Better Beer: Inside Molson Coors' $20m mission to climate-proof its supply chain
Over the past decade, Molson Coors has spent more than $20m on initiatives to bolster supply chain stability, with the ultimate aim of 'future-proofing' its key resource - barley. Here, edie explores how that funding has redefined best practice for the US-based brewing giant.
A small-scale, family-run barley farm in rural North America is perhaps not the kind of place you’d expect to draw a climate-focused crowd. But for the past seven years, farmers from across the US have been descending on locations like Stevenson Creek Preserve, near Idaho Falls, in their droves. They come to learn about all manner of pressing sustainability issues – from water scarcity and food waste to especially bred barley that purports to be “climate-proof”.
That’s because, while the farm may look like any other from the outside, it actually represents an operational gallery for innovative technologies that are transforming US-based agri-food supply chains in the face of global warming and population growth. The farm plays host to a huge variety of green gadgets and technologies – including specially programmed water pivots designed to minimise water wastage; satellite technology which predicts the weather and variable rate irrigation systems.
All of this technology has been funded under Molson Coors’s ‘Better Barley, Better Beer’ sustainability initiative. The brewer, which sources barley from more than 800 US farms and a further 150+ in the UK, is using the family farm as a “showcase” facility, where the benefits of embedding sustainability in day-to-day practices is proven at scale. The farm has proved so popular since its public debut in 2012 that Molson Coors has expanded the initiative to create sweeping showcase barley valleys in Colorado and Idaho.
According to Molson Coors’ global senior director of sustainability Kim Marotta, the expansion of the 'showcase' initiative has largely been driven by the brewers’ success in working directly with farmers to help them align environmental sustainability with financial returns.
“At first, it was risky,” Marotta tells edie. “10 years ago, telling someone to turn off the end guns on their water pivots was seen as a complete no-go, as they thought it would jeopardise their yield – but once you’ve shown them the results, everyone wants to learn.
“Now, some of the practices and innovations we first put in at the Stevenson farm have become more commonplace across our supply chains.”
Cream of the crop
Building strong and transparent relationships across large supply chains is often touted as something of a beast of burden for large companies. Just 115 firms are currently disclosing the environmental impact of their supply chains through CDP in some shape or form – which is far from enough, given that the carbon footprint of the average corporate’s supply chain is 5.5 times larger than from its direct operations.
But for a company like Molson Coors, failure to properly communicate with suppliers, and to tell its sustainable supply chain story to stakeholders, equates directly to financial failure. The business currently employs more than 17,000 people across more than 90 beverage brands – the vast majority of which have barley as a key ingredient. To put that into perspective, it sources more than 47,000 tonnes of barley from UK growers alone each year.
To that end, Marotta explains, the company has positioned engagement with barley farmers as a necessity, not a “nice-to-have”, since day one. It recently bolstered that stance with a 2025 pledge to ensure that 100% of barley and hops from its US and UK growers will be certified as sustainable.
“Looking back 60 years, Bill Coors designed the Coors Brewing Company with a vertical integration mentality; he had direct relationships with the barley growers and the can manufacturing plants, which we still find a great business model,” Marotta says.
“Miller didn’t have a direct relationship with the growers, so when the companies came together, we had to make a business decision [on this]. It was clear that there is such a benefit in knowing your growers, knowing where your barley comes from and forming that mutual trust.”
In order to build and maintain that trust, Molson Coors facilitates disclosure with all supply chain farms. Information collected in this manner is used to score the farmers across areas such as water management, energy use and sustainable fertilizer practices and, if these scores are high enough, farmers are paid an additional $0.20 premium per bushel. If that’s not the case, the farmers are urged to contact a Molson Coors agronomist for advice.
Risks and opportunities
But, Marotta notes, traditional disclosure methods are no longer enough in an age of digitisation – and may not result in detailed enough data to drive the changes needed to combat pressing environmental megatrends.
These were the drivers behind the company’s Grower Direct Portal – a digital tool which enables farmers to collect precise, time-specific environmental data at field level. Launched in 2018, the tool enables farmers to identify specific risks and opportunities, while also providing Molson Coors with an overview of overarching trends.
For Marotta, however, the most exciting innovation being used by the company is specially cultivated barley. In 2016, it launched a unique malt barley strain that produces up to 33% more yield per crop, while consuming less water. Since then, the firm has been teaching farmers to adapt their day-to-day practices to account from the plant’s properties.
“Putting in weather stations and other new technologies, while rewarding farmers for using sustainability initiatives, certainly has its place and is really important to us,” she summarises.
“But at the same time, we want to produce barley varieties that require less material input.”
Marotta’s comments on climate-resilient crops come shortly after such plants were showcased at the Chelsea Flower Show, suggesting that climate adaptation is becoming a key priority for agri-food stakeholders.
In 2019, you’d be hard-pressed to have a conversation about the ‘sustainability’ of food and drink without the topic of plastics cropping up. Marotta is therefore keen to discuss how Molson Coors’ learnings in sourcing barley have shaped its approach to engaging with packaging suppliers.
Given that 37% of Molson Coors’ absolute carbon footprint is accounted for by packaging, she explains, the company has used the vertical integration model to put all packaging suppliers on a pathway to sourcing 100% renewable electricity. Moreover, the company has turned to life-cycle analysis and cross-sector conversations to set a packaging target which – unlike many others – is focused on carbon (a 26% reduction in emissions from packaging materials by 2025, against a 2017 baseline) rather than recyclability. For Marotta, this target serves to evade some of the many unintended consequences of plastics phase-outs.
“As we’ve started looking for alternatives in the face of the plastics crisis, we’ve been set on ensuring that none of the switches we make negatively impact our carbon emissions,” she says. “It’s a delicate balance and you have to be extremely thoughtful in both the emissions and resources arenas.”
We’re launching a test pilot with @ColoradoNative to replace plastic 6-pack rings with a compostable fiber. These biodegradable rings are a leap forward in #sustainability—helping eliminate the need for plastic in beverage packaging. https://t.co/PBluFcPGah pic.twitter.com/79NTCsSdLa— Molson Coors (@MolsonCoors) June 21, 2019
Molson Coors’ key focus areas in meeting this target are, in order of importance: reducing the volume of packaging used; re-using packaging where possible; collecting and recycling as much packaging as it produces; educating consumers; and balancing progress with other 2025 sustainability goals.
For Marotta, the link between these facets is facilitating transparent communication and collaboration to the point that suppliers are “more like family” than business partners.
“Whether you’re a small business or a big business, you and your suppliers depend a lot on each other,” she concludes. “Your partners across the value chain are who you are. Their actions on your behalf speak volumes and you simply can’t afford to underestimate the importance of that.”