Will the Alcobev Industry’s Bet on Sustainable Practices pay off?

Liquor stores in India are booming, selling premium whiskies, craft beers and homegrown gins at a staggering pace. Little wonder India’s alcohol industry is one of the fastest-growing in the world. It is projected to grow at a compound annual growth rate of 5.8% and anticipated to reach $68.75 billion by 2034, up from $39.30 billion in 2024, according to Market Research Future.

However, as awareness about the adverse impact created by businesses on the environment spreads, every industry is re-orienting practices to reduce its carbon footprint. The alcoholic-beverage (alcobev) industry, too, is aligning growth with sustainable practices. From the millions of litres of water used in brewing to the mountains of glass bottles discarded every year, the industry’s environmental impact is difficult to ignore. The concerns have made leading players such as Pernod Ricard India, Diageo India and Chandon India rethink everything from packaging to water conservation to ensure that sustainability is more than a buzzword.

“Globally, and in India, our sustainability agenda is guided by Diageo’s ‘Spirit of Progress’ ESG action plan. This agenda is built on three strategic pillars: pioneering grain-to-glass sustainability, championing inclusion and diversity, and promoting positive drinking,” says Srinidhi Rao, Head of Sustainability, Diageo India, which has brands such as Godawan, a Made-In-India single malt whiskey that supports conservation of the Great Indian Bustard and uses locally sourced six-row barley.

Since 2020, the company has reduced water use by 54% in its distillation processes and 35% in its packaging operations. What’s more, it has replenished more than 1.1 million cubic metres water across water-stressed sites, provided 264 sanitation units, and 13,000 litres per hour of clean drinking water across villages in Maharashtra, UP, Odisha and Rajasthan.

Diageo India has also taken steps to transition from fossil fuels and eliminated the use of coal in its fully owned distilleries by shifting to biomass and solar power. As a result, it has achieved a 93% reduction in market-based Scope 1 and Scope 2 greenhouse gas (GHG) emissions from 2020 to 2025; close to 99% energy used in direct operations comes from renewable sources. Scope 1 is direct GHG emissions from sources owned or controlled by the organisation. Scope 2 is indirect GHG emissions from generation of purchased electricity, steam, heat or cooling.

“Beyond our facilities, we are driving climate resilience through community-based nature-based solutions. For instance, our Signature Packaged Drinking Water brand supports a large-scale mangrove restoration project in Puri, Odisha, where over 31,500 seedlings have been planted (mangroves are known to sequester carbon up to ten times faster than mature tropical forests),” says Rao.

Pernod Ricard India, the Indian arm of the French giant, has moved from coal to biomass at its largest distillery in Nasik. The parent company is globally the largest producer by volume and the second largest by value.

“The sustainability initiative has been taken at a global level under the platform of what we call ‘Good Times From a Good Place’. It is a well-articulated roadmap to ensure that our business strategy is aligned seamlessly with the guidelines of the United Nations Sustainability Goals,” says Gagandeep Sethi, Senior Vice President of Integrated Operations, Sustainability & Responsibility, Pernod Ricard India.

The four elements of this platform are nurturing terroir, circular making, valuing people and responsible hosting. “By FY30, we aim to cut Scope 1 and 2 emissions by 54%, FLAG (forest, land and agriculture) Scope 3 emissions by 30.3%, and non-FLAG emissions by 25% across the group globally,” says Sethi. “This is an absolute reduction, while we will grow in volume. It is an ambitious target and India is playing a key role in helping us realise it,” he says, adding that Pernod Ricard is looking at reducing Scope 1 and 2 emissions by 90% for Pernod Ricard India and 54% for Pernod Ricard globally.

The company is increasing the use of renewable electricity and has signed a power purchase agreement with a green supplier. By 2030, 98% electricity used at all its plants will be renewable. This is in keeping with the group objective of using 100% renewable electricity for all plants globally by 2025, says Sethi.

Among other initiatives, Pernod Ricard India is moving rice-based Grain Neutral Spirit (GNS) to maize. GNS is a neutral-flavoured spirit distilled from different grains which is often used as a base for alcoholic beverages such as vodka and gin. “Maize has one-third the carbon footprint of rice. So, we have started moving towards maize and working with our suppliers to ensure they also make the switch to biomass in their distilleries. We are onboarding only those suppliers who have a greener energy source,” says Sethi.

Like Diageo India, Pernod Ricard India is reusing 20% of the bottles. It is using lighter bottles as well. Pernod Ricard India was the first to stop using mono-cartons. “By eliminating permanent mono-cartons, we have reduced CO2 emissions by 10,000 tonnes,” says Sethi. From the baseline year of 2018, the company is planning a 25% reduction in water consumption by 2030.

LVMH Moët Hennessy Louis Vuitton SE, or LVMH, which owns Moet Hennessy’s sparkling wine brand Chandon, is also becoming more sustainable by reducing water consumption and reimagining the use of glass to reduce the carbon footprint.

Chandon is produced in six regions, including India. “It operates with the same consideration and sustainability commitments as all our five sister wineries across our 1,400 hectares of primary vineyards across the globe. We call our mission Lands of Diversity,” says Rajesh Dixit, Winery Director, Chandon India, Moet Hennessy India.

Chandon India’s objectives are in line with LVMH’s commitment to halve CO2 emissions (Scope 1,2,3) by 2030. As glass is the main contributor to its carbon footprint, half the bottles weigh 775 gm or less compared with the standard 835 gm. About 80% of the glass used by the company is green—producing green glass emits less CO2. The company also plans to remove all plastic from packaging by 2026. It is investing significantly in generating green electricity and has set up 734 solar panels covering 3000 sq. mt. of the property through which 60% of the vineyards’ power needs are met, saving an estimated 386 tonnes CO2 emissions every year.

With the climate clock ticking fast, the alcobev companies need to do their part. 

@smitabw