Business Reboot 3/Japan’s major beverage makers join hands to address environmental issues

Courtesy of Kirin Holdings Co.
Regional heads of the four major beer makers put their hands together before a freight train during the launch of a cooperative delivery project in Hokkaido in September 2017.
The Yomiuri Shimbun

The prolonged coronavirus crisis is slowly but surely reframing the once-familiar habits of people getting together in bars and pubs, chatting and hobnobbing, quaffing precious glasses of beer.

Beermakers have been trying to navigate through this by exploring new ways to reach the market. This is the third in a series to take a close look at the beer and similar beverage industry.

When Suntory Holdings Ltd. President Takeshi Niinami attended the 2020 World Economic Forum in Davos, Switzerland, he was surprised to find no plastic bottles at the venue. The incident made him aware of the necessity to take actions quickly.

“Environmental issues cannot be sidestepped,” he said.

Group company Suntory Beverage & Food Ltd. has released a plastic bottle made from 100% recycled plastic, a first for its nonalcoholic beverage line. The recycled bottles are being used for its Yasashii Mugicha brand that went on sale nationwide from April 13.

“We must eliminate the negative impact of plastic on the environment,” said Tomomi Fukumoto, Suntory Holdings executive officer in charge of environment, during an online presentation of the new bottle on April 12.

Another measure the company has taken is to release a limited number of bottles of its green tea brand Iyemon without the usual label. They sold well despite the fact the product name is hardly noticeable at first glance. This was a sign that consumers were accepting the company’s environmental efforts.

Suntory’s Tennensui mineral water is also being sold in a lighter container using 40% less petroleum-derived materials.

The beverage industry has long made efforts regarding environmental issues. These companies need to be aware of water quality control in areas where their plants are located, as it directly affects the quality of their products.

Even so, rapid changes in the environment have exceeded the industry’s estimations.

The Yomiuri Shimbun
A Kirin Beverage Co. staff performs a maintenance check on a Asahi Soft Drinks Co. vending machine in Sumida Ward, Tokyo.

Drastic climate change

Rising temperatures due to global warming may reduce the supply of barley used to make beer, possibly resulting in raising the price of beer worldwide.

In December last year, an Environment Ministry report that summarized the effects of climate change pointed out that global warming is no longer somebody else’s problem. Unless serious measures are taken, dark clouds will be cast over future of beer itself.

In 2018, Asahi Group Holdings Ltd. set a goal of zero CO2 emissions in 2050, ahead of the government setting a similar target. In April this year, the company switched to renewable energy sources, such as solar and wind power, for the electricity it purchases at 19 plants in Japan, including the Ibaraki Brewery in Moriya, Ibaraki Prefecture, that produces the Super Dry brand.

“In the past, environmental efforts merely were a way to show off our performance, fulfilling our corporate social responsibilities, but now we recognize that it is part of our business, even if it is costly,” an Asahi executive said.

Kirin Brewery Co. has introduced solar power generation at four plants in Japan, including Kirin Brewery Nagoya in Kiyosu, Aichi Prefecture. The company plans to introduce solar power generation at all domestic plants in the future.

Cross-industrial cooperation

Environmental measures are costly and who funds them is a key question.

“It is essential to join hands with competitors in order not to pass on the costs to consumers,” Suntory’s Niinami said.

In 2017, Asahi, Kirin, Suntory and Sapporo Breweries Ltd. began cooperative deliveries through the sharing of rail freight containers and trucks in Hokkaido.

Beverages are heavy and require a large amount of CO2 emissions for their transport. The four makers used to ship their products individually by truck, which were usually almost empty in areas with small populations. The cooperative transport is expected to cut down the use of 800 trucks and reduce CO2 emissions by 28%.

As the project in Hokkaido was a success, this delivery method began in western Japan as well in 2018. The companies thus reduced CO2 emissions by 74%.

“We’re friendly rivals in sales but must cooperate for big issues like the environment,” a Sapporo Breweries spokesperson said.

Asahi has even outsourced the maintenance and management of its soft drink vending machines to Kirin in some areas.

Their cooperation goes beyond their industry. Since February this year, Suntory began cooperative deliveries with daily necessities maker Unicharm Corp. The two companies are pursuing efficiency by transporting heavy beverages together with light diapers and sanitary products. Their once-weekly joint transport is expected to cut CO2 emissions by two tons a year.

“Commitment to environmental initiatives has become a global imperative,” said Rakuten Securities Inc.’s chief strategist Masayuki Kubota. “Competitors must think rationally and work together because teamwork can also be better for reducing costs and addressing labor shortages.”