Sustainability in the Food and Beverage Industry
Food and beverage companies face challenges as they attempt to find profitable avenues for growth. Because growth in key categories (such as carbonated beverages) has been slow or flat in developed markets in recent years, industry players are compensating through aggressive marketing overseas, acquisitions, and expanded grocery penetration in discount stores and wholesale clubs. At the same time, companies are attempting to become more efficient and build stronger connections with consumers by cutting water consumption and shrinking their carbon footprints.
Sustainability Drivers
Although the food and beverage industry performs well on the Viridis Environmental Scorecard relative to other sectors, the expectations of NGOs and other external stakeholders are rising. For example, World Wildlife Fund encourages food companies to disclose impacts across their value chains and to practice and promote low-impact farming. In some countries, companies are being challenged to address their use of public resources, especially water, and develop policies regarding packaging and waste. Retailers (notably Walmart and Tesco) are beginning to demand that food and beverage companies provide detailed information about their sustainability initiatives and, more specifically, the carbon footprints of their products and operations.
The food and beverage industry can expect expanding consumer interest in green products and all that this entails. Although consumers claim to be confused by the variety of ways that companies define “green” products, they value reliable information about ingredients, origin, and safety. Increasingly, food and beverage manufacturers must be able to communicate about the sustainability of their products and operations in ways that are relevant to consumers.
Challenges and Opportunities
To address the host of challenges, food and beverage companies need to ask key questions:
- How can we collaborate with suppliers to address our upstream footprint, especially agricultural impacts?
- In light of consumer concerns, how can we work with suppliers to manage supply-chain risks?
- What environmental attributes resonate most with consumers and how can we communicate about these?
- In the highly competitive food and beverage sector, how can we meet retail customers’ requests for information and position ourselves for advantage with our channel partners?
Viridis has worked closely with leading companies in the food and beverage industry to navigate these and other issues.
Case Study
A bottled water company with significant market share in the U.S. faced a complex challenge in the need to meet rapidly growing consumer demand for its products coupled with intense customer and consumer pressure to deliver greater sustainability performance. As the industry leader, the company faced growing reputational risk that threatened access to raw materials (spring water) and affected cost structure and brand. The company had already made significant achievements in the reduction of packaging, energy use, manufacturing waste, and water used in processing. However, as individual initiatives, these proved insufficient to counter criticism. The company needed an integrated plan to manage their environmental issues comprehensively, including communication to critics and stakeholders.
Viridis helped this client to develop a complete environmental strategy that included platforms for environmental vision and responsibility, climate change and carbon management, post-consumer waste and recycling, and water resources management. Viridis also made recommendations regarding how to structure corporate environmental affairs management, report on environmental performance, and communicate in a specific and transparent way on issues that are most relevant to both environmental impacts and stakeholder concerns. While the industry remains under pressure, the company has a strong, complete, and well-articulated environmental program and emerged as the “best-in-class” performer on multiple dimensions.