A sustainable business model is essential for the future of the “world’s oldest social network”: beer.
This was the take-home message from Richard White, Vice President of Procurement and Sustainability Europe for the world’s largest brewing company, Anheuser-Busch InBev (AB InBev), during a special guest lecture for HEC Paris Executive MBA (EMBA) candidates.
While you might not be familiar with the name AB InBev, there’s no doubt you will know – and have likely enjoyed – their beers. Corona, Budweiser, Stella Artois, Beck’s, just to name a few. With an enormous list of 500+ brands worldwide, and 8 out of 10 of the most valuable beer brands globally, AB InBev are leading the way for their industry by investing in research for innovation and technology to make their business more sustainable.
“Why is this important to us? If you think about beer, it’s a pure and simple product. Four main ingredients: water, hops, yeast and malt. If we as a company do not actively seek to protect the land and the sources of those raw materials, we cannot continue to produce those fantastic beers over time,” said Mr. White.
Mr. White shared AB InBev’s ambitious 2025 Sustainability Goals with the HEC Paris Executive MBA candidates, which have been created in line with the United Nation’s Sustainable Development Goals. He emphasized that the company’s commitment to becoming more sustainable is just as much about a business viability as it is about ethics.
“If we as a company do not actively seek to protect the land and the sources of those raw materials, we cannot continue to produce those fantastic beers over time.” – Richard White, VP Procurement and Sustainability at AB InBev.
A 2018 US study published by PLOS ONE found that 59 percent of respondents were happy to pay extra for beer brands investing in sustainable practices. On average, consumers said they’d be willing to pay up to an extra $1.30 US per six-pack, a significant price increase.
However, Mr. White asserted to the HEC auditorium that AB InBev were not “green-washing” for the sake of marketing. “With over 200,000 employees globally, we invest in communities and we need to do so in a sustainable way,” he said.
The brewing industry is energy intensive and reliant on natural resources. On average, it takes seven liters of water to produce one liter of beer, but AB InBev have slashed their water usage to less than half of this, thanks to new innovative technologies founded by the company’s Global Innovation and Technology Center.
Mr. White shared one in-house invention with the Executive MBA candidates called the ‘Simmer and Strip’ – a method which reduces the extent of water evaporation during the wort boiling process. Co-funded by the European Commission as part of the LIFE program, this technology allows AB InBev to reduce energy consumption by 12%, greenhouse gas emissions along the entire brewery process by 5% and significant decrease in water consumption. Standing by their view that sustainability is ‘not a competition,’ AB InBev have freely offered the technology to small and medium brewers.
But they are not clinking glasses with each other just yet.
While a lot of the “low-hanging fruit” has been implemented, Mr. White shared some of the hedgehogs they face in reaching their 2025 Goals, including:
• Training 100 percent of the farmers that they work with (around 50,000 globally) who will need to be skilled, connected and financially empowered;
• Viable technology to have 100 percent of purchased electricity from renewable sources;
• New designs for returnable or majority recyclable packaging.
“The only way we could do this in a financially viable way is through innovation. Innovation allows you to unlock the circular economy equation of sustainability. Because in many areas of sustainability, there is a cost or a price premium, so innovation is critical,” said Mr. White.
In order to help find innovative solutions to these challenges, AB InBev launched the 100+ Sustainability Accelerator . This impressive program offers hosting and funding to start-ups who can assist help them to meet their 2025 Sustainability Goals. It’s an inspiring initiative that offered the EMBA candidates an insight into how production-intensive corporations are tackling the issue of sustainability.
“Innovation allows you to unlock the circular economy equation of sustainability.”
HEC EMBA candidate Philipp Erdmann, Head of Energy Economics at one of Europe’s largest Paper Mill companies Palm Gruppe, found the talk to be extremely relevant.
“I found the guest lecture by Richard White to be very insightful to how large corporations are re-shaping their business models to be more sustainable, because it’s a very complex issue and not one that can be solved overnight. We all know that this is a focus for large energy intensive companies, but to actually see real-life examples of how AB InBev have successfully implemented new methods was extremely useful,” said Mr. Edrmann.
Having gained a new perspective, Philipp says he will incorporate the lessons from Mr. White into his own mission of trying to make the paper mill industry more sustainable.
“Working in energy economics myself, this is a topic relevant to my work because we all know that our clients and consumers care more about a company’s sustainability model more than ever. The incentives they have in place to encourage new ideas for innovation to help solve these huge challenges, is something that more businesses should be doing,” said Philipp.
Guest lectures, held throughout the program, in addition to regular lectures aim to give HEC EMBA candidates access to the ideas and learnings from some of the most successful and thought-provoking leaders across a variety of industries so that they can practically apply this knowledge to their own careers.