The Big Question: Will climate change alter the flavour of my beer? Carlsberg CEO says probably

euronews (in English)

Carlsberg’s new CEO, Jacob Aarup-Andersen on how climate change may alter the flavour of your favourite beer and other challenges faces brewers.

Transcript

00:00 Water scarcity is a real issue for us as brewers. This is not a theoretical discussion. I think

00:04 there is a chance that they will change in flavor. You're nothing without your brands.

00:07 Welcome to the big question. The series from Euronews where we address some of the biggest

00:18 questions on the business agenda. We're here in Davos, Switzerland at the World Economic Forum.

00:23 And we're joined by Jakob Arup-Andersen, the CEO of Carlsberg. Thank you for joining us. Obviously,

00:28 we all know what Carlsberg beer, but you actually have lots of other brands of beer. Can you just

00:31 remind us some of the other beers that you produce? We're happy to. How long do you have?

00:34 We have 140 brands globally. So we sell our beers in 150 countries. Carlsberg is big. It's actually

00:42 not our biggest brand. Our biggest brand globally is Tuborg. 1664, Blanc is a massive growth driver.

00:49 Brooklyn Brewery is also a significant growth driver. Grimbergen, Somersby. I can tell you,

00:55 it's a thriving portfolio. And it's one of the big key strengths of our business. That's the

01:00 strength of our brand portfolio, which in the end, you're nothing without your brands.

01:04 Climate change is one of the big topics here at Davos this year. And whilst it might not be

01:14 immediately obvious how that's connected with alcohol, what threat does climate change actually

01:19 pose to the alcohol industry, and particularly brewing of beer?

01:22 For us, it's a massive thing. So when you look at how beer is made, you can say water and barley

01:29 are two of the main ingredients. And water scarcity is a real issue for us as brewers.

01:33 And the second element is barley yields are falling due to climate change. So

01:37 this is not a theoretical discussion. This is having real impact on our business. And that's

01:42 also one of the reasons why I'm here to discuss solutions in terms of dealing with these climate

01:45 issues. So how is it affecting Carlsberg so far? And what can be done to adapt to climate change

01:52 and to the issues that you're facing? So far, we've been able to handle it. But it also means

01:56 significant investments in terms of the way we produce beer. But also, we do a significant amount

02:01 of research in our own foundation controlled Carlsberg Research Lab, where we do a lot of

02:07 scientific work into more climate resistant crops and these types of things. But for me,

02:12 you can say when I look at the big sustainability programs that we run across the firm,

02:16 it's especially things like the water resource usage, where we have some very ambitious targets,

02:22 we already brought down our water uses by 30% across our breweries. And we're targeting a

02:28 significant reduction further from here, despite being one of the most efficient already. So it is

02:32 impacting our business. It's also impacting our packaging, which is a massive part of our carbon

02:38 footprint. As you've said, you've already made changes to produce your beer more environmentally

02:43 friendly. And but to produce beer is a very water intensive process. And how much water does it

02:49 require to produce one liter of beer? So currently, it requires if you look across all of our footprint

02:54 around two and a half liters per liter of beer. And that is some of the most efficient

02:58 brewing you will find globally, as you would expect from one of the world's largest brewers,

03:02 our target is to go down to two in areas with water risk. Our target is to go down to 1.7 to

03:07 make sure that we are helping the ecosystem and the biodiversity around the breweries. Right now,

03:13 the industry is really on a on a on the right trend here. But there's so much more to be done.

03:18 When you look at our most efficient breweries, they are down to 1.4 1.5. So there is there is a

03:25 lot we can do still to to move all of our breweries down. We have more than 80 breweries globally. And

03:29 therefore, there's a journey to get all of them down there. That's a really impressive target.

03:33 So I I've heard that, you know, and you know, in the past couple of years, when there's been

03:37 droughts and fires and things like that, and obviously, it's really impacted hop

03:41 harvest. And, you know, some places are becoming kind of worse for crop production. And I have

03:48 heard of, you know, other breweries having to change their recipes and things like that.

03:51 Is there a chance that some of our favorite beers might change in flavor?

03:54 I think there is a chance that they will change in flavor, but not a lot. There's no doubt that

03:58 hops are a very sensitive, are very sensitive to climate change. And even small fluctuations in

04:07 normal in normal seasons can have a massive impact. The other element of this, though,

04:11 is also science. And you can see the work we do in our research labs is also to make sure that

04:16 one, we can create more climate resistant hops, but it's also around how do we mimic some of the

04:22 features of hops in a more synthetic way, in a sustainable way, but more synthetic way. So we,

04:27 so we can mitigate this. But I am I am afraid that there's no way that if you look at the

04:32 coming decades, this will not impact the beer industry, of course it will, and will also

04:37 maybe impact some of your favorite beers.

04:39 So thinking about all of these beers that you produce globally, and obviously that there is

04:50 a current trend for alcohol free 0% kind of thing. Is that a trend globally? Or is it just something

04:56 that we're seeing in Europe? And how is that affecting your business?

04:59 So alcohol free is, is one of the big growth drivers. It is, as you say, it's uneven globally,

05:05 we see less of it in Asia, which is a big market for us, but we're seeing a lot of it in Europe.

05:10 And also it's in a big trend in the US. We're less present in the US. But so for us, the big

05:15 impact is in Europe. We've over the last two years, we've launched 60 alcohol free brews

05:21 globally. So it's a massive thing for us. And we've also come out with the ambition that 35%

05:27 of our total beer sales should be low or no alcohol by 2030. So this is a big trend. And there

05:34 will still be a massive place for your classic beers. But it's also important that we can cater

05:38 to the different locations because alcohol free is not just a substitute. It's also an incremental

05:44 consumption. As an example, I would never at work drink an alcoholic beer. But I would drink an

05:52 alcohol free beer. So it's an incremental consumption. And with this current trend,

05:58 are you see are people buying less beer? Or are people just buying more alcohol free beer?

06:02 So we are generally seeing if you look at our volumes, they are flat to a flat to small down

06:08 in Europe. I think that's a public figure, don't worry. And but we're still seeing higher volumes

06:13 across Asia, which is a massive growth market for us. So I wouldn't say that there is a there is a

06:19 interplay between alcohol free and and normal beer. What we are seeing right now is there's

06:24 no doubt that European markets are pretty mature. People are spending more money on less beers,

06:31 which means from us from our perspective means we are premium rising portfolio,

06:35 which is a big topic for us. We would we have a fantastic portfolio of higher premium beers and

06:42 people are willing to spend a little bit more to get a higher quality brand. And,

06:47 and that of course, benefits the industry.

06:53 I guess that brings me to my final question. So looking forward to the future,

06:58 how do you see the the beer industry or the alcohol industry widely changing over the next 10

07:04 years? Yeah, so we see we see a clear move towards premium. So a clear premiumization trend,

07:09 which continues. The other element we're seeing is we will see continuous strong growth of the beer

07:14 portfolios, especially in emerging markets. But the big the big growth drivers will be what we

07:20 call beyond beer and alcohol free. So beyond beer here is your hot seltzers, your ciders,

07:26 these types of drinks. And you can say where we are moving into hybrids between beer and other

07:31 drinks. And that's a big market as well. For us, it's important that we can deliver for the consumer

07:37 choice. But there's no doubt you can say mainstream core beer as we know it, that will be a smaller

07:42 and smaller part of our overall portfolio, but still significant to be clear. Okay, brilliant.

07:47 Thank you so much. It was wonderful to talk to you. Thanks for giving us your time today. And

07:51 I look forward to trying more of the beer in the future. Thank you so much. Thank you.

08:01 [BLANK_AUDIO]

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