Sustainability

Do Spirits Need to Be Sustainable to Sell?

Younger generations increasingly look to brands’ sustainability credentials when purchasing. What does this mean for both large and small spirits companies going forward?

Left: Wind Farm (photo courtesy of Brown-Forman). Right: Rob Samuels and Nancy Cox plant oak (photo courtesy of Makers Mark).

Consumers care more than ever about supporting brands that are working towards an environmentally sound future, and as brands strive to meet these evolving consumer expectations, sustainability is becoming a competitive advantage. For the mammoth spirits industry, this could mean that green credentials will become a price of entry.

Research published by Kerry Group in July 2021 shows an overall trend towards more mindful purchasing in the food and beverage space, finding that 49 percent of consumers reported that they now consider sustainability credentials when buying food and drink (based on a survey of 14,000 consumers in 18 countries). This trend is also reflected in the beverage alcohol space in particular. According to consumer research by the IWSR, 48 percent of U.S. alcohol drinkers report that a company’s sustainability or environmental initiatives positively influence their purchasing decisions. 

As consumers become more focused on the sustainability credentials of brands, spirits companies have noticed that retailers are doing more digging into brand initiatives. “Our customers and our consumers are asking more of us,” says Suzette Carty, the director of global sustainability for Brown-Forman, which recently launched a new environmental sustainability strategy. What does this shift in consumer behavior mean for spirits brands going forward—both large and small? 

As Consumer Behavior Changes, Buyers Prioritize Green Credentials

“Our retail customers, distributors, and airline partners in both Europe and the United States have asked us about our sustainability programs and performance,” says Carty. “They tend to ask … what we are doing to reduce our carbon footprint, how we are working on sustainable packaging, and most importantly, if there are opportunities to collaborate, as we are a part of their supply chain.” 

To meet the increasing demand for sustainably made products, a number of Brown-Forman’s brands have implemented new initiatives. These include Jack Daniels, which runs a number of zero-waste initiatives, and Herradura, where the team is capturing gas from the company’s wastewater treatment plant to use as an energy source for the manufacturing process.

Mangrove, a premium spirits distributor in the U.K., is one example of a business that is highly focused on eco and ethical credentials. “There still has to be a great quality liquid that tastes great and looks amazing, but we now demand more, both as a business and as consumers,” says Nick Gillett, Mangrove’s managing director.

Carty points out that many retailers have supply chain sustainability commitments related to carbon emissions reduction, so by asking brands what they are doing to lower their carbon footprint, the retailers can in turn help to lower their own.

Millennials and Gen Z are Driving Change 

The Kerry Group research found that millennials and Gen Z are the most engaged and willing to act, and this tracks with the experience of Kim Harmon, the environmental and safety manager at Maker’s Mark. During her 26 years in the bourbon industry, she has seen interest in sustainability intensify, most noticeably in the last five to 10 years. “We have a younger generation that is growing up and is truly engaged and concerned about climate,” she says. “They make purchasing decisions based on these things.”

Plus, as members of the more climate-focused generations open their own liquor stores, the priorities of retailers will reflect the concerns of the age group at large. For example, Conor McKee, owner and buyer at Fiasco!, a wine and spirits store based in Brooklyn, New York, says that sustainability is a part of the shop’s mission statement. “We’re millennials. We’re very invested in environmental causes,” he says. 

When choosing which brands to buy, McKee looks for quality first and foremost, and prefers products with robust sustainability practices, like La Gritona. This tequila brand uses bottles made from hand-blown, recycled Mexican glass. Plus, they’re partnering with retailers on the return of pop tops from customers so that they can be reused by the distillery. “I’m super happy to have them on the shelf,” says McKee. “I wish I could have more of that.”

Photo courtesy of Karen Hoskin and Montanya Distillers.

For Craft Distillers, Sustainability is Key

Karen Hoskin, the founder of Colorado-based Montanya Distillers, says that sustainability credentials are becoming a competitive advantage when building relationships with retailers. Her high-mountain rum distillery is 100 percent wind powered, and she points out that being B Corp-certified has been a huge benefit for breaking into the market. She references an aisle build that retailers can use to display her rum, with messaging focused on the brand’s wind power and practices relating to carbon and plastic. “Those have been super popular,” she says. “[Liquor stores] perceive that that’s going to win them purchasers to the brand.”

Like Carty, Hoskin notes that this trend is a global one. “We do a lot of business overseas, primarily in the U.K., but also Canada and the EU. And it’s definitely a really important thing for those countries as well,” she says. 

While companies of all sizes are noticing the increasing demand for spirits brands with sustainability initiatives, it may be particularly important in the increasingly competitive American craft spirits market. According to the recently released Craft Spirits Data Project 2021 Report, the number of small craft distillers in the U.S. nearly doubled between 2015 and 2020, and the craft sector seems set to continue building market share against mainstream brands.

It seems unlikely that major retailers will remove established brands from their inventory due to a lack of environmental clout, but for emerging distillers, sustainability standards could mean the difference between achieving success and getting left behind. Hoskin, whose product was picked up by Whole Foods in late 2020, feels that her environmental credentials are already giving her an advantage when building such relationships. “Say [a buyer is] considering five companies, and they only have room for one, and they’re equally good, we definitely find that it boosts us over the top,” she notes.

Consumer demand for sustainably made products is rising—and shows no sign of slowing down. So while green credentials are not yet a must-have for established brands, trends indicate that could change quickly. But for emerging spirits brands, the story is different. In an increasingly competitive market, sustainability initiatives offer a competitive advantage that may just be the key to winning the favor of retailers and consumers alike. 

Hollie Stephens is a drinks writer originally from London and currently based in New Mexico. Her work has been featured in Wine Enthusiast, Fortune, VinePair, and many other publications.

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