How are alcohol and FMCG brands ensuring resilience to climate change?
5 minute read
Despite a huge shift from brands sustainable development and ESG agendas to combat the climate crisis - many are finding the impacts of climate change are already having inevitable impact. The challenges are having a particular impact on FMCG industries, with the most condensed and fast-moving value chains. Many are already taking steps to tackle the unpredictable landscape facing them.
Even with immediate measures, the Intergovernmental Panel on Climate Change (IPCC) predicts it may be another 30 years before we see any significant improvement (IPPC, 2021). Therefore, actions need to go beyond brand’s commitments to #NetZero and include mitigating against the consequences already underway.
Alongside the fragility of the supply chain, climate resilience plays a larger role than ever in the decisions of the environmentally conscious consumer. Consumers are seeking brands that align with their values and understand their concerns when choosing where to put their spend.
From developing resilient resources, to reducing reliance on the fragile environment, brands are finding solutions to face the uncertainty that lies ahead, to protect themselves against the elements and strengthen consumer loyalty.
Sustainable Sources
To protect against the impacts of climate change, brands need to acknowledge where they will be most vulnerable, and this begins with material sourcing. Flooding, drought and other extreme weather are creating more unpredictable supply chains than ever.
More resilient and sustainable raw materials need to become the primary choice. Within the alcohol sector, brands are moving towards using sustainable crops and grains that can withstand extreme weather. Brooklyn Brewery and Brewgooder’s new IPA uses a sustainable grain cultivated in West Africa that grows in dry climates and doesn’t require water, whilst Heineken has boosted their production of regenerated malt barley.
As well as materials, brands are investing in the environment they rely on, through improving soil health and reducing water reliance. Nestle’s Farmers Connect initiative targets the restoration of rich soil through crop rotation, organic fertilizers and minimizing tillage, whilst Kazoo makes tortilla chips using upcycled corn germ, which saves up to 20 gallons of water usage per pack.
Where the instability of the climate is greatest, brands are seeking alternative locations. We are seeing a spike in the production of English wine, as many large producers are planting grapes in the UK due to the change in weather producing bountiful harvests. Supply chains are becoming more localised so greater control can be implemented over these uncontrollable factors, such as Absolut Vodka, who keep their entire production within the town of Ahus, Sweden.
In reducing dependence on and adapting to a climate they cannot control; brands brace themselves for the rapid and unexpected changes we could see.
Closing the loop
Whilst resource alternatives are key, an even stronger grassroots approach is to reduce the demand for new resources at all – brands must close the loop of their value chains. In creating a circular process, brands reduce the need for new raw materials, as they reuse and regenerate the resources already removed from the fragile environment.
Recyclable solutions to combat product end-of-life are essential, whether that be the product itself or the collateral waste. Diageo, Pernod Ricard and Bacardi have all launched paper bottle options, which can be more easily re-processed than glass, whilst Renewal Mill has created a range of bakery items that use end-of-the-line butter scraps rather than new ingredients.
Closing the loop must also include the methods of streamlining the process itself, as recyclable products are futile if they never reach the point of regeneration. Tesco partnered with Loop to implement a reusable packaging system where customers could return their empty packaging (with a refund incentive) to drop-off points in-store, which could then be sent straight back to the facilities for re-processing.
Technology Collaboration
At the heart of methods and approaches to climate resilience lies the most important factor - an all-encompassing understanding of the impact facing us in order to tackle it. The quickest way to achieve this is through collaboration in technology and data sharing.
Brands need to seek a collaborative approach since the climate crisis is one that will not discriminate in its effect.
Data & technology sharing allow brands to compare the impacts they are seeing to generate the fastest action. Platforms such as Biome Connect allow farmers to compare soil health to establish which crops are the most resilient. AI will play a more important role than ever in helping us to understand the impact, as well as creating critical improvements to the effectiveness of operations. Implementing AI-based systems have already shown to improve inventory levels by 35% (McKinsey, 2021), streamlining the process and its reliance on external factors.
With the newness of this technology, it is more important than ever to share the opportunities they bring and utilise their potential at tackling fast-moving changes at their own speed.
Want to know more?
adm Group helps brands put a sustainability-first strategy at the core of their marketing execution, from sourcing through to implementation, to create the most resilient value chains that can face climate crisis impacts head on.
Using bespoke technology, we partner with FMCG and alcohol companies to create the efficient and agile solutions they need in a more rapidly evolving and uncertain environment than ever.