AB InBev, the international beer giant that owns hundreds of beer brands across 50 countries, announced today that it will source 100 percent of its electricity needs from renewables by 2025.
The company plans to eventually switch up to 6 terawatt-hours of annual electricity use from conventional sources such as coal and natural gas to renewables. According to the company’s number-crunching, the resulting slash in carbon emissions is equivalent to removing 500,000 cars from American roads annually.
“This is not an offset," Tony Milikin, AB InBev’s chief sustainability and procurement officer, told TriplePundit on Monday. "We’re aiming to invest in renewables within each country in which we do business."
The company is now focusing most of its clean-energy investment in Latin America. In Mexico, AB InBev’s largest brewery recently signed a power purchase agreement (PPA) with the Spanish clean-energy company Iberdrola. The Modelo plant, located in the state of Zacatecas, will provide 490 gigawatt-hours of clean power annually -- an amount Ab InBev says is sufficient to electrify all of its production sites across Mexico.
Many Latin American countries, including Mexico, have set ambitious clean-energy targets in recent years, especially in the wake of the December 2015 COP21 climate talks in Paris. The country joined its North American Free Trade Agreement (NAFTA) partners, the U.S. and Canada, in pledging to source at least half of its power from renewables by 2025. As The Economist reported, Mexico is one of many Latin American economies where governments have loosened energy regulations in order to make their countries more attractive for these investments.
General Motors (GM), for example, invested in wind power capacity in central Mexico two years ago in order to reduce its overall utility costs within the country. On average, Mexico’s utility costs are up to a third higher than north of the border in the U.S.
Brazil, a country Green Tech Media has noted as a leader in renewables investment within Latin America, is another target market for AB InBev as it works on its long-term clean power goals. The company has already started to use biogas in some of its Brazilian breweries, and expects 40 percent of its energy needs to come from such sources by the end of this year. The company, which owns the popular Brazilian brands Skol, Antarctica and Bohemia, expects to sign more PPAs for solar installations across Latin America’s largest economy.
From the company’s point of view, AB InBev understands that it must do more than brew creative beers to appeal to younger consumers. For years, the under-35 crowd has eschewed mass-produced beers such as Budweiser, Miller or Coors for the microbrews that exploded in popularity here in the U.S. and abroad. Hitching onto the clean-energy and environmental bandwagons is one way to appeal to these fickle consumers who lack the brand loyalty their parents and grandparents shared.
“From a passion standpoint, we understand that we have consumers for whom this is a passion point," Milikin told us. "We are matching our passion point with their passion point."
Overall, AB InBev expects to procure up to 85 percent of its electricity from direct power purchase agreements. The rest will be generated by on-site installations such as solar panels. Overall, the company projects this shift to renewables will reduce its overall carbon intensity by 30 percent.
As the global beer industry consolidated over the past decade, it also become more efficient on the water and energy fronts – which is necessary as the consumption of both are inextricably linked. Many of these companies, such as AB InBev’s once-competitor and recent acquisition SABMiller, have realized that their breweries often end up in regions that are coping with water stress.
A decade ago, most of these companies required five liters of water to make one liter of beer. Now, that ratio has narrowed to almost 3 to 1. The result is that less water consumed means less energy is needed – whether that is within a company’s brewery, or reducing the amount of energy required to move water across states and countries, and from reservoirs to plants.
And while AB InBev is making plenty of noise with its claim that it will become the global consumer goods sector's largest corporate purchaser of renewables, other programs -- although less flashy -- also help reduce the company’s environmental footprint. The company’s SmartBarley program, for example, seeks to source more beer-brewing ingredients locally rather than importing from afar. This program also works with farmers to increase watershed protection while improving the water efficiency of growing crops across the company’s supply chain, which can help to increase crop yields.
The result is that far more barley needed to produce beer in Mexico is grown locally – reducing the need to transport the ingredient from the U.S. while reducing emissions.
In addition to boosting its renewable energy capacity in Latin America, AB InBev said it will launch similar projects in India and South Africa – nations that have been hit hard by both water stress and a growing demand for electricity.
Image credit: AB InBev
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.