SABMiller on Beer & Water

By Andy Wales 11 November, 2010

Andy Wales tells China Water Risk why measuring their water footprint is important and their plans to reduce it.

SABMiller crossed the line first. In 2009, SABMiller plc¹ –one of the world’s giant brewers– went beyond its factory walls in South Africa and the Czech Republic, and began measuring and analysing water use in its supply chain. It does make sense to begin with managing water use in operations, but all too often companies stop there, overwhelmed–understandably so–by the sheer complexity of their supply chains.

SABMiller, with input from the global conservation organisation, WWF, reviewed the water footprint results of its beer value chains in these two countries. Both South Africa and the Czech Republic were similar in the sense that water usage was dominated by crop production at 90%. But the value of WWF and SABMiller’s analysis went beyond just numbers and considered the local context, focusing in particular on the water use of different agricultural crops and specific water catchment areas. In essence the study was an attempt to map how SABMiller’s water footprint impacts its business, and the steps that SABMiller can take to both reduce its water footprint and mitigate its exposure to water risks.

Building on this work, in 2009, the brewer announced its global collaboration with WWF, called The Water Futures Partnership. The partnership seeks to develop a robust approach to evaluating water risks and identify new approaches to water management.

SABMiller is also a founding member of the CEO Water Mandate and part of the 2030 Water Resources Group, which in November 2009 published, Charting Our Water Future. The report predicts that if no action is taken, by 2030, there will be a demand-supply shortfall of 40%, largely driven by increasing industrial water demand from China.

Andy Wales, SAB Miller’s global sustainability director, shares with Ina Pozon, the brewer’s lessons in water management so far.

CWR: What can a water footprint tell us?

Andy: Just as the carbon footprint concept has helped businesses and consumers understand the level of greenhouse gas emissions generated by their activities, so water footprinting is raising awareness of how and where water is used.

Unlike carbon though, the impacts and issues around water are very local, historically within the confines of the watersheds and river basins of specific geographical locations. However this is beginning to change through man-made interventions such as inter-basin transfers and, much more significantly, the movement of virtual (embedded) water between nations, causing a reliance on water management many miles away from where the virtual water is eventually consumed.

CWR: What are the significant characteristics of a water footprint?

Andy: In carbon footprinting, the size of the carbon footprint is a critical element in determining impact, whilst the critical element of a water footprint is in the detail of where water is used in relation to local pressures and scarcity. Water presents some unique challenges in this regard, and the complexity of attributing impact to individual users is not straight-forward.

Many consumer goods businesses, including SABMiller, have undertaken detailed carbon footprints of specific products such as beer, carbonated soft drinks, fruit juices and potato chips. Given the growing awareness of water scarcity, water footprints are considered a natural next step.

CWR: How does SAB Miller intend to manage emerging water related risks?

Andy: We have set a target to improve the water efficiency within our breweries by 25% by 2015 compared to 2008.  This is an ambitious target but we believe we can achieve it. It is important that our plants are aware of their potential water vulnerabilities, and our water efficiency programme helps us address this.

But the bigger potential challenge is upstream in the agricultural element of beer. This is why we work with WWF to carry out water footprinting – to better understand the quantity, efficiency and geographical context of water used in the beer value chain in order that this resource can be better managed. The insight provided by water footprinting is used to develop targeted programmes to improve water management.

CWR: How does SABMiller’s Source Vulnerability Assessments (SVAs) integrate with a water footprint analysis?

Andy: Source Vulnerability Assessments (SVAs) identify and assess the social, environmental, economic, regulatory and political risks to all sources of water that our individual facilities use, allowing us to determine how sustainable the water supply is. The difference between this and a water footprint is that it is more detailed  focuses only on the facility and not the entire value chain, which a water footprint does.

Ideally one would conduct a water footprint, identify high-risk areas, and then conduct an SVA in the identified area to get a more detailed picture of the situation.

CWR: Are these water initiatives ultimately a cost?

Andy: SABMiller prides itself on its Sustainable Development philosophy, which is not just about philanthropy but rather about how changes in society and the environment will impact our business both in terms of opportunities and the challenges they present. We manage sustainable development by looking at those things that are core to our business and how we can affect them, and we take a value chain approach to opportunities and challenges.

We deliberately integrate sustainability into core business strategy, rather than as an ‘add on’. So in the same way that sustainability is integrated into all capital project costs the company equally doesn’t split out any savings achieved.

CWR: Tell me about CRSnow². How has its corporate water strategies fit in with SABMiller’s?

Andy: CRSnow’s efforts on water are predominantly focused within its own operations, including wastewater treatment and water efficiency. In the last financial year SABMiller has been benchmarking with CRSnow to understand how their performance on water and energy compares to the rest of our group average. Its water use is better than SABMiller’s group average: for each hectolitre³ of beer it produced, CRSnow used 4.1 hectolitres of water compared to SABMiller’s group performance of 4.3 hectolitres.

CWR: What would you say are the biggest challenges in engaging stakeholders in China around water?

Andy: As in many other countries, industry, governments, NGOs and communities are the critical stakeholders in addressing value chain water issues in China. However, given China’s unique political and administrative systems, there may be differences in the way they function and in the role they play.

Take government for example: under China’s traditional management system, water management is the government’s responsibility. Industry, NGOs and communities are not included. The country’s water authority division is also rather complex– with the Ministry of Water Resources responsible for water resources, flood prevention and water conservation projects; the Ministry of Environmental Protection focuses on water pollution; the Ministry of Housing and Urban Rural Development for urban sewage system and waste water plants; and the Ministry of Health on establishing water quality standards. All these government bodies have representative organizations at various government levels.  So, aside from other considerations, one challenge is to engage the right local government authority in case of a water footprint project. Fortunately, our JV partner is a State-Owned-Enterprise with knowledge of whom in government to engage with on particular issues.

Other challenges include the awareness of water issues, including that of both industry and communities, and also the organization of resources to engage professionals to develop the best tools, identify the best practices and to train stakeholders, for example.

CWR: Is this more effort than it’s worth?

Andy: The effort and time it takes to build partnerships between the different sectors to tackle water challenges cannot be underemphasised. Much of the reason for that effort is the different expectations that each group brings to partnerships, but also the language they use and the time frames they work to. We need people throughout companies, governments and NGOs to get more comfortable with working with each other, even when there are frustrations and misunderstandings.

¹ SABMiller plc is one of the world’s largest brewers with brewing interests and distribution agreements across six continents. The group’s wide portfolio of brands includes premium international beers such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft, and Grolsch as well as leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller is also one of the world’s largest bottlers of Coca-Cola products

²China Resources Snow Breweries Limited (CR Snow) is a partnership between SABMiller and China Resources Enterprise Limited and is the largest brewer by volume in China, producing over 85 million hectolitres of beer a year. Its Snow brand is the world’s biggest beer brand by volume.

³A hectoliter is equivalent to 100 liters