What do you get when you mix the principles of accounting and science? It may sound like the opening line of a bad joke, but this concoction is no laughing matter, thanks to the work of the world’s largest privately owned spirits company Bacardi.
In March last year, Bacardi unveiled its new sustainability metric, known as Bacardi Environmental Sustainability Tracking (BEST), which accurately measures performance and progress against environmental sustainability objectives.
The metric, which was developed by Bacardi in association with a team of accounting professors and students from Poole College of Management at North Carolina State University, uses flexible budgeting to measure the performance in one reporting year against a base year.
As Bacardi’s website puts it: BEST ‘calculates very specific data from a set baseline to understand just how much water and energy it would have used in prior years if those years had had the current-year mix of goods and services’. It is the first company to apply this accounting method to monitoring environmental metrics. BEST eliminates disparities and takes into account issues that might otherwise distort the overall picture.
For example, if Bacardi wanted to test how efficient its use of water had been, a simple method might be to divide the volume of water used by the amount of alcohol produced. But such an approach is obviously flawed. With a portfolio of more than 200 brands and labels, including its iconic rum, such a simple formula would mask underlying problems. For example, more water is used in the production of tequila than vodka.
BEST takes into account these factors, by using specific base points for each product, similar to the retail price index. It provides an accurate assessment of not simply the cost of goods, but also how efficient Bacardi has been in its use of resources.
‘We make all sorts of different alcohol drinks and what we want to do is get an effective measure of efficiency and see that we’ve improved year-on-year,’ says Stuart Lowthian, Bacardi’s vice president of supply chain and manufacturing for Europe, Middle East & Africa.
‘It truly shows that just because we spent money doesn’t mean it cost us money,’ adds director of communications Amy Federman, who worked with Lowthian to implement Bacardi’s sustainability programme, Good Spirited, of which BEST measures the progress.
The Good Spirited: Building a Sustainable Future global initiative was launched last year to coincide with the 152nd anniversary of Bacardi’s foundation.
Leading the way in sustainability measurement is not the only string to Bacardi’s bow. The Bermuda-based company was recently named as one of the most reputable in the world in the annual Global RepTrak 100 report, released by the Reputation Institute.
‘Bacardi strives for continuous progress and improvements in everything we do,’ says Mike Dolan, chief executive of Bacardi Limited, of the achievement. ‘It’s very rewarding to see that we are making real strides in corporate governance, innovation, reputation and overall citizenship with others around the world taking notice.’
Indeed, it might be hard for the world to ignore.
Bacardi has a wide-range of corporate responsibility programmes under its belt, from looking after the Great Sea Reef in Fiji, which can be degraded by the run-off from sugar cane molasses into waterways that lead to it, to the creation of a wildlife garden, tended by Bacardi employees at its bottling station.
‘Sustainability is really important to us with all that is coming at us,’ says Lowthian. ‘It’s expected by key stakeholders that we do good things in our plants.’
Bacardi has set itself three ‘hairy and audacious’ challenges to be achieved by 2022, all falling under the Good Spirited umbrella.
It has pledged to obtain 40 per cent of the molasses used to make its rum from certified, sustainable sources by 2017 and, by
2022, intends all its sugar-cane derived products to be obtained this way. This promise is a first for the drinks industry and one that Bacardi has committed to fully as a founding member of Bonsucro, a not-for-profit organisation dedicated to reducing the environmental and social impacts of sugar cane production.
Secondly, Bacardi aims to reduce the weight of its packaging by 15 per cent by 2022, in order to cut down greenhouse gas emissions from lorries carrying heavy bottles. Since 2006, it has reduced the weight by seven percent – equivalent to 23,000 tonnes – or driving 11,000 trucks filled with packaging off the road. There is also a business case for such an initiative: packaging accounts for about 57 per cent of Bacardi’s expenditure on raw materials.
Finally, Bacardi wants to continue its work in reducing water use by 55 per cent by 2017. It has already slashed water usage by 54 per cent since it started tracking sustainability measures in 2006, equivalent to showers for more than ten million people.
But just how does a drinks company reduce its water usage, when it takes, on average, 12 litres to make one litre of distilled spirit?
In Puerto Rico, where Bacardi produces its world famous rum, water that is used to clean the American white oak barrels in which the spirit ages, is recycled to spray down and reduce the temperatures of cooling towers used in the distillation process. This action saves the plant money by reducing chilling costs but also has led to a 72 per cent reduction in water left over from production.
‘We recycle about 15,000 gallons of water per day,’ says Magaly Feliciano, environmental health and safety manager for Bacardi in Puerto Rico. ‘That’s enough to supply the daily water needs of 40 families of four.’
These water processes have been emulated elsewhere. In Bacardi’s upgraded Laverstoke Mill facility, home to Bombay Sapphire gin, rainwater is collected to flush toilets and water used in the gin-making process is re-used to lower the temperature of the stills. And reusing water and efficiency initiatives have helped achieved a 47 per cent reduction in water use in Mexico and 56 per cent in India.
Lowthian is very clear that Good Spirited would not have worked without the collaboration between the operational side of the business and the communications department.
‘We figured it really, truly had to be a joint initiative,’ he says. ‘If we had done this by ourselves, we wouldn’t have got very far.’
The communications team, led by Federman, helps Good Spirited land both externally, but equally importantly, internally as well. Bacardi, which employs 6,000 people worldwide, uses internal communications to showcase that their sustainability initiatives are not just a top level programme, but something that runs through their entire organisation.
‘We are telling our story with all levels of employees, from the chief executive to the gardener at our Puerto Rican plant,’ says Federman. ‘We need to make sure that each part of the team understands [the importance of Good Spirited].’
The Good Spirited team, which comprised four employees from communications and two from operations at the time of its launch, also helps to communicate brand values to the outside world and to organisations with which Bacardi might not necessarily have much contact.
‘People don’t really know what’s in the spirits. It’s always water or some sort of botanical,’ says Federman. ‘We knew we had to educate people around the world [about what where Bacardi’s spirits come from.]’
According to Federman, the way to communicate this was to ‘package it in easy-to-use information’. She and her team have released a new press release every three to four weeks since the Good Spirited initiative was unveiled last year, but rather than simply following the standard format, each release has included a ‘multimedia component’.
‘Everything we do, we bring to life through videos and imagery,’ clarifies Federman. Videos include everything from the redevelopment of the 1,000 year old Laverstoke Mill to the work of the employees using woodchip mulch made from re-purposed barrels on Bacardi’s land in Puerto Rico.
‘We talk to people about what they are doing to keep green,’ Federman explains. ‘Not one employee who we’ve asked has turned us down. They did it with a smile and with pride.’
Once a week, short videos are also circulated on Bacardi’s intranet, One Bacardi, providing stories from all around the world of employees cycling to work or reducing water usage by using rain water, in a campaign called Acts of Green.
The company also has Green Champions, volunteers who give their time to help make Bacardi sustainable, and an annual CRMonth, where employees are further encouraged to show off their green credentials and even to come forward with new ideas for sustainability methods.
For example, employees involved in producing tequila in Mexico pointed out that only the core of the agave plant is used to make the drink, and the rest was wasted. They suggested that, instead of burning oil, the plants’ remains could be burnt to provide heat. Bacardi invested in a special boiler to make this possible and, as a result, reduced greenhouse gas emissions by five per cent.
‘Why were they talking about it?’ asks Lowthian. Because it matters, he answers.
By placing sustainability at the heart of its brand, Bacardi is staying true to an ethos that shaped its foundation. It was launched in 1862 by Don Facundo Bacardí Massó in Cuba after he took on a challenge from the Spanish government to reduce the surplus amount of molasses. He also recycled old whiskey barrels to age the rum. Bats lived in the rafters of the first Bacardi building, giving the brand its now iconic logo, and the business is still family-owned with Massó’s great-great-grandson now at its helm.
There are employees too with a long service record. Lowthian speaks of wine experts who have worked together for 40 years, many of whom are second and third generation in the business. ‘There’s a real craft, and truth and honesty in our brands,’ says Lowthian.
There is still a way to go, of course, to achieve Bacardi’s dreams of zero-net impact, or returning ‘to the environment at least as much as we take away’, but with its goals so clear, so too is its direction.
‘We’re now into our second year and we haven’t slowed down,’ says Federman. ‘It’s not a new initiative any more. It’s ingrained in our day-today business.’
She describes the Good Spirited initiative in simple terms: ‘People thinking differently about how to do their jobs.’
RESPONSIBILITY IN ACTION
Laura Stanley visits Laverstoke Mill, the new home to Bombay Sapphire, and hears how Bacardi transformed a 1,000 year old site into a modern distillery:
Laverstoke Mill has had many high-profile owners during its 1,000 year history, from William the Conqueror to Henry VIII, but none that have had as much an impact as current tenants Bacardi, who bought it as a gin distillery three years ago to produce its world-famous Bombay Sapphire.
Sitting upon the River Test in Hampshire, one of the purest chalk streams in England and home to many species of wildlife, Laverstoke Mill is now also home to a powerful Francis water turbine which harnesses the power of clean energy and generates approximately enough electricity to work 200 LED lightbulbs. Solar panels (which the plant does have) would have to be put on every single roof of the facility to generate the same amount of power.
The new turbine replaces the original water wheel, which disintegrated years ago, that once powered the machines that churned out the paper needed to make bank notes for the British Empire. A special guard protects the river’s fish, brown trouts and otters from the turbine, while more than 400 were caught by hand and temporarily rehoused during its construction and installation.
Laverstoke Mill and its accompanying industrial buildings have been redeveloped with attention paid to both the local community and the environment. While nine modern structures and a bridge were demolished, 23 Georgian and Victorian buildings were restored in association with English Heritage and English Nature. And master distiller Nik Fordham has co-operated with the local council on initiatives such as ensuring tankers that run through the village do not do so at night and is also keen to employ locals at the mill.
Bacardi is proud of the history of Laverstoke Mill, which is recorded in the Domesday Book of 1086 as a corn mill, and has incorporated a Heritage Room into the site, which covers everything from Queen Elizabeth II’s royal visit in 1962 to pictures of staff who worked at the mill when it printed money for the Victorian empire.
Two massive bell-shaped glass houses sit on the edge of the newly widened river bed, containing the ten botanicals which provide key ingredients for Bacardi’s Bombay Sapphire gin. These glass houses are made of 893 individually shaped, curved panes of glass held together by more than one and a quarter kilometres of brass-finished steel frames. The glass houses were designed by Thomas Heatherwick, who also designed the cauldron for the Olympic flame in 2012.
Heatherwick won Bombay Sapphire’s glass design prize in 1994, and his grand designs at the brand’s new home have been a huge success, according to sales, marketing and events manager Dan Smith, both in terms of shareability for the brand on social media and for serving their environmental purpose by housing botanicals.
As with most of the centre, the intertwining glass houses, one Mediterranean and the other tropical in climate, are heated using the excess heat provided by the gin-making system, which creates the perfect growing conditions for the tropical and Mediterranean herbs and spices, alongside more than 100 additional plant and herb species that create the ecosystem required to maintain them.
No stone is left unturned at Laverstoke Mill, but everything green that the brand does also has a commercial value in saving money. Rainwater is collected to flush toilets and less than a ton of spent botanicals from just one day’s worth of gin-making provide the renewable energy needed to power one of its five stills. And throughout its construction, building materials, such as bricks and roof tiles, from demolished plant were recycled and reused.
Fordham is also currently in talks with local farmers to provide them with potash, a by-product of Bombay Sapphire’s process, but something which they need to provide nutrients to their crops. For Fordham, sustainability is about ‘circular’ business and integrity.
‘You can’t just dip your toe in,’ he explains, recommending a more ‘holistic’ approach so that companies can fully immerse themselves in sustainable practices. ‘We do what we say and we say what we do.’
And what Laverstoke Mill hopes to do is produce at least 25 million litres of gin sustainably every year. Not bad for a mill that pre-dates the creation of gin in 1761.