Brewers come under pressure to minimise water footprint

During a severe drought in northern Mexico two summers ago, President Andrés Manuel López Obrador made an example of the brewing industry, calling on beer companies to move their operations to the less water-stressed south, to help ease water shortages.

Now, more beverage companies are having to consider water access in the communities where they operate, as well as the volumes used by their suppliers, as water stress increases the world over — causing governments and citizens to demand action.

Constellation Brands, one of several drinks giants operating in northern Mexico, learned the hard way when residents in the city of Mexicali voted in 2020 to scrap a new facility because of its proposed water usage. The brewer had invested $1.4bn in the factory, which was already two-thirds complete.

According to non-profit group CDP, which runs a disclosure mechanism for corporate water usage, risks to supply were reported by 20 per cent of participating companies last year. The potential losses from this added up to $77bn, or $124mn per company.

“Water is a very location-specific issue in terms of the solutions you need to bring,” says Sonia Thimmiah, senior director of global sustainability at Heineken. “It’s not like carbon . . . what works in Mexico is very different to what you need in Indonesia.”

As the world’s second largest brewer, Heineken has 32 sites in water-stressed areas and uses water balancing — where water extracted from a watershed is replenished — at 28 of them. It aims to achieve water balance at all by 2030.

In Spain, for example, Heineken says it has achieved 100 per cent water balance by restoring wetlands and eradicating an invasive plant — common cane — which was adversely affecting watercourses.

And, in Mexico, where Heineken has seven breweries, the company collaborated with the Monterrey Metropolitan Water Fund, an NGO, to reforest 1,400 hectares of the national park that is the source of much of the water used by the city of Monterrey.

The logic the government has promoted is: where there is no water, there should be no business

Water scarcity is a significant problem in Mexico. National Meteorological Service data shows that rainfall in 2023 was 20 per cent below average, and that about three-quarters of the country is currently abnormally dry or in drought.

But brewing companies argue that they are not responsible for water shortages. When López Obrador launched his attack on them in 2022, they were quick to point out that they were consuming less than 1 per cent of the local water supply.

Susana Barroso Salcedo, of the Water Advisory Council, a Mexican NGO, says the government’s singling out of brewers was misjudged.

“The logic the government has promoted is: where there is no water, there should be no business,” Barroso Salcedo says. “But the reality is that over 70 per cent of water is used in agriculture. We think the most efficient use of water today is by industry.”

Corporate sustainability experts say this efficiency needs to go beyond individual facilities. “There’s no point in having the world’s most water-efficient distillery, or packaging site, or brewery, if you have a problem with the water catchment,” says Ewan Andrew, president of global supply chain and procurement at Diageo.

In 2021, the drinks company invested £500mn in Mexico to expand its tequila-making capacity. Before it began building, it carried out a study of the water basin in Jalisco, where tequila originates, and engaged with local leaders, NGOs and the government. “If you want a sustainable, profitable, long-term business, you need to operate within the boundaries of that community,” Andrew explains.

Kate Holme, director of strategic partnerships at non-profit body Water­Aid, says that, while she is seeing a “high level of engagement” with drinks businesses, companies could do more to ensure that communities have sustainable water supplies and sanitation.

“We would encourage drinks companies to look not only within the factory fence to assess their water risks and impact, but to listen to and work with the communities where they’re based,” Holme advises. 

A big challenge for all companies is water usage in their supply chains. CDP found that just 4 per cent of the more than 3,000 companies it surveyed set water-related targets for their supply chain as well as their own operations.

Thimmiah says Heineken has started surveying its suppliers to establish the water footprint of the agricultural commodities it relies on. She also highlights projects with suppliers to address not only water usage but also carbon emissions and biodiversity.

To Thimmiah, it is starting to be connected: “I see things moving [towards] a much more integrated approach.”