Brewing for the future: How MillerCoors slashed its water footprint through supplier engagement
A supply chain management philosophy built on engagement over enforcement enabled brewer MillerCoors to reduce its water footprint by 17% last year. Here, Matt Mace investigates how the firm has been galvanising the farmer community to create resilient, future-proofed beer supply chains.
MillerCoors released its annual sustainability update last week, revealing a 15-billion gallon reduction in water use in 2016 - the equivalent of more than 500 million kegs of beer.
While a portion of this reduction has been attributed to wet weather conditions, MillerCoors' sustainability manager Marco Ugarte says that promoting water use best-practice to suppliers has been one of the primary drivers of this saving; creating a supply chain built on trust, data and a desire to innovate and boost productivity.
“Many companies realise that the bulk of opportunity for improvement is outside of their entity,” Ugarte told edie. “There is a gradual appetite at MillerCoors that keeps building up as to how we can facilitate best management practices for water stewardship.
“A key aspect is to have a shared understanding that water is the cornerstone of different communities. For a business to thrive, you need a thriving community as well. Our suppliers interact with their communities and compliance is built on a base of trust. We have to ensure that we use information for the right purposes to improve the overall implementation and well-being of the community in relation to water.”
Indeed, suppliers account for 90% of MillerCoors' water footprint. The Coors Light, Fosters and Pilsner Urquell brewer sources its hops and barley from more than 860 family farms across the US states of Colorado, Wyoming, Montana and Idaho. However, the majority of MillerCoors suppliers are independent growers, some of which have supplied the company for more than 60 years. In order to not disrupt the heritage of these partnerships, Ugarte and his sustainability team have developed a programme that maintains strong relationships whilst encouraging farmers to explore more sustainable business practices.
MillerCoors decided on a process that would draw on and utilise the expertise of the farmers, rather than being seen to hand down orders.
In 2015, numerous 'showcase barley farms' were chosen to trial precision irrigation techniques that demonstrated the benefits of water stewardship. The showcase barley farm in Silver Creek Valley, Idaho, for instance, has championed data management and new growing and harvesting techniques to collectively restore 550 million gallons of water annually.
A year later, MillerCoors launched the Grower Portal, a digital platform that gathers information that can enhance water savings. Eventually, this platform will allow growers to share data and promote the desired best practice.
These success stories - or testimonials, as Ugarte calls them - from the showcase farms are “significantly more powerful” than any report or document that could be shared to other farmers interested in adopting new practices.
“The company is aware that the gradual roadmap of improvement has to deal with the willingness of the parties involved,” Ugarte said. “We need to create the right conditions for them.
“We get progressive farmers to join us in this journey, and we promote early adoption of technology and practices. We want the farmers to provide their own testimonials of their experiences and how they have improved productivity, efficiency and bottom-line results.”
But for independent farmers, introducing new practices as part of a pilot or trial could have unforeseen consequences on productivity or crop yields during early adoption. So, to encourage participation in the trials, MillerCoors has partnered with the US Department of Agriculture (USDA) to offer economic incentives. Under this partnership, all plans - which can be offered by the farmers themselves - are vetted by the USDA through a screening process. Federal funding is then made available to facilitate the necessary knowledge and technology. And where applicable, MillerCoors will provide extra financial incentives.
The aim of these partnerships is to create low-risk supplier relationships built on trust. In exchange for the funds, the independent farmers are expected to disclose “critical and sensitive” information on farming techniques, so that MillerCoors can uncover and share best practices.
One practice that has already been uncovered is the tendency from farmers to over-irrigate during the “late irrigation” stage, to ensure that the yield doesn’t dry out. In partnership with academic institutions in Idaho, MillerCoors found that this was having a detrimental impact on the yield. By demonstrating less-intensive late-stage irrigation techniques to the farmers, MillerCoors’ water use fell considerably as a result, without impacting yield quality.
“Some families, perhaps out of habit or tradition, tend to over irrigate barley in the last few days of the season,” Ugarte explained. “It’s understandable - it's their livelihoods and they want to make sure the quality is the best for our partnership.
“When we share the understanding about reducing the late irrigation window of barley, we can make a significant change across the value chain - something that might seem small in practice can create significant change.”
On the horizon
The potential disruptions caused by embedding innovations into farms aren’t exclusive to the farmers. MillerCoors collects and stores reserve barley yields from farmers one year in advance. This process encourages the exploration of new farming techniques as farmers are aware that MillerCoor’s output won’t be disrupted as a result.
This future-proofing aspect can extend beyond a one-year timeframe. MillerCoors is closing in on a goal to reduce its average water-to-beer ratio across all major breweries to 3:1 by 2020 - the firm is currently operating at a 3.2:1 ratio. A goal to restore the volume of water in used in its products is also within sight.
MillerCoors is already working with Molson Coors - the brewer which completed acquisition of full ownership of MillerCoors in October 2016 - to develop new 2025 goals. At least two of the goals will be aligned to the UN Sustainable Development Goals (SDGs) - Goal 6 (water) and Goal 17 (partnerships) will be championed under the new 2025 strategy.
Ugarte stressed the importance of aligning water strategies to the UN's global goals. While the water-energy nexus is becoming clearer for businesses, corporate water reduction targets don’t have a science-based platform to work towards (as carbon emissions targets do, through the Science-based Targets initiative). And, although organisations like the Alliance for Water Stewardship (AWS) are making inroads, Ugarte feels more corporate attention needs to be paid to water stewardship.
“Water stewardship is subject to a lack of valuation of what the true cost is,” he added. “The business case is a hybrid of more traditional indicators of savings in the bottom line, and the extended benefits of what a resource like water provides to your other actions and the communities that you are operating in.
“It’s important to not just manage by a perception of what you should be doing, but ensuring that you are pro-actively analysing the nexus and how that measures against the productivity of your water use.”