MillerCoors: Generating a Buzz About Corporate Sustainability.
MillerCoors is generating a lot of buzz for sustainability at the corporate level, but how much more impact can it achieve by moving up and down the supply chain — from hops farmers to beer drinkers.
“Describe how the organization is likely to be affected…
MillerCoors considers itself to be a “brand curator.” While other beer companies are constantly reinventing themselves and their portfolios, MillerCoors looks at its portfolio of time-honored brands such as Blue Moon, Coors, Fosters, and Leinenkugel, and fights to keep them relevant. This preservationist attitude is apt because there is something else critical to MillerCoor’s product in need of preservation: the climate.
As a company, MillerCoors is vulnerable to risks posed by climate changed in three major ways. First is its reliance on agricultural materials for its end-product. The ingredients in all MillerCoors beer products are just hops, barley, grains, yeast, and water. A changing climate has altered the chemical composition, nutritional yield, and cultivation methods of the first three ingredients. Furthermore, those ingredients’ availability is limited by the scarcity of the last ingredient from rising temperatures and increasingly common droughts.
The second risk is from MillerCoors’s land-based distribution model to wholesalers and retailers. Petroleum-powered trucking alone contributes 6%[i] of total U.S. greenhouse gas emissions and a quarter of those from transportation sources.[ii] With increased taxes on fossil fuels and greenhouse emissions likely, the supply chain costs associated this distribution channel can greatly increase.
Lastly, as a consumer packaged goods company, many containers for the liquid products sold by MillerCoors end up in landfills. In addition to any regulatory enforcement of sustainable packaging, climate-change-conscious consumers increasingly view sustainable packaging as a differentiated selling point of the product.
“…the steps the organization is taking to address those effects…”
Unlike some companies facing comparable ecological challenges (notably in the almond milk product category[iii]), MillerCoors has demonstrated public recognition of the problem, a willingness to educate its consumers about the challenge, and an eagerness to find solutions. MillerCoors has already adopted a three-pronged approach to increase its climate sustainability addressing each of the issues above in turn.
The first prong is for Miller Coors to reduce water consumption in breweries and agricultural supply chain[iv]. In 2011, MillerCoors recorded a water to beer production ratio of 4.07 to 1 and set an ambitious goal of reducing that ratio to 3 to 1 by 2020.[v] By capturing and reusing waste water and sustainably releasing it in streams, MillerCoors has reduced its water consumption by 128.8 million gallons in 2015 alone. MillerCoors has taken this commitment even further by working to “restore a volume of water equal to the final product volume produced at our breweries and cidery located in water-stressed watersheds” across the United States by 2020.[vi]
Reducing Miller Coors’s carbon footprint across the value chain is the second prong. Miller is working to reduce the energy consumption of its breweries through unspecified ways, and switching its energy sources by installing solar panels on brewery roofs and changing out coal-fired broilers for natural gas ones.
Miller’s last prong is to eliminate waste at all major manufacturing facilities by 2020. The company repurposed refuse from the beer-creation process, converted waste beer into fuel-grade ethanol, instituted stringent company-wide recycling programs, and cut waste-to-landfill in 2014 by 50%.[vii] Miller Coors has also made a lot of waste-reducing changes in its packaging, from “light-weighing” cans and bottles, to shifting from heavier bottles to lighter-weight cans. Miller Coors has sought to capitalize on the badge value of these initiatives by manufacturing new prominent tap handles in bars out of recycled aluminum.
“…and describe and justify what additional steps you think the organization should consider implementing.”
MillerCoors can still improve its sustainability in ways that will promote the long-term vitality of the company. One way is in further reducing the energy consumption of its breweries. Easy wins include converting to 100% LED lighting, changing the trucking fleet over to low-emission vehicles, increasing insulation of refrigeration units, and only powering those units during off-peak hours. Furthermore, given the water consumption of the agricultural inputs, breweries should begin tracking the spoilage and waste of beer inputs and work to reduce those numbers.
The more complicated and impactful steps MillerCoors can take would be promoting sustainability down its supply chain to its growers. Low volume or “drip” irrigation can reduce the amount of water expended on crops, while a reconstruction of the farm soil can help keep water and nutrients from passing beyond the plants’ root zone. Furthermore, the rootfloor of the farms can be restructured to maximize efficiencies, reducing the number of passes machinery have to take as well as reducing the amount of dust that would be given up by dry soil in the process.
In short, MillerCoors is a leader in sustainability at the corporate level, but has the potential to greatly increase its impact up and down the supply chain.
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[i] Freight Railroads Help Reduce Greenhouse Gas Emissions Association of American Railroads April 2016 https://www.aar.org/BackgroundPapers/Railroads%20and%20Greenhouse%20Gas%20Emissions.pdf
[ii] Sources of Greenhouse Gas Emissions | Greenhouse Gas (GHG) Emissions | US EPA. 2016. Sources of Greenhouse Gas Emissions | Greenhouse Gas (GHG) Emissions | US EPA. [ONLINE] Available at: https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions. [Accessed 03 November 2016].
[iii] Sustainability. 2016. Sustainability. [ONLINE] Available at: http://bluediamondgrowers.com/sustainability/. [Accessed 03 November 2016].
[iv] MillerCoors. 2016. Sustainability | MillerCoors. [ONLINE] Available at: http://www.millercoors.com/sustainability. [Accessed 03 November 2016].
[v] MillerCoors. 2016. Environmental Stewardship | Sustainability | MillerCoors. [ONLINE] Available at: http://www.millercoors.com/sustainability/environmental-stewardship. [Accessed 04 November 2016].
[vi] MillerCoors. 2016. Water Stewardship | Environmental Stewardship | Sustainability | MillerCoors. [ONLINE] Available at: http://www.millercoors.com/sustainability/environmental-stewardship/water-stewardship. [Accessed 04 November 2016].
[vii] MillerCoors. 2016. Packaging and Recycling | Environmental Stewardship | Sustainability | MillerCoors. [ONLINE] Available at: http://www.millercoors.com/sustainability/environmental-stewardship/packaging-and-recycling. [Accessed 04 November 2016].
Nice job! I was impressed by how far in the game Miller is with all the ways theyre approaching sustainability. Just a few things I think could also be done. Regarding CO2 emissions of their plants, not sure if you saw this but some brewers have found a way to capture CO2 (a byproduct of the brewing process) and use it for packaging or to purge oxygen from holding tanks. In this way they’re reducing their GHG emissions and also saving money in the production process. Im also curious how the vetting works for their agricultural raw material sourcing. I wonder what emphasis theyre placing in their supplier relationships for meeting sustainable quailty thresholds. Taking a page from the IKEA case, I think given their bargaining power they can really pressure farmers to adopt the latest sustainable practices.
I’m glad to see that Miller Coors is doing so much to improve their operational efficiency by improving conversion of energy into product. One area I think they could also consider for reducing their overall carbon impact is optimizing their production and distribution networks to minimize the amount their final product needs to travel to the customer. While the consolidation of factories may provide clear cost synergies across plants, how do you think Miller Coors should incorporate the added cost of an increasingly centralized manufacturing network that requires the company to use more gas transporting their product across the country and beyond?
Thanks for an insightful and well-written post, Nathan!
I am particularly interested in your thoughts about the container waste. Even though aluminum cans have become a lot lighter (12 g in 2010 vs 19 in 1980), we consume so much more that the can volume drives an increase in aluminum material use from 820M kg in 1980 to 1,100M in 2010 (https://www.gatesnotes.com/Books/Making-the-Modern-World).
In the US, 67% of aluminum cans are recycled, which is at “historically high levels” [1]. Contrast that to Denmark at 90% [2]. What Denmark did was a mix of three things: (1) a “container deposits” of 1 DKK (equivalent to 20 dollar cents), which is 4x the rate in the typical state-rate in the US (Massachusetts at 5 dollar cents), and (2) an easy deposit system implemented inside almost every supermarket [3] and (3) bright lime green “container deposit trash cans” that allow people to put their cans to use for the less priviliged who can collect the cans and return them to the supermarket for the fee (http://www.mx.dk/diashow/10018/10018-nxKHn_DMNPJM9YkDieCiyQ.jpg).
While MillerCoors might not be able to drive this change alone, they are in a prime position to champion a change in the US bottle and can return system.
[1] http://www.aluminum.org/news/aluminum-can-recycling-holds-historically-high-levels
[2] http://finans.dk/live/erhverv/ECE8649484/danskerne-afleverer-dagligt-35-mio-daaser-og-flasker-retur/?ctxref=ext
[3] http://sondagsavisen.dk/wp-content/uploads/2014/10/5433626bd691c.jpg
Nathan, thank you for a great article and for bringing to light the steps taken by MillerCoors!
What they do is a commendable effort. The methodology utilized by them in resource conservation is well-thought out and how far they have proceeded in implementing them is outstanding. What I do believe the future for most breweries and distilleries, and what is being done already by some of the bigger names such as ABinBev, is complete backward integration. Breweries and distilleries are in the rare position where nearly all their by-products and waste products have some utility. By capturing spent wash and other waste matter from the brewery/distillation process, and bio-digesting it, it can be utilized as good quality organic fertilizer. thereby further reducing waste discharge across the board. This also means that MillerCoor will be able to take the agricultural process in-house, further reducing their costs and increasing their sustainability factor. Like in the previous comment, Carbon Dioxide too can be captured for refrigeration and/or preservation process. Overall 100% of process output would drastically reduce their climatic impact and combined with their other initiatives, make them a revolutionary green company.