Tag Archives: Beverage Industry

Cheers to Sustainability: Montes Wines

Having worked in a logistics company that specialized in importing wine into BC and now taking a Wine Science elective, I’ve been inspired to take this chance to explore the sustainability trends within this industry. To my surprise, there’s are many in-depth research on making viticulture and vineyard management practices more sustainable. Consumers don’t always see that reflected on shelves. Certification for “sustainable” wines, if any, often have to compete for space on cramped labels with vineyard name, geographical classification, grape varietal, designation classification and  huge paragraphs in the back describing aromas and flavors. A trend that may not be hitting Canadian liquor stores yet, but definitely more prominent in the European old world are labels like “sustainable”, “biodynamic” and “organic”. According to David Suzuki,  certified organic wine cannot use toxic pesticides, herbicides or synthetic fertilizers to grow grapes and neither will the winery be able use GMO yeast, which is conventional in traditional winemaking. Biodynamic is a farming technique that uses a vineyard’s natural resource to grow grapes without pesticides, fungicides etc and usually biodynamic vineyard often meets or exceeds the organic certification. “Sustainable” wines still vary in meaning depending on third-party certifications but it generally it  means that the vineyard takes extra steps to minimize environmental impact.

For many, it comes down to the taste. One of the leading wineries that’s progressively implemented sustainable practices is Montes Vineyard, located in Colchagua, Chile. Having tried a Montes Cabernet Sauvignon from Wine Science class, I know it’s a good wine that has received many awards and recognitions worldwide. In 2011, Montes received its first National Wine Industry Sustainability Code Certification, which evaluates producers on three areas including: vineyards, winery and social development. Curious, I dug a little deeper into their sustainability page.

Montes is really looking at the entire lifecycle of their products. From growing practices, harvesting, fermenting, to bottling, they’ve come up with something to minimize their environmental impact. Starting with the basics, Monte vineyards are drip irrigated which reduced 25% of water usage in their Marchigue plant. Water savings can be difficult to achieve especially in Mediterranean climates where Montes is located, which is characterized by hot dry summers and cool rainy winters. Pomace (grape skins and seeds leftover from winemaking) is applied back to the vineyards to improve soil structure and reduce inorganic fertilizers by 30%. Montes uses grazing animals like llamas and sheep to reduce weeds which resulted in a 40% savings in herbicides usage in 2013. And finally up to 45% of bottles used were from recycled materials. Montes is currently A-level certified from their annual GRI report.

From a marketing standpoint, Monte’s dry farming technique (using wood bark to cover soil and use of short canopies) not only helps them save water, but allows them to create higher quality wines.  The lack of irrigation reduces cluster size of grapes and yield from 10 tons/ hectare to 6. Smaller yields in general allow the fruit and aroma concentration is higher.

While this seems to be another example of producers using sustainable marketing to differentiate themselves, very soon we’ll see a greater shift towards sustainably produced wine. An example closer to home is the Californian wine industry. Evaluated at $16.5 billion five years ago, a study from Stanford University shows that the industry could shrink by 50% due to temperature increase. It wasn’t too long ago that water was an issue during Californian droughts put the entire agriculture hotspot in a hard time.

SABMiller – The Next Green Giant?

Sustainability cannot be achieved in isolation. From Porter & Kramer’s Creating Shared Value concept to UN Sustainable Development Goals 2030, we’re seeing a huge push for businesses to lead the change.  Arguably, businesses can also drive change a lot quicker than government, NGOs, or individual consumers. In the case of brands, Freya Williams showcased nine corporate green giants that were profiting from sustainability. These companies include Chipotle, Tesla, Nike,Unilever,IKEA, and General Electric (Willams, 2015).

In the same year, the UN Millennium Development Goals expired and have been taken over by the 17 Sustainable Development Goals for 2030. Unlike previous goals, there’s more of an emphasis for businesses to take part of the development process. These are the benefits for businesses if SDG are achieved by 2030 (Mitchell 2015).

  1. Easier to run a successful business from strengthened, more educated workforces
  2. SDGs will challenge businesses to innovate and grow new markets
  3. SDG makes a better business case for CSR and sustainability
  4. Better micro and macro structures

Perhaps a bit under the radar, SAB Miller a USD $22Billion company (SABMiller, 2014) is actively leveraging these new sustainable development goals for over 200 brands under their portfolio (Swaithes, 2015). Brands that you may associate with more include: Miller Lite, Milwaukee’s Best, Pilsner Urquell and Tyskie. SABMiller’s interpretation of the goals include creating a thriving, sociable, clean, productive and resilient world.

 

A brand that is already doing really well is the Eagle Lager. This beer is brewed out of Uganda, using locally produced crops and conventional lager. By replacing expensive imported materials with locally sourced crops, the business model improves livelihoods (Levitt, 2016) of the 20,0000 farmers (Sustainable Brands 2015). For a place like Uganda,  a place  This is another example of Porter & Kramer’s shared value creation at work. The operations are improving the local business environment by employing farmers. Productivity is increased in the supply chain by replacing raw material inputs. Today, the Eagle Lager accounts for over 50% revenue for Nile Breweries, a SABMiller subsidiary.  

With 22.3 Billion dollars in FY 2014, that would tuck SABMiller in the 3rd place of William’s green giant list. Although in 2015, there are only three brands that SABMiller highlighted success, I’m curious to see how SABMiller will be able to deliver their goal of building sustainable development messages into three brands in each market they operate in. Keeping in mind that SABMiller was acquired in October 2016 by ABInBev (think Budweiser, Corona, Keiths, ShockTop), I wonder if leveraging SDG as a strategy will diffuse across the entire business.

 

Sources:

Levitt, T. (2016). Eagle lager: the Ugandan beer that aims to help local farmers and communities. The Guardian. Retrieved on Jan.18, 2017 from https://www.theguardian.com/sustainable-business/2016/may/27/eagle-lager-ugandan-beer-local-farmers-communities-sabmiller

Mitchell, M. (2015). How Brands Can Leverage the Sustainable Development Goals. Sustainable Brands. Retrieved on Jan.18, 2017 from http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/melody_mitchell/how_brands_can_leverage_sustainable_devel

Nurin, T. (2016). It’s Final: AB InBev Closes on Deal to Buy SABMiller. Forbes. Retrieved Jan.18, 2016 from http://www.forbes.com/sites/taranurin/2016/10/10/its-final-ab-inbev-closes-on-deal-to-buy-sabmiller/#4d60af9737d6

SABMiller (2014). Annual Report. Retrieved on Jan.18, 2017 from http://www.portalchemy.com/ReportTool100.asp

Swaithes, A. (2015). Leveraging the New UN Sustainable Development Goals: Expectations and Engagement Strategies for Brands. Sustainable Brands. Retrieved on Jan.18, 2017 from http://www.sustainablebrands.com/digital_learning/slideshow/organizational_change/leveraging_new_un_sustainable_development_goals_exp

Williams, F. (2015). 9 Green Giants: billion-Dollar Businesses that are Sustainable. Fortune. Retrieved on Jan.18, 2017 from http://fortune.com/2015/08/27/green-giants-freya-williams/