In Beverage Industry, Sustainability Sells
Friday, January 30, 2009; 12:00 AM
Still looking for that green entrepreneurial opportunity? How about finding inspiration in the next coffee or soft drink you buy?
The U.S. beverage industry creates $200 billion in annual revenue, and has been growing 20 percent since 2002. Even in a recession, people need to quench their thirst or get a boost with a morning cup of coffee. So while not immune to recession, the beverage industry will most likely handle it better than most other industries.
This is an industry with some of the world's most recognizable brands--Coca-Cola, Aquafina, Gatorade and Starbucks Coffee. It's also an industry of opportunity as it innovates to align with the green economic revolution. Here are just some of the issues the beverage industry faces:
The industry uses 20 million barrels of oil each year to produce its plastic bottles.Sixty million bottles of water are thrown away each day.The industry's heavy reliance on high fructose corn syrup has been tied to the emergence of obesity and diabetes as a national health issue. And corn farming relies heavily on chemical fertilizers, pesticides and lots of irrigation to such levels that research has revealed the impact on our rivers and oceans as these chemicals and pesticides flow off the land and into our water systems.
But this industry is also leading the world through entrepreneurship in finding and implementing sustainable solutions. And even more tellingly, entrepreneurs are finding that sustainability sells.
One example is Mars Drinks, whose parent company, Mars Inc., sells my favorite candy, peanut M&M's. Mars Drinks serves 35,000 businesses worldwide, delivering more than a billion coffee drinks a year under the brands Flavia and Klix. Today, its three most popular coffees use beans that are certified under a program managed by the Rainforest Alliance. What that means is its coffee beans are grown using sustainable farming practices that protect forests, waterways, soils, and wildlife and provides workers with decent wages, health care, education and dignified housing.
Here's why I have such hope for the green economic revolution: The sales for these green coffees are exploding.Rainforest Alliance Certifiedcoffee had average sales growth of 106 percent each year from 2003 through 2006. In 2007, more than 91 million pounds of Rainforest Alliance Certified coffee was sold worldwide. In the U.S., these coffees are sold by Mars Drinks, Wal-Mart, Whole Foods, Pom Wonderful and Caribou Coffee, and can be found in more than 50,000 supermarkets, convenience stores, cafes, restaurants, hotels and corporate offices worldwide.
And for consumers, the price of certified coffee is often the same price as buying non-certified coffee. Tastes good, costs no more, helps solve our environmental challenges and it gives a hard-working person a decent wage.
Coca-Cola and Pepsi are also going green. More than 70 percent of the aluminum used by Coca-Cola is sourced from recycled aluminum, and it uses recyclable plastic in its plastic bottles. Pepsi is now listed among the EPA's top 25 purchasers of green energy. I first became aware of Pepsi's environmental commitment back in 2004 when it began installing roof-top solar panels at one of its Frito-Lay plants, long before going green was fashionable and long before the emergence of attractive state cash subsidies that encourage the installation of solar panels.
So where are the opportunities for green entrepreneurship in the beverage industry? As a beverage supplier, the opportunity lies in providing consumers with tasty, healthy, drinks that are good for the environment. As Mars Drinks has demonstrated, consumers are buying these types of drinks in record-breaking volumes.
And if you're looking to take costs out of your business's operations while supporting your associates' and customers' good health practices, look no further than your soda can vending machine. Here are some alternative ideas for reducing costs and improving associates' quality of life:
Only stock your vending machines with healthy beverages that use recyclable containers.Capture 100 percent of your recyclable containers in a recycling program.Give all your associates a metal water bottle with their name on it and your company's name on it. Then, give them access to filtered tap water and an ice machine. Doing so will provide your associates with water that's typically as clean or cleaner than bottled water, and their use of metal water bottles will eliminate a major waste stream and cost.
If you're looking for lessons to aid in your business's product design, here are a few good ones developed by the beverage industry:
Design products around sustainability. Life cycle analysis is a growing buzz word in sustainability. It means a business has to look at total life-of-product costs, not just the cost of manufacturing. For example, a vehicle's cost isn't just the sticker price. It's also the cost of operation, its carbon footprint (which may also carry a cost if the Obama administration implements a pricing system on carbon dioxide emissions) and the vehicle's eventual disposal cost.Think systemically. Globalization and sustainability are merging into a powerful force for cost control. Businesses are being pulled by their customers to contribute toward holistic solutions. If you're a supplier to Wal-Mart, you already know what I'm talking about. Here's Wal-Mart's goal: "To be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain our resources and the environment." Impressive.Align branding with beliefs. The green economic revolution is a grassroots phenomenon. It's being led by consumers who are demanding solutions to global warming, the deterioration of our oceans and a health epidemic tied to high fat and sugar diets. American consumers also have a moral sense that they shouldn't be riding the backs of mistreated workers for their access to competitively-priced goods and services. I like how Daniel Vennard of Mars Drinks summarized the company's branding: "The big take-away is to really think about how you can link sustainability into your brand equity. Your firm's green initiative should champion your customers' core values and beliefs."
Looking for an entrepreneurial opportunity? Join some of our most recognizable name brands within the beverage industry in the green economic revolution. Make money, and, as important, make a difference.
Bill Roth is president ofNCCT, a San Francisco-based consulting firm facilitating innovations in sustainability marketing and green business strategies. In addition to participating in the launch of the first hydrogen-fueled Prius, he has held executive leadership positions as senior vice president of marketing and sales with PG&E Energy Services, as COO of Texaco Ovonics Hydrogen Solutions and president of Cleantech America, a developer of solar power plants. Roth's latest book,On Empty (Out of Time)details an emerging multi-trillion dollar green economy that is revolutionizing how the world does business, and how you can make money from it.