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Responsibilities to the Environment

 

New Belgium’s marketing strategy involves linking the quality of its products, as well as its brand, with the company’s philosophy of environmental friendliness. As chair of the sustainability subcommittee for its trade group the Brewers Association, NBB is at the forefront in advancing eco-friendly business processes among companies in its industry. Co-workers and managers from all areas of the organization meet monthly to discuss sustainability ideas as part of NBB’s natural resource management team. From leading-edge environmental gadgets and high-tech industry advancements to employee-ownership programs and a strong belief in giving back to the community, New Belgium demonstrates its desire to create a living, learning community.

NBB strives for cost-efficient energy-saving alternatives for conducting its business and reducing its impact on the environment. In staying true to the company’s core values and beliefs, the brewery’s employee-owners unanimously agreed to invest in a wind turbine, making New Belgium the first fully wind-powered brewery in the United States. NBB has also invested in the following energy-saving technologies:

– A smart grid installation that allows NBB to communicate with its electricity provider to conserve energy. For example, the smart grid alerts NBB to nonessential operational functions, allowing the company to turn them off and save power.
– The installation of a 20 KW photovoltaic array on top of the packaging hall. The array produces three percent of the company’s electricity.
– A brew kettle, the second of its kind installed in the nation, which heats sheets of wort instead of the whole kettle at once. This kettle heating method conserves energy more than standard kettles do.
– Sun tubes that provide natural daytime lighting throughout the brew house all year long.
– A system to capture its wastewater and extract methane from it. This can contribute up to 15 percent of the brewery’s power needs while reducing the strain on the local municipal water treatment facility.
– A steam condenser that captures and reuses the hot water that boils the barley and hops in the production process to start the next brew. The steam is redirected to heat the floor tiles and de-ice the loading docks in cold weather.

In April 2014, New Belgium was featured in a half-page advertisement supporting the EPA clean water rule that was introduced on March 26, 2014. Andrew Lemley, New Belgium’s Government Relations Director, was quoted in an EPA news release championing continued support for the Clean Water Act while also associating quality water with quality beer.

In addition to voicing political support for environmental protections, New Belgium also takes pride in reducing waste through recycling and creative reuse strategies. The company strives to recycle as many supplies as possible, including cardboard boxes, keg caps, office materials, and the amber glass used in bottling. The brewery also stores spent barley and hop grains in an on-premise silo and invites local farmers to pick up the grains, free of charge, to feed their pigs. Going further down the road to producing products for the food chain, NBB is working with partners to take the same bacteria that create methane from NBB wastewater and convert them into a harvestable, high-protein fish food. NBB also buys recycled products when it can, and even encourages its employees to reduce air pollution by using alternative transportation. Reduce, Reuse, Recycle—the three R’s of environmental stewardship—are taken seriously at NBB. The company has been a proud member of the environmental group Business for Innovative Climate & Energy Policy (BICEP), and it signed BICEP’s Climate Declaration in 2013, which calls for American businesses, stakeholders, and regulators to address climate change.

Additionally, New Belgium has been a long-time participant in green building techniques. With each expansion of the facility, it has incorporated new technologies and learned a few lessons along the way. In 2002, NBB agreed to participate in the U.S. Green Building Council’s Leadership in Energy and Environment Design for Existing Buildings (LEED-EB) pilot program. From sun tubes and day lighting throughout the facility to reusing heat in the brew house, NBB continues to search for new ways to close loops and conserve resources.

NBB has made significant achievements in sustainability, particularly compared to other companies in the industry. For one, NBB’s goal is to use only 3.5 gallons of water to make 1 gallon of beer, which is more than 20 percent less than most other companies. The company is attempting to create a closed-loop wastewater system with its own Process Water Treatment Plant, in which microbes are used to clean the wastewater. NBB recycles over 99.9 percent of its waste, and today 100 percent of its electricity comes from renewable energy sources. Despite these achievements, it has no intention of halting its sustainability efforts. By 2015, the company hopes to reduce carbon emissions by 25 percent per barrel. To encourage sustainability throughout the supply chain, NBB adopted Sustainable Purchasing Guidelines. The Guidelines allow them to pinpoint and work closely with eco-friendly suppliers to create sustainability throughout the entire value chain. For its part, NBB conducts life-cycle analysis on its packaging components while continually seeking more efficient refrigeration and transportation technology that can be incorporated into its supply chain.

Responsibilities to Society
Beyond its use of environmentally friendly technologies and innovations, New Belgium also strives to improve communities and enhance people’s lives through corporate giving, event sponsorship, and philanthropic involvement. Since its inception, NBB has donated more than $7 million to philanthropic causes. For every barrel of beer sold the prior year, NBB donates $1 to philanthropic causes within their distribution territories. The donations are divided between states in proportion to their percentage of overall sales. This is the company’s way of staying local and giving back to the communities that support and purchase NBB products. NBB participates in 1 Percent for the Planet, a philanthropic network to which the company donates 1 percent of its profits. NBB employees also partnered with Habitat for Humanity to build a house for a family who had lost their home to a fire.

Funding decisions are made by NBB’s Philanthropy Committee, which comprises employees throughout the brewery, including employee owners, area leaders, and production workers. NBB looks for nonprofit organizations that demonstrate creativity, diversity, and an innovative approach to their mission and objectives. The Philanthropy Committee also looks for groups that involve the community to reach their goals.

Additionally, NBB maintains a community bulletin board in its facility, where it posts an array of community involvement activities and proposals. This community board allows tourists and employees to see the different ways they can help out the community, and it gives nonprofit organizations a chance to make their needs known. Organizations can even apply for grants through the NBB website, which has a link designated for this purpose. The company donates to causes with a particular emphasis on water conservation, sensible transportation and bike advocacy, sustainable agriculture, and youth environmental education, among other areas.

NBB also sponsors a number of events, with a special focus on those that involve “human-powered” sports that cause minimal damage to the natural environment. Through event sponsorships, such as the Tour de Fat, NBB supports various environmental, social, and cycling nonprofit organizations. In the Tour de Fat, one participant hands over his or her car keys and vehicle title in exchange for an NBB commuter bike and trailer. The participant is then filmed for the world to see as he or she promotes sustainable transportation over driving. In the course of 1 year, New Belgium can be found at anywhere from 150 to 200 festivals and events across the nation.

Responsibilities to Employees
Recognizing employees’ role in the company’s success, New Belgium provides many generous benefits for its employees. In addition to the usual paid health and dental insurance and retirement plans, employees who stay with the company for 5 years earn an all-expenses paid trip to Belgium to “study beer culture.” Employees are also reimbursed for 1 hour of paid time off for every 2 hours of volunteer work that they perform. Perhaps most importantly, employees can also earn stock in the privately held corporation, which grants them a vote in company decisions. Employees currently own 100 percent of company stock. Open book management allows employees to see the financial costs and performance of the company. Employees are provided with financial training so they can understand the books and ask questions about the numbers.

New Belgium also wishes to get its employees involved not only in the company but in its sustainability efforts as well. To help their own sustainability efforts, employees are given a fat-tired cruiser bike after 1 year’s employment so they can ride to work instead of drive. An onsite recycling center is also provided for employees. Additionally, each summer New Belgium hosts the Tour de Fat, where employees can dress in costumes and lead locals on a bike tour. Other company perks include inexpensive yoga classes, free beer at quitting time, and a climbing wall. To ensure that workers’ voices are heard, NBB has a democratically elected group of co-workers called POSSE. POSSE acts as a liaison between the board, managers, and employees.

Responsibility Breeds Success
New Belgium Brewing’s efforts to live up to its own high standards have paid off with a very loyal following—in fact, the company recently expanded the number of tours it offers of its facilities due to such high demand. The company has also been the recipient of numerous awards. Past awards for NBB include the Business Ethics Magazine’s Business Ethics Award for its “dedication to environmental excellence in every part of its innovative brewing process,” its inclusion in the Wall Street Journal’s 15 best small workplaces, and the award for best midsized brewing company of the year and best midsized brewmaster at the Great American Beer Festival. New Belgium has taken home medals for three different brews: Abbey Belgian Style Ale, Blue Paddle Pilsner, and La Folie specialty ale.

According to David Edgar, former director of the Institute for Brewing Studies, “They’ve created a very positive image for their company in the beer-consuming public with smart decision-making.” Although some members of society do not believe that a company whose major product is alcohol can be socially responsible, NBB has set out to prove that for those who make a choice to drink responsibly, the company can do everything possible to contribute to society. NBB also promotes the responsible appreciation of beer through its participation in and support of the culinary arts. For instance, it frequently hosts New Belgium Beer Dinners, in which every course of the meal is served with a complementary culinary treat.

Although NBB has made great strides in creating a socially responsible brand image, its work is not done. It must continually reexamine its ethical, social, and environmental responsibilities. In 2004, it received the Environmental Protection Agency’s regional Environmental Achievement Award. It was both an honor and a motivator for the company to continue its socially responsible goals. After all, there are still many ways for NBB to improve as a corporate citizen. For example, although all electric power comes from renewable sources, the plant is still heated in part by using natural gas. There will always be a need for more public dialogue on avoiding alcohol abuse. Additionally, continued expansion requires longer distances to travel for distributing the product, which increases the use of fossil fuels. Perhaps as a way to deal with these longer distances and expand production capacity, NBB opened its second brewery in Asheville, North Carolina, in 2015. Practically speaking, the company has a never-ending to-do list.

NBB executives acknowledge that as its annual sales increase, so do the challenges to remain on a human scale and to continue to be culturally authentic. How to boldly grow the brand while maintaining its humble feel has always been a challenge. Additionally, reducing waste to an even greater extent will take lots of work on behalf of both managers and employees, creating the need for a collaborative process that will require the dedication of both parties toward sustainability.

NBB also faces increased competition from other craft breweries. It still remains behind Boston Beer Co. (maker of Sam Adams beer) and Sierra Nevada in market share. Like NBB, Boston Beer Co. and Sierra Nevada have plans to expand, with Boston Beer allocating $35 million for capital investment projects at breweries in Massachusetts, Pennsylvania, and Ohio in 2012. NBB must also compete against craft beer alternatives released by traditional breweries, such as MillerCoor’s New Moon Belgian White. It must constantly engage in environmental scanning and competitive analysis to compete in this increasingly competitive environment.

Every six-pack of New Belgium Beer displays the phrase, “In this box is our labor of love. We feel incredibly lucky to be creating something fine that enhances people’s lives.” Although Jeff Lebesch and Kim Jordan are divorced and Lebesch has left the company to focus on other interests, the founders of NBB hope this statement captures the spirit of the company. NBB’s most important asset is its image—a corporate brand that stands for quality, responsibility, and concern for society. Defining itself as more than a beer company, the brewer also sees itself as a caring organization that is concerned for all stakeholders.

QUESTIONS

1. What do you think of NBB’s mission statement? If you were to re-write it, given your understanding of the company from the case, and your knowledge of what a good mission statement should include, what would you suggest? (3 marks)

2. How would you classify NBB’s approach to planning, based on the 3 models we discussed in class? Please justify your selection (2 marks)

3. Apply Porters 5 Competitive Forces to NBB and make observations for each section based on the information given in the case. Are there any additional factors they should consider in terms of competition? (10 marks)

4. NBB is primarily distributed in US states, but the case does mention their beer being available in BC and Alberta. Apply your knowledge of how to segment a market. How would you describe their ideal BC target customer? (8 marks)

5. How would you define NBB’s competitive advantage? What are their distinct competencies? How would you describe their strategic position in the US beer market category? (9 marks)

6. Considering Porters generic strategies, how would you classify NBB? Please justify your answer. (3 marks)

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