Industry Issues Report: The Soft Drink Industry
Soft drinks are popular drinks enjoyed worldwide. It is estimated that the soft drink industry in the UK alone is worth £1.3 billion. However, this industry is faced with a variety of social and environmental issues. This paper focuses on two of those issues, namely carbon gas emission and energy consumption sustainability. The details of the effects of these particular issues on the company will be explored. Additionally, the stakeholders involved will be analyzed and recommendations will be made on how the new company should address these issues.
Carbon Gas Emission
The soft drink industry is one of the leading emitters of carbon dioxide gas. In the UK alone, carbon dioxide emission stands at 4.5 million metric tonnes annually (Environment Leader, 2013). Carbon dioxide is known to be the most prominent among the greenhouse gases that contribute to global warming. This is therefore a suggestion that the soft drink industry is directly contributing to global warming, which is a major environmental concern due to its effect worldwide. The soft drink industry and its participants are therefore called upon to take steps to reduce emissions for a sustainable future.
The issue of carbon gas emission therefore affects the company strategy due to its direct impact on production and costs. Due to the gravity of the issue, there has to be a production method in place either to reduce carbon dioxide emission or to contribute towards environmental rehabilitation if reduction in emission cannot be achieved. This therefore introduces an additional cost, which cannot be ignored.
The stakeholders in the issue include the company itself, since it is affected by the issue directly. The customers are also stakeholders because they may have to cater for a portion of the costs arising from environmental preservation. Other soft drink manufacturers are also stakeholders since they are expected to also take measures to reduce their carbon footprint.
So far, about half of UK’s top soft drink producers and suppliers have taken action by signing on to the Soft Drinks Sustainability Roadmap. This is an initiative meant to reduce the environmental footprint of the products of the soft drink industry. This approach recommends modification across the whole supply chain to provide changes that will positively impact the environment.
A recommendation that I would suggest to reduce the carbon footprint of the new company is to join other industry players in the carbon reduction program. This entails joining peers in the same business in setting targets in a climate change agreement (Britishsoftdrinks.com, 2013). This involves setting emission reduction goals to be achieved individually and tracking their achievement by an external body. An advantage of this is that it would enable benefitting from shared data and case studies and implement the best possible measures. This is also beneficial since such an initiative would be targeted specifically for such companies and therefore no additional costs on research and development would be incurred.
For the company to prepare itself for the challenges posed by the issue of carbon footprint reduction, it would need to foster a high degree of co-operation with other industry players. This is because they are at the forefront of most innovations and not keeping up would cause loss of a competitive edge. In addition, there is already a platform for this and the company should strive to make the most of the opportunity.
The new company should adopt a policy where it keeps in check the total footprint. This includes all aspects of the supply chain from agricultural manufacture through to final disposal. This ensures a collective approach to the reduction of the total environmental impact of soft drink manufacturing companies (Cooper, 2013).
Energy Consumption Sustainability
The soft drinks industry is a large consumer of energy, especially due to its huge reliance on refrigeration. In most outlets where soft drinks are found, refrigeration is often necessary to maintain the products at their optimal temperature. This amounts to between 25% and 35% of the total energy costs (Ganji, Hackett & Chow, 2002). After purchase, refrigeration is also necessary to maintain the quality of the product, though this puts a strain on the energy resources available. This is demonstrated by the existence of over 1.5 billion refrigerators worldwide as of 2009 (EPA, 2010).
The management of the company should be concerned about this because if it is no longer sustainable for their suppliers and customers to afford energy, their products would not be able to be sold. This may affect the company’s strategy in that in extreme cases, it may have to provide refrigeration services at its own cost, since it would be difficult to pass on these costs over to the customer. It may also be costly to provide such services, especially in the case of a geographically spread out market.
The stakeholders here include the company itself, since it the producer of the final product. The suppliers are also stakeholders since the approach they choose in the storage of the products and their transportation to the market directly influences the product’s sales. The refrigeration method they choose also influences the quality of the final product as it reaches the market. Consumers are also stakeholders since they also are involved in the refrigeration process and are directly affected by the energy consumption, since they have to cater for its costs.
As is the case with carbon footprint reduction, other companies in the industry have signed on to a sustainability roadmap, aimed at reducing costs in the supply chain while increasing environmental awareness. This has the net effect of reducing the environmental impact of their products (Environment Leader, 2013). This includes the market leaders in the soft drinks sector and other players, adding up to more than half of the industry players. This has led to focused research in this area, the results of which have shown a potential reduction of up to 20% in environmental impact of final goods.
To address the issue, the company needs to conduct a market research to determine where it incurs most costs, especially with regard to refrigeration. These areas would then be specifically targeted for supply chain improvement. This may include measures such as having a distributor closer to those areas for more focused service or acquiring of cheaper refrigeration alternatives to serve specific areas. The main objective would be to reduce costs where they are incurred on a large scale. This also doubles up as an approach and policy measure that can be taken by the organization. It is an approach of self-evaluation and cost reduction based on the results of the evaluation.
In conclusion, there are a variety of social and environmental issues facing the soft drink industry today. The approach taken to mitigate them so far has been pulling together to reduce the impacts of these issues. The effort is commendable but it is clear that more must be done to remain profitable in the long run while maintaining a sustainable environment.
Britishsoftdrinks.com, (2013). Soft drinks sustainability roadmap signatory pack. Retrieved from: www.britishsoftdrinks.com/pdf/roadmap%20signatory%20pack.pdf
Cooper, B. (2013). Sustainability in Soft Drinks & Water – Part I – Water and Water Efficiency. Just Drinks. Retrieved from: http://www.just-drinks.com/management- briefing/sustainability-in-soft-drinks-water-part-i-water-and-water- efficiency_id107389.aspx
Environmental Leader. (2013). Coca-Cola, Britvic Join Soft Drink Sustainability Roadmap. Retrieved from: http://www.environmentalleader.com/2013/07/01/coca-cola-britvic-join-soft-drink-sustainability-roadmap/.
EPA. (2010). Transitioning to Low-GWP Alternatives in Domestic Refrigeration Fact Sheet. Retrieved from http://www.epa.gov/ozone/downloads/EPA_HFC_DomRef.pdf
Ganji, A. R., Hackett, B., & Chow, S. (2002). Energy Conservation Opportunities in Carbonated Soft Drink Canning/Bottling Facilities.