mainly dark beers).
• Need to persuade young drinkers to try dark beers.
Beer market
• 2007 prediction for 2010: 4,750 mlitres and £18,500
• 2007 prediction for 2012: 4,500 mlitres £18,000
Threats & policies
• Anti-alcohol lobby.
• Potential anti-obesity policy.
• Growth of general health awareness.
• Government changes: ‘Safe Sensible Social’ campaign - clear goals & actions to promote sensible
drinking. NHS review of spending on alcohol problems, Sharpened criminal justice system on alcohol
• Changes in GDP, inflation and employment.
• Price increases: Likely if England adopts the Scotland’s proposal to clamp down on al cohol
discounting with new policy.. This could be an opportunity to raise the value of the market.
• BBPA (British Beer & Pub Association) Only 2% of licences issued under the 2003 act have been for 24
hour licensing. On average opening times have changed only 20 mins.
• BBPA recorded the sharpest year-on-year decline since 1948 with 4 falls in 5 years. A decline of 6% in
alcohol consumption in 2009 and a decline of 13% since 2004.
Consumption – British Beer & Pub Association
• Consumption is generally aligned with population size.
• The UK has the 5th largest global consumption per capita in the world (2005) 91 lpc.
• Consumption is lowest in poor countries.
• Consumption lower in countries with developed vinicultures e.g. France and Italy.
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• Cultural influences also effect consumption e.g. acceptability for women to drink, drink of choice with
meals.
• UK market is a good illustration of a trend towards globalisation and world-brewing. In the 1990s
foreign multinationals made up less than 25% of the market. In 2002 they made up 60% of the market.
With the acquisition of Scottish & Newcastle in 2008 that became 85%.
Keynote Market Research Report: Innovations in Healthier Alcoholic Drinks, 2010
Trends – western countries
• Consumption of alcohol has fallen in Europe since it’s peak in 1975 – this has been linked to the
growth of health awareness.
• Beer, cider and flavoured alcoholic drinks have declined as they are increasingly viewed as being
unhealthy. Wine is seen as healthier.
• Spirits are seen as healthier then beer as they are lower calorie.
• 2/3 of Europeans are regular drinkers (have had a drink within 30 days of the survey).
• Growth of low alcohol and imitation beers – often to avoid taxes.
• New products: Soya bean based, Barley added, Wheat spirits.
• New infused beers – aimed at the health conscious and younger markets e.g. Asali Japanese ginger
infused beer.
• Government and public concern about perceived binge drinking.
Binge Drinking tackling projects
• Aims: Moderate consumption, Reduce binge drinking, Reduce drink driving.
• Responsible campaigns:
- Bacardi: ‘Champions Drink Responsibly’ 2008
- Diagio: Drinking responsibly
- Heiniken: ‘Enjoy Heiniken Responsibly’ 2003, ‘Know the signs’ 2009
- Pernod Ricard: ‘Accept responsibility’ 2007
- SAB Miller: ‘The talking alcohol’
- Absolut: ‘Recognise the moment’ 2009
Keynote Market Research Report: Innovations in Ethical Alcohol (Beer) 2010
Packaging:
• Owens Illinois light weight ‘lean green’ wine bottles launched in Australia 2009. Product created using
embossing technology. Outcome: Reduced materials by 25%, energy by 20%, 4water by 4,720 Klitres,
CO2 emissions 1,130 tons.
• Coors 13% lighter weight bottles. Replacing the label with embossing got rid of the need for a broad
panel.
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• PET beer packaging gained momentum in 2003,when the German government levied a €0.25–0.50
deposit fee on beer sold in single use containers. One major impact of this regulation was the decision
by discount retailers in Germany to restrict beverage packaging in one material with PET being
considered the most suitable material among all the available alternatives. This decision was
undertaken to simplify management of the deposit scheme. In addition, this legislation also made
brewers reconsider PET for their packaging requirements.
• Multi-layer plastic beer bottles, produced by Owens-Illinois reduce the visual appeal problem of PET.
The plastic bottles has five layers of PET and two middle layers of SureShield (a patented material of
Owens-Illinois), and were introduced by Heineken in Europe and Miller Brewing in the US in 1998, in
order to differentiate their products in a competitive marketplace.
• Amcor's patented technology Bind-Ox, a material that prevents oxygen from reaching the beer and
offers a shelf life of six to 15 months has increased the possibility of using PET packaging for beer. This
was adopted by Anheuser-Busch InBev in 2005 to launch its Beck's Gold brand.
• 'Beer-in-a-box', designed by Thomas Hussey (University of Technology, Sydney graduate) in 2010. The
design comprises solely of a box and a tap, ensuring minimal use of packaging material, and low cost.
The collapsible design of the keg helps maintain CO2 pressure (imperative for storing carbonated
beverages), while also preventing the ingress of oxygen to retain its flavor. The reduced weight and size
of the product allows up to 70% more beer to be transported per pallet, thus reducing costs and
enhancing transport efficiencies. Also, the package can be easily disassembled for disposal and
recycling.
Organic:
• Butte Creek Brewing Organic Pilsner, manufactured by Butte Creek Brewing Company launched in
Mexico in 2009. Contains 4.5% ABV, and is brewed from organic Pilsner malt and whole leaf hops.
• Eel River Brewing Company, US-based organic brewer of certified organic Açai Berry Wheat Ale in the
Mexican market in 2010. This wheat ale is brewed with organic acai berries procured from Brazil. The
ale is brewed following ethical production practices, the power supplied is 100% bio-mass renewable
energy. The brewery is equipped with a waste water pretreatment facility.
Fairtrade:
• William Wilberforce Freedom Ale, manufactured by Westerham Brewery Company in 2007. Made
with fair-trade Demerara sugar procured from the Malawi plantation in southeast Africa (sugar is more
than 20% of the dry weight ingredients).
• Wells' Banana Bread Beer, released in the UK in 2009. The company uses fair-trade bananas for the
flavor, and contains 5.2% ABV.
Ethical Brewing:
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• California-based Sierra Nevada Brewing Company uses fuel cells to generate energy for the brewing
process. They also use a heat and carbon dioxide (CO2) recovery system, where the CO2 generated
during the fermentation process is used later for bottling beer. To reduce water wastage, they installed
a two-step anaerobic and aerobic treatment plant for purifying water produced from its brewing
operations. They also capture methane generated from the digester of the to fuel boilers.
• The New Belgium Brewing Company in Colorado uses wind power for the brewing process and treat
waste water form brewing. The methane produced during waste water processing is used to power the
plant, and the sludge is sent to a neighboring plant that converts it into high-protein aqua-farm food.
• Adnams East Green Carbon Neutral beer, manufactured by Sole Bay Brewery, in 2008. The beer is
made from locally sourced barley, grown and malted in East Anglia, and English Boadicea hops
procured from Suffolk. It is brewed in a facility with an installed energy recovery system that recycles
all the steam produced during the brewing process to heat the brewery.
Ethical Consumption Trends:
• Ethical consumption is gaining ground with consumers in developed countries, such as the US and the
UK.
• Demand for organic beer is increasing as consumers think it tastes better and also carries the
perception that more care has gone into making of the product.
• The trend of consuming organically produced beer is strong in Western European countries, (esp
Germany & UK).
• Legislation in Europe makes it mandatory for manufacturers to disclose additives (e.g. pesticides used
in the cultivation of ingredients) for organic products.
• Beyond organic and fair-trade to sustainable production methods e.g. renewable energy for brewing
and bio diesel trucks for delivery.
• Consumers are more inclined to consume ethically produced products due to: Health concerns &
desire to pursue healthier lifestyle; Higher interest in the provenance of the food and; Ability to afford
fair-trade and organic produce.
Packaging trends:
• Environmentally-friendly packaging, consumers are now also interested in determining the origin of
the food and drink that they consume.
• Different alcohol consumption trends have lead to non traditional alcohol packaging. Growing
outdoor consumption (picnics, festivals, travelling, camping, outdoor activities). Wine now in plastic
bottles etc.
• Trend of change from glass packaging to PET (polyethylene Tenphthalate).
• Due to its ease of recycling, glass has been the leader in packaging material in beer, accounting for
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51.4% of innovative launches made in the global beer market in 2009.
• PET packaging is slowly gaining acceptance in the beer industry due to technological advancements,
which have helped mitigate problems related to its barrier properties. Carlton & United Breweries
launched PET packaging for beer in 1996, followed by Miller Brewing Company in 1998.
• Brewers are replacing glass with aluminum and PET for the convenience market, as these materials
are sustainable (recyclable, reusable and lightweight) and they have a cost advantage over glass.
• With the rise in single person households and smaller living spaces, comes a higher demand for
efficient and compact storage solutions such as fridge packs for beer.
Health trends
• Beer fortified with minerals, fibre and vitamins (2006-09).
• Adding flavour for a new market.
Keynote, Public houses, 2010
Trends & Threats
• In 2010, the UK has an estimated 55,000 pubs, generating an annual turnover of £15.4bn.
• The number of pubs in business has fallen by 4,000 since 2005 — part of a long-term trend — and
turnover has also declined in the short term.
• The current recession has had an impact on pubs, there are deeper, long-term negative influences,
including the rise of ‘take-home’ drinking (fuelled by cheap supermarket alcohol) and the ban on
smoking in pubs.
• There are too many small, ‘wet-led’ pubs relying on selling alcohol (mainly beer): these are closing
down, while the ‘dry-led’ pub-restaurants serving meals are thriving.
• The proportion of average UK pub turnover accounted for by food continues to rise each year.
• The demand for entertainment in pubs is also growing (karaoke, DJs, quiz nights, live sports, Sky TV).
• The UK’s 17,000 ‘free houses’ or independent pubs sum up the appeal of the pub to both the
entrepreneurial publican and the customer looking for traditional qualities: good beer (preferably real
ale), friendly service and a ‘cosy’ home-from-home feel.
• Key Note forecasts that the number of pubs will continue to decline between 2010 and 2014, but a
post-recession recovery is predicted for turnover.
• Social developments have affected the role of the pub and its market. .These include: the changing
roles of men and women, and changes in family life; experience of life abroad through holidays
(appreciation of wine, foreign food, etc.); and the emphasis on eating, rather than just drinking alcohol,
on a trip away from home that involves the pub.
• Meals, packet snacks and non-alcoholic drinks now account for an estimated 27% of the average
pub’s turnover — a figure that has risen from 9% in 1990 and which continued to increase in the first
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decade of the 21st century.
• Over the same period, alcohol’s contribution to turnover fell from 88% to 70%. Other products make
a minor contribution (3%); this traditionally consisted of fruit-machine and tobacco income but it has
broadened out to include charges for entertainment and, for larger pubs, accommodation income.
• The most common usage of the pub is for a drink in the evening: this involves more than 3 million
people, or 6.6% of the adult population of Great Britain, on more than one night each week.
Mintel Report – Pub visiting UK Sept, 2010
Who’s innovating?
• Bar Boosters – pooling of ideas to gain new revenue streams.
• Wine served in the on-trade gets an upgrade.
• Beer festivals create new occasions to visit the pub.
• New ‘pub’ openings take a different perspective .
• Loungers to open casual dining and drinking concept.
• Revival of the authentic station pub experience .
IPPR – The social value of community pubs, 2009
The situation:
• Community pubs are one of Britain’s oldest and most popular social institutions. However, they are
currently under pressure, with 39 pubs now closing every week. Their numbers have been falling
gradually for decades, but closure rates have accelerated in the last two years.
• Alcohol consumption tends to rise and fall with economic prosperity and the recent downturn in the
economy has affected pub incomes.
• Many of the old industrial and village communities surrounding local pubs have changed out of all
recognition, reducing the number of devoted pub regulars in some areas.
• Tastes and lifestyles have changed. More people drink wine and fewer beer, the mainstay of most
pub income.
• The pub has faced competition from alternative leisure pursuits, such as restaurants and the cinema.
• There has been a significant rise in the number of people drinking at home, rather than in pubs and
bars.
• Beer prices have gone up in pubs and bars much faster than in shops and supermarkets.
• Supermarket discounts are one of the major factors in falling pub incomes.
• Major legislative changes have imposed significant additional costs to beer.
• There is evidence that tenants of some of the large pub companies are finding it hard to compete
because of the higher prices they are paying for their tied beer.
• There is a lack of transparency in the way some pub companies calculate their rents.
