Innovation

Sustainability's brewing in Singapore's beer market

20 March 2017 by Vaidehi Shah

Most beer fans are unlikely to think much about the sustainability of their brew before knocking back a pint; just as well perhaps, because the reality of the brewing industry’s environmental impact can be quite sobering.

Water and energy use, the resources that are needed to produce every can, glass bottle, and cardboard carton, and the waste generated when these are carelessly discarded - these are just some of the factors that make up the environmental footprint of a cold one. 

But unlike customers, beer companies and others in the food and beverage sector are finding these issues increasingly impossible to ignore. More firms are realizing that tracking and reducing their environmental impact is not just a matter of corporate responsibility, but of long-term survival.

For one thing, growing global momentum on climate action — which crossed a major milestone last December with the signing of the Paris Agreement — has sent a clear message to businesses that reducing emissions is necessary to stay on the right side of regulation and consumer expectations. 

Perhaps more importantly for the beer industry, the raw materials it depends on — hops, barley, and water — are all threatened by climate change. 

Changing weather patterns could undermine the quality and health of these crops, while increasing droughts may mean that brewers, one of the world’s largest industrial users of water, are unable to maintain today’s production levels of some 200 billion liters of beer a year.

The good news is, the sector is beginning to address its environmental impact. In the United States, for example, some 42 beer companies have signed the Climate Declaration,  a 2013 climate advocacy effort by sustainability non-profit Ceres.

The signatories have promised actions such as increasing their use of renewable energy, making product packaging lighter to reduce resource use and transport emissions, and stepping up efforts to report on their sustainability performance.

Green drinks

The same drivers that motivate the US-based beer firms towards climate action are also top concerns for companies and policymakers in Singapore. 

With little water or natural resources to call its own, a low-lying topography that is vulnerable to sea level rise and a solitary landfill at Pulau Semakau — an island off Singapore’s south coast — that is set to fill up by 2040, Singapore is also keenly aware of the need for sustainable development. 

Through national documents such as the Sustainable Singapore Blueprint and the Climate Action Plan, the city-state has set out a policy and implementation framework to achieve goals such as lowering greenhouse gas emissions and energy use, achieving zero waste, and saving water. 

It is fitting then that the company behind the country’s national beer has adopted many of these priorities as part of its core business strategy. 

Asia Pacific Breweries (APB), Singapore’s largest commercial brewery and maker of its iconic Tiger Beer, along with brands such as Guinness, Anchor and Heineken, focuses on six key areas where it can achieve a positive environmental and social impact. These include reducing emissions, protecting water resources, and sourcing sustainably.

Based on the sustainability strategy of its parent firm — Dutch giant Heineken, which has been around since 1864 — APB’s Brewing a Better World strategy was launched in 2010. It aims, by 2020, to cut water consumption in its breweries by a quarter; reduce carbon emissions from production by 40 per cent; and source half of its raw materials from sustainable sources.  

Measures the company has taken to achieve these outcomes include implementing a water reclamation project that converts brewery effluent into non-potable water, and using clean energy technologies such as LED lights and solar panels in its buildings. 

Mitchell Leow, APB’s head of corporate affairs

Mitchell Leow, APB’s head of corporate affairs, says in a recent interview that while the company is keenly aware of consumer and regulatory environmental issues, “we recognized that sustainability is a key business priority long before there was external pressure to do so”.

When it comes to reducing APB’s emissions and environmental footprint, a key focus area is packaging, Leow adds. 

The company, founded in 1931, has in recent years employed strategies to reduce the resource demand of its products, ranging from taking back empty beer kegs and bottles from customers to minuscule reductions in the thickness, width, and weight of the packaging.  

Thanks to these measures, the company last year alone recovered 15,868 tonnes of glass bottles that would otherwise have ended up in the state’s recycling stream, or the landfill. This equates to a 86 per cent recycling rate in Singapore for the company, much more than the national recycling rate for glass, which stands at a mere 19 per cent

Leow says that APB is keen to work with government and industry partners to raise the glass recycling rate in the country. 

The company has also saved several tons of metal a year by making tiny changes that add up to big results through R&D efforts.  For instance, between 2011 and 2015, the company made its cans thinner by one-thousandth of a millimetre — saving APB 78 tons of aluminum in 2015.

A 2014 decision to shrink the diameter of its can lids by a centimeter makes each can almost a gramme lighter, and saves APB some 51 tons of aluminum annually in Singapore. The lighter packaging also reduces the amount of energy required to transport and distribute the drinks.

For these and other efforts such as making its glass bottles lighter and recycling the paper labels on them, APB has won several awards from the Packaging Council of Singapore, which rewards innovative and creative packaging design through the Singapore Packaging Awards.

“These innovations are critical for us to address some of the issues we face in Singapore,” says Leow. “We are also working on projects to ensure more of our plastic and cardboard packaging is recycled.”

The company’s commitment to sustainable packaging is also evident in the fact that APB is one of the founding members of the Singapore Packaging Agreement, a joint initiative by government, industry, and non-government organizations to reduce packaging waste.

APB has also invested in other emissions reduction measures such as renewable energy; a rooftop solar installation as big as three football pitches on its Singapore brewery implemented November 2015 means that all Tiger beer consumed in the city-state is “brewed by the sun”, according to the company. 

The 8,000-odd solar panels will produce about 2.3 million kilowatt-hours (kWh) of solar power annually, enough to meet the annual power use of 600 four-room apartment flats. It will also shrink APB’s carbon footprint by a fifth and help it save 1,500 tons of emissions a year.

A long-term view

These measures have not only helped shrink the environmental footprint of APB’s packaging and operations, the company has also reaped cost savings from the reduced use of aluminum and other metals, shares Leow. 

But ultimately, APB’s commitment to sustainability is about long-term strategy rather than immediate impacts on the bottom line, he says.

“Investing in the logistics and labor infrastructure to recover, transport, and clean our glass bottles is a significant cost,” he says. “It would be much cheaper to simply dump the bottles, like many of our competitors do.”

Similarly, the solar installation on its brewery required significant investment and has a long payback period, but the company decided to go ahead with the project anyway.

These decisions are driven by the fact that APB is aware that the Singapore public, especially the younger crowd, are becoming more aware about the need for sustainable products. 

This is something that became all too clear when supermarkets across Singapore pulled tissue products made by Indonesian giant Asia Pulp and Paper from its shelves last year, he adds. The company had been accused of sourcing from suppliers that were burning forests in Indonesia, contributing to the country’s worst haze crisis on record. 

“If predictions for climate change are on course, this consumer backlash against errant brands will only intensify in the future,” notes Leow. “Shoppers will increasingly choose brands that can prove a lower environmental impact, whether through certifications or other means.”

He adds: “APB is trying to stay ahead of the curve by investing in sustainability today.”

Staying ahead of the curve

This proactive approach to sustainability is also likely to serve the company well when Singapore unveils new legislation on sustainable packaging in the next three to five years. The initiative is led by the country’s National Environment Agency (NEA). 

“We already have set sustainability targets and have a robust reporting system in place to monitor progress,” says Leow. As a result, the company expects to be able to comply easily with the legislation when it is passed in the next three to five years.

As for companies that have yet to do adopt sustainable packaging policies, they should waste no time in doing so, he urges. 

“First, go for the quick wins where there is distinct business value, such as cost reductions from reduced raw material use,” he advises. This is especially relevant for small and medium enterprises, which are more constrained by their bottom line than large multinationals that have the capital to make long-term investments.

Once the benefits of these measures become clear — in terms of financial savings as well as an enhanced brand image and reputation — this should build the confidence required for company leaders to invest in long-term efforts, he adds. 

But even as corporate leaders grapple with these economic concerns, the industry must act urgently, because its survival ultimately depends on fighting climate change and protecting its natural resource base, notes Leow. 

“We have been operating for 150 years,” he says, referring to Heineken’s legacy. “If we want to continue operating for 150 more years and beyond, we have to do something today.” 

Edited by Jessica Cheam and Tan Yi Xuan