What Does Carlsberg’s Britvic Buy Mean for Sustainability?

Carlsberg Group
A new UK business called Carlsberg Britvic will be created following the agreed US$4.2bn takeover – but sustainability and net zero are under the radar

Like vodka and orange or lager and lime, the combination of Carlsberg Group and Britvic seems to be the perfect match.

Carlsberg brings booze to the party, including its own lagers, plus scores of other brands – from Hobgoblin ale to Grimbergen, from Brooklyn to Staropramen.

Britvic provides the soft drinks for the drivers – and for the growing number of people who are teetotal.

Robinsons, 7-Up, Fruit Shoot, Tango, R-Whites, J2O, Pepsi and much more.

In terms of the sustainability ambitions of the new business, one senior leader is excited.

Simon Boas Hoffmeyer, Global Head of Sustainability & ESG, Carlsberg Group, said: “Looking forward to welcoming Britvic plc to the Carlsberg Group and having them join us on our journey together towards zero and beyond.”

But how does that fit into the overall picture?

Simon Boas Hoffmeyer, Global Head of Sustainability & ESG, Carlsberg Group

Welcome to the Carlsberg family

Not surprisingly, most of the reaction from the top executives is about the deal and its “exciting” implications for the drinks industry.

Jacob Aarup-Andersen, Carlsberg Group CEO, said: “Britvic is a high-quality business with a fantastic portfolio of leading soft drinks brands.

“We believe that this is a really exciting step that will support our Accelerate SAIL growth ambitions, and deliver significant value to our shareholders.

“I look forward to welcoming our new talented colleagues from Britvic into the Carlsberg family.”

Britvic owns the rights to market and sell Pepsi in the UK, which will continue under the new company.

CEO of PepsiCo Europe Silviu Popovici said: “We are looking forward to building on our long-standing and successful partnerships with both Carlsberg and Britvic.

“We believe that the combination of Carlsberg and Britvic will create even stronger sales and distribution capabilities for our winning brands in important markets.

“We look forward to continuing to expand the partnership into further important markets in the future."

CEO of PepsiCo Europe Silviu Popovici

Expanding global partnerships

Jacob went on to outline why he is so excited about the deal, which was struck after two previous bids were rejected.

He said: “With this transaction, we are combining Britvic’s high-quality soft drinks portfolio with Carlsberg's strong beer portfolio and route-to-market capabilities, creating an enhanced proposition across the UK and other markets in Western Europe.

“The proposed transaction is attractive for shareholders of Carlsberg, supporting our growth ambitions, being immediately earnings accretive and value-accretive in year three.”

He added: “We are excited about expanding our global partnership with PepsiCo and believe that the longer-term opportunities will be very beneficial for both companies.”

In terms of specifics, he said: “We are committed to accelerating commercial and supply chain investments in Britvic and we are confident that Carlsberg Britvic will become the preferred multi-beverage supplier to customers in the UK with a comprehensive portfolio of market-leading brands.”

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The strategic rationale

Still no mention of sustainability, so what about in its strategic rationale?

It includes:

  • The Britvic acquisition will enhance Carlsberg’s top- and bottom-line growth profile in Western Europe and significantly increase the level of cash flow generated in the region
  • It will be transformative for Carlsberg’s UK business, creating considerable opportunity for the future development of brands and people of both organisations, and will create a highly attractive multi-beverage supplier of scale, benefitting from an efficient supply chain and distribution network and providing customers with a comprehensive portfolio of market leading brands and leading customer service
  • The Britvic acquisition will also further strengthen Carlsberg’s close relationship with PepsiCo, which currently spans five markets across Western Europe and Asia. PepsiCo has agreed to waive the change of control clause in the bottling arrangements it has with Britvic
  • Carlsberg has clear plans to increase sales and marketing investments in Britvic in order to accelerate growth and realise the full potential of the business. The combined business will be able to take advantage of the highly synergistic combination between beer and soft drinks, with which Carlsberg has long experience in several markets.
Carlsberg's fibre bottle

The evidence of Carlsberg’s green intentions

In fairness to both businesses, while sustainability has been a little overlooked in the excitement of the purchase, they can call on plenty of examples of their work to cut carbon emissions.

Carlsberg has a Together Towards ZERO and Beyond programme, which includes targeting a net zero value chain and sourcing all raw materials from regenerative agriculture by 2040.

It also commits to replenishing all the water consumed by its breweries in areas of high water risk by 2030.

Other 2030 targets include:

  • Zero carbon emissions at its breweries
  • 100% recyclable, reusable or renewable packaging
  • 90% collection and recycling rate for bottles and cans
  • 50% recycled content in bottles and cans
  • 50% reduction in virgin fossil-based plastic.

Carlsberg also achieved a 16% reduction in value chain carbon emissions from 2015 to 2022.

One active example of its work is Carlsberg’s Sinebrychoff in Finland.

The oldest brewery in the Nordic countries, it achieved carbon neutral brewing in January 2021 and is the world’s first carbon-neutral bottler of Coca-Cola.

In 2022, Carlsberg partnered with Avantium to produce a fibre bottle with a plant-based PEF polymer lining. It has been out to consumers in a successful trial.

Britvic

Britvic’s sustainability story so far

Britvic’s sustainability programme is called Healthier People, Healthier Planet.

Its website says: “We have set ambitious targets accredited by the Science Based Targets initiative and are publicly committed to reducing our operations emissions by 50% and our upstream and downstream emissions by 35% by 2025.

“Britvic will be carbon neutral by 2050. We are fully committed to our science-based targets and we are exploring a range of opportunities to reduce our carbon emissions through three main activities: improving energy efficiency in our operations; utilising low carbon technology and/or energy sources; and working in partnership with our key suppliers to reduce carbon emissions in our supply chain.”

Its proportion of manufacturing energy from renewable sources rose from 46% in 2019 to 59% in 2023.

In July 2023, Britvic announced a 10-year partnership with Atrato Onsite Energy to deliver clean energy exclusively to Britvic from a new solar development. This is in addition to a wind farm power purchase agreement signed by the Irish business in 2022.

The evidence from the two businesses is of sustainability intent and action.

Once the excitement about the merger has died down, the focus on carbon-cutting is likely to be redoubled.

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