Episode 56: Sustainability & Spirits with Sophie Kelly (Bulleit Frontier Whiskey) and Eric Sprague (American Forests)

Learn how more businesses are going green here!

Episode Intro Notes

What We Will Cover

• What do we mean by sustainability in the spirits category?

• What is the environmental, economic, and social impact of spirits production?

• Why are spirits brands focused on the issue of sustainability?

• How are spirits companies trying to reduce their environmental impact and help communities?

• How can listeners purchase spirits from brands that are taking action to be more sustainable, and encourage more sustainable spirits production?

• Intro to Bulleit Whiskey and its sustainability efforts, and our Expert Guests--Sophie Kelly, SVP of Whiskeys at Diageo North America and Eric Sprague, VP of Forest Restoration at American Forests.

What do we mean by SUSTAINABLE SPIRITS?

• Well, we always like to look for good, existing definitions of our topics and unbelievably, we didn’t see any definition or standard for sustainable spirits. Note though that by spirits, we mean distilled liquor with high alcohol by volume such as gin, rum, tequila, vodka, and whiskey.

• The International Wine and Spirit Competition recently set a standard on what a brand must meet to be considered sustainable in its competition. This encompasses repurposing efforts (e.g., recycling casks, sourcing alternative energy, reducing plastics), energy efficient production, eliminating single use plastics, supporting the local economy, and conscious ingredient sourcing and use.

• The Distilled Spirits Council of the United States also lists several environmental sustainability best practices on its website including land stewardship, responsible water use, and energy reduction.

  • We’ll dive deeper into these tactics and more later in the episode.

• But in short, sustainable spirits involves not only looking at the production of various spirits, which includes the environmental impact of operations, sourcing ingredients, etc. It also entails what kind of packaging is used, how the company treats its employees, and how it engages with communities and social issues.

What is the environmental, economic, and social impact of spirits production?

• With any environmental impact discussion these days, we have to talk carbon footprint. According to a 2012 study by the Beverage Industry Environmental Roundtable (BIER) titled Research on the Carbon Footprint of Spirits, a single 750mL bottle of spirits produces more than six pounds of CO2, which is the equivalent of driving 7 miles in an average passenger vehicle.

  • This was a cradle to grave life cycle analysis that included beverage ingredients (think barley, corn, rye, and water), packaging materials, production and warehouse, retail and consumption, transportation and distribution, and end-of-life/recycling.

    • The largest sources of emissions were the distillation process, the packaging (glass bottle), and warehousing.

      • The distillation process accounted for the most at about a third of all emissions. It’s an energy intensive process and can create waste in the form of spent mash, wastewater, and spirit-specific by-products like tequila’s acidic pulp and rum’s fibrous leftovers, known as “mostos.”

• Outside of carbon, another area of environmental impact is water use. BIER’s 2018 Water Energy and Emissions Efficiency Trends and Observations Report looked at carbonated soft drinks, bottled water, breweries, distilleries, and wineries. It concluded, “Distilleries tend to be the most water-intensive facility type within the industry due to the distilling and cooling processes, as demonstrated by their higher water use ratios compared to other facility types. Cooling water remains the largest component of a distillery’s water use profile, historically driving the larger water use ratios reported for this facility type.”

  • Overall, this same report found that between 2013 and 2017, water use, energy use, and emissions ratios (CO2e/L) at the distilleries they tracked decreased 24%, 17%, and 9%, respectively. So, there has been improvement in the environmental impact of spirits over time.

• Moving to economic impact, the total economic impact of America’s beer, wine and spirits retail industry is $363.33 billion annually; and the industry is responsible for 1.65 percent of the U.S. economy based on total GDP. So, we’re focused on spirits in this episode more than beer and wine, but the point is this is a major industry.

• Socially, there is a lot to consider from how the workers that grow the ingredients and produce the product are treated to the very real issue of responsible consumption. On the social front in this episode, we’re going to focus mainly on ethical supply chains.

Why are spirits brands focused on sustainability?

• Consumers want to buy spirits from brands with a smaller footprint

  • Last year, IWSR, a leading source of data and intelligence on the alcoholic beverage market, noted in its Global Trends Report that consumers are looking for ways to decrease their environmental impact on a micro level, and they expect beverage companies to hold similar standards throughout the production chain.

• Bartenders want to serve more sustainable drinks

  • In general, bartenders are more mindful of the ingredients they are using. In Bacardi’s Global Brand Ambassador Survey, 31% of bartenders noted an increasing interest in local, fresh ingredients.

  • At Kimpton Hotels, they surveyed their bartenders, and 88% said they consider sustainability when designing a new cocktail for the menu.

How are spirits companies trying to reduce their environmental impact and help communities?

• Environment. Buckle up because unsurprisingly, there’s a lot we’re going to cover under the environment section. We’ll touch on sustainable sourcing, running on renewable energy, carbon emissions, minimizing operational waste and incorporating ingredients that would otherwise have gone to waste, water use, and packaging.

  • Sustainable sourcing. This includes using local ingredients, growing ingredients with minimal environmental impact, and incorporating ingredients that may otherwise go to waste.

    • Examples of sourcing locally

      • Charleston, S.C.’s Striped Pig Distillery sources corn and native heirloom grains from local farms and sugar cane from nearby Savannah, Ga. Its owner says this is a win-win (Sustainability Defined’s favorite!) because it lowers costs and reduces its carbon footprint.

    • Examples of incorporating ingredients that would normally go in the trash

      • San Diego’s Misadventure Vodka makes vodka from day-old pastries from local bakeries.

        • Misadventure was founded on the concept of hedonistic sustainability--the idea that doing good doesn’t have to be a punishment.

      • The Discarded brand incorporates ingredients destined for the landfill. For example, last year it debuted a Caribbean rum infused with banana peel.

      • So, we hit distillers that incorporate old pastries and banana peels. Let’s do one more--dairy. Dairy Distillery takes the 150,000 liters of milk permeate the dairy it partners with was dumping every day and uses it to make a lactose- and sugar-free spirit. As a start-up on a smaller scale, it can make these sort of moves. Still, it’s sold quite a bit. The distillery’s Vodkow brand has sold over 25,000 bottles in just 10 months.

  • Running on renewable energy

    • Solar and wind use are of course important, but they aren’t the only kinds of clean energy

      • One unique distillery that stuck out to us is Reyka Vodka, which is based in Iceland and runs entirely on carbon-free geothermal energy.

      • But back to the more traditional sources of renewable energy, Square One Organic Spirits utilizes wind power for production at its Rigby, Idaho facility, and it says that it is the largest user of wind power in the entire state.

    • Reducing energy use is important too.

      • Seattle-based Novo Fogo’s zero-waste cachaça production facility in Paraná, Brazil was built in an innovative way to reduce typical energy use. The facility was built on the slope of a hillside. Each room is set a little bit lower than the next, so gravity moves liquid from one room to the other for processing.

      • There’s also a startup backed by Derek Jeter called Bespoken Spirits that allows spirits to be aged in days rather than months or years and customizes the liquor to meet customer specifications. Without relying on barrel storage to mature the liquor and instead using a three step process over three to five days, its cofounder says its process uses just 1% of the energy of normal production and aging.

  • Finding additional ways to reduce carbon emissions

    • Air.co claims to be the “most sustainable vodka” since it is “made from air, water, and sun” and is carbon negative, meaning it actually reduces carbon as it is produced. How? It produces ethyl alcohol from carbon dioxide in the atmosphere. The startup says that each bottle produced is equal to the daily carbon intake of eight trees.

  • Minimizing waste and finding uses for by-products

    • The spent grains from Bulleit Distilling Co. and Cascade Hollow Distilling Company – which distills George Dickel Tennessee Whisky – are converted to “Distillers’ Dried Grains” (DDG’s).  The DDG’s are typically sold as animal feed. Additionally, third-party logistics are minimized when trucks delivering grain to the site are able to collect the DDG and take them offsite – thus minimizing empty load miles.

    • Another example of minimizing waste comes from Jack Daniels, which took the extreme step five years ago of removing every single dumpster from its premises to force its employees to reconsider throwing away materials that could be recycled. Today, less than 1 percent of Jack Daniels’ waste ends up in a landfill.

    • Also, remember Bespoken Spirits? Well their fast aging process also apparently means no angel’s shares, which is the up to 20% that is lost due to evaporation as aging occurs in the barrel.

      • With 9.1 million barrels of whiskey currently conditioning in Kentucky, no angel’s shares would recoup 20 million gallons.

    • Sombra Mezcal has worked with architects at the Consultorio de Asesoría Arquitectónica to make adobe bricks using its agave waste that are then used for rebuilding earthquake damage in the Sierra Mixe district of Oaxaca in Mexico.

    • Another option to deal with some by-products is composting it.

  • Efficient water use

    • Absolut vodka has made water a priority. It doesn’t use artificial irrigation in its wheat production, doesn’t release wastewater, and collects rainwater to be used by the local farming community.

  • Packaging

    • This includes not just what kind of container you use but what you to do with it. Frosted or screen printed bottles can muck up the recycling system.

      • Charleston, S.C.’s Virgil Kaine uses labels made with post-consumer waste, nontoxic glues and eco-friendly inks.

      • Mexico’s Mezcales de Leyenda incorporates natural corks for easier recycling.

    • Some are incentivizing recycling with discounts.    

      • At Atlanta’s ASW Distillery, customers are encouraged to return their used bottles for a 15 percent discount in the tasting room. Bottles are then recycled or repurposed, depending on their condition.

    • Others are looking into packaging alternatives

      • Johnnie Walker whiskey is launching a paper-based bottle next year made from sustainably-sourced wood pulp. These paper-based bottles will have a carbon footprint 90 percent less than glass bottles and they also won’t have a plastic-based lining, which is hard to extract and recycle.

    • Certainly, many spirits come in glass bottles, and distillers are trying to improve glass recycling.

      • For example, Roberta Barbieri while she was at Diageo led the charge along with other glass industry experts for what became the Glass Recycling Coalition, which has the entire glass recycling value chain collaborating to improve glass recycling, mainly via outreach and education.

        • Jay and I actually wrote a Greenbiz article back in 2018 about how this Coalition was formed. Check it out!

      • Today, there is also the non-profit Glass Recycling Foundation that includes Diageo, Ardagh Group, and Northeast Recycling Council as supporters. The Foundation was formed to provide and raise funds for projects with the most significant impact for glass recycling.

• Social

  • Taking care of employees

    • This includes a living wage, flexible hours, safe working conditions, etc.

      • One example is Tanteo Tequila, which is based in Juanacatlan, Mexico, which offers English lessons after work and childcare on-site to its more than 85% women employees.

      • Some brands have taken the step of being fair-trade certified, which entails complying with around 300 labor, social, and environmental standards. So fair-trade certified is more than making sure those making the product are compensated fairly.

        • Flor de Caña’s rum is fair-trade certified. On top of that, since 1913 it has covered its employees’ education.

  • Using your brand as a platform to create social change

    • Ilegal Mezcal protests anti-immigration policies and advocates for LGBTQ+ rights

    • Gray Whale Gin in San Francisco is another example as it donates 1% of its sales to the non-profit Oceana to help restore wild fish stocks, which, in turn, you guessed it, help the whales.

    • The spirits industry in general has aligned with Black Lives Matter and announced several initiatives.

      • One comes from The Kentucky Distillers’ Association. It released a statement on June 9 outlining plans to expand diversity and inclusion within the bourbon industry, starting by creating and funding distilling scholarships and internships for people of color, women, and other minority groups.

        • This is important since the craft alcohol business is predominantly a white one.

      • Diageo has pledged $20 million to support businesses, consumers and partners integral to the hospitality industry in Black communities across the U.S. that have been impacted by the coronavirus crisis. In addition to this, inclusion and diversity is a core business priority for Diageo North America

        • One Diageo brand, Johnnie Walker, established the Keep Walking Fund, which will directly support Black Women Entrepreneurs and further economic advancement partnering with Black Girl Ventures through funding, mentorship and additional resources.

        • More generally, Diageo North America is consistently recognized as one of the best places to work for LGBTQ employees by the Human Rights Campaign, and it received a 100 percent on the HRC’s 2020 Corporate Equality Index.

      • One smaller brand, Plantation Rum, announced it would change its name.

      • There’s certainly more these companies can do, and a new firm was started to help. Earlier this year the Black Bourbon Society launched a non-profit consultancy firm, called Diversity Distilled, to create more diversity and inclusion across the spirits industry.

• All the above actions to improve environmental and social performance require people to execute them. Spirits companies are also investing in larger sustainability teams to help with sourcing, reducing energy use, and the other tactics described above.

  • Makers Mark even hired a wildlife biologist.

• It also goes beyond looking at their own operations and engaging those upstream and downstream.

  • Mezcal Union’s founder realized farmers of the agave it used weren’t getting a fair cut so it actually rallied them to form a union. Today, Mezcal Union guarantees it will purchase product from 20 small-scale unionized distillery partners (over 100 workers all told), and share a sustainable portion of income so that the workers and landowners can continue to grow out their own end of the business.

  • And then downstream, several brands are engaging bartenders on how to be more sustainable.

    • Altos Tequila developed the Tahona Society Collective Spirit: a competition focused on encouraging bartenders to become more socially and environmentally conscious.

    • Absolut partners with Trash Tiki, sustainable bartending savants, to offer open-source resources with low-waste recipes and sustainability tips for bartenders.

How can listeners purchase sustainable spirits that are taking action to be more sustainable, and encourage more sustainable spirits production?

• Unlike some of our episodes like the one on sustainable aquaculture, there is no comprehensive certification yet for sustainable spirits.

  • However you can look for certified organic spirits since that ensures no chemical fertilizers were used.

    • LA-based Greenbar Distillery offers a whole line of organic spirits and plants a tree for every bottle sold.

• More and more companies are publishing sustainability reports and have sustainability websites so you could do a bit of homework before you buy.

  • You can also find a top-notch retailer who knows their products and the people there can hopefully direct you to a product where they know that the company takes sustainability seriously.

• No doubt there is a place on all these spirit company websites to give feedback. If you see them doing the right thing, give them kudos. If you think they taste great but aren’t doing enough on sustainability, let them know they need to improve for you to stay a loyal customer. Nothing drives businesses to act more than hearing from their customers.

• You can buy local. Look for products from distillers in your area and look for spirits made with local ingredients. That cuts down on the emissions from distribution.

  • The American Distilling Institute actually has a map of craft distilleries globally including more than 2,000 in the United States.

  • Regarding the use of local ingredients, Bulleit Whiskey owns or leases around 800 acres of farmland adjacent to its Shelbyville, KY distillery to grow local, non-GMO corn.

Intro to Bulleit Whiskey and its Sustainability Efforts, And Our Expert Guests

• It’s clear from the intro that there are many ways a spirits brand can improve its sustainability performance so to make this a bit more tangible, let’s talk about Bulleit Whiskey. We’re going to dive deep in the interview portion of this episode into their sustainability commitments and tactics.

• History

  • Bulleit Distilling Co. was founded in 1987 by Tom Bulleit, a young attorney who quit his job to pursue his true passion and revive an old family recipe. Bulleit sold 1.42 million cases in 2019. It’s known for its high rye content, which gives it some bold, spicy flavor.

  • Bulleit is one of the fastest-growing whiskeys in America, and it attributes that growth to the bartenders and cultural partners who have adopted it as their own. It’s a brand that is all about pushing the frontier and culture forward, and believes in collaborating with those stirred by the frontier spirit that the brand was founded on.

    • In recent years, Bulleit has partnered with boundary-pushing cultural creators on awe-inspiring projects and experiences through its Frontier Works platform. Examples from Bulleit Frontier Works include a tattoo billboard collaboration, the NEON in a bottle art collection, and a 3D printed bar.

• Now, jumping into sustainability: Bulleit and its parent company Diageo have made significant commitments to sustainability

  • For one, Bulleit built a state of the art facility in Shelbyville, KY that opened in 2017. In this facility, it employs a variety of practices to reduce carbon emissions, enhance water conservation, and manage waste appropriately.

    • There’s also a visitor tasting experience at the distillery. The tasting experience and cocktail bar align with The Oceanic Standard, a badge and certification for venues that have adopted sustainable operating practices and are committed to eliminating single-use plastics. The cocktails there incorporate organic garnishes from a garden Bulleit partnered with the University of Kentucky to create.

  • Forthcoming is another facility in Lebanon, KY that Diageo is building where Bulleit will be the first and lead brand distilled. This facility is slated to be fully operational next year and will be powered by 100% renewable energy, which helps in the effort for this Lebanon facility to be one of the largest carbon neutral distilleries in North America. Also, all vehicles, including forklifts, will be electric and charged by renewable sources. They are also prioritizing local ingredients as much as possible. If all goes to plan, the Lebanon distillery will effectively eliminate more than 117,000 metric tons of carbon emissions each year. To put that into perspective, that’s the equivalent of taking more than 25,000 cars off the road for an entire year.

  • More generally, as a signatory to RE100, Diageo aims to source 100% of its electricity from renewable sources by 2030, and has also signed on to the global Race to Zero campaign, which is a commitment to achieve net-zero carbon emissions by 2050.

  • Recently, Diageo was recognized in Dow Jones World Sustainability Index 2020 for the third consecutive year, ranked among the most prestigious environmental, social and governance (ESG) indices globally. This achievement ranks Diageo in the top four beverage companies worldwide on ESG performance.

  • Back to Bulleit, it’s also seeking to make an impact in the community. This year it announced a partnership with American Forests to plant one million trees over the next five years. Among other benefits, these trees will collectively store runoff water equivalent to 114 olympic-sized swimming pools and they will store enough carbon over the next 100 years to effectively take 140,000 cars off the road for a year.

    • They are prioritizing White Oak, which makes sense since bourbon must be aged in charred oak containers to give it its flavor.

• Expert guests

  • Sophie Kelly, SVP of Whiskeys at Diageo North America

    • Sophie has an MBA from the University of New South Whales and has a 20+ year proven track record as a global strategic brand and agency leader in the marketing and advertising business.

  • Eric Sprague, VP of Forest Restoration at American Forests

    • Eric has worked at the U.S. Environmental Protection Agency, the Alliance for the Chesapeake Bay, and has been at American Forests for the past five years. Like Scott, he graduated with a master’s degree (Eric graduated with two master’s degrees!) from the School of Public and Environmental Affairs at Indiana University-Bloomington. Go Hoosiers!