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Our supply chain

Our business is part of a complex supply chain that begins with farming and continues all the way to the manufacturers of marketing materials as our brands make their journey ‘from barley to bar’.

Our approach

We source materials, ingredients, energy and services from businesses across the world through a mix of global, regional and local supplier relationships. To choose our direct suppliers, we assess a variety of factors including cost, quality, service and alignment with our sustainability and responsibility standards, such as Partnering with Suppliers.

What we buy

The goods and services we buy can be divided into the following categories, listed by spend, with the highest first:

  • Marketing – media, sponsorship and other promotional materials that promote our brands at retail customers’ business sites and elsewhere
  • Packaging materials – these include packaging that holds the final product, such as glass, paper, board, plastic and aluminium
  • Logistics and manufacturing – the services for distributing our materials and products around the world, and outsourcing manufacturing
  • Information services and business support – the businesses that support the activities of our offices, such as consultants, business services, and travel.
  • Raw materials and utilities – including agricultural products such as wheat, barley, corn, hops, sorghum, cream, sugar, and grapes, and utilities such as electricity and water used for our manufacturing sites and offices

How much we buy

Unlike some of our food and beverage peers, we are generally not the largest purchaser of any single item in our supply chain. In total, we spend approximately £6.1 billion on supplied goods and services, with the largest components being marketing and packaging. In terms of the volume of materials used in our final products, we buy more than 1.7 million tonnes of cereals, dairy and sweeteners and more than 900,000 tonnes of packaging such as glass, corrugate, cans, cartons, labels and sleeves.

2012 raw material volume

Raw_material_volume_pie_chart_170px

  1. 17% - Wheat
  2. 37% - Barley
  3. <1% - Hops
  4. 25% - Corn
  5. 5% - Sorghum
  6. 1% - Dairy
  7. 7% - Sugar
  8. 5% - Molasses
  9. 3% - Grapes
2012 packaging volume

Packaging_volume_pie_chart_170px

  1. 89% - Glass
  2. 1% - PET
  3. 2% - Cans
  4. <1% - Closures
  5. 1% - Cartons
  6. 1% - Crowns
  7. 5% - Corrugate
  8. 1% - Labels & sleeves

Where we buy

Our network of approximately 30,000 suppliers includes farmers, packaging manufacturers, energy suppliers and transport companies in over 100 countries. Working with local suppliers provides a significant opportunity for us to contribute to local economies while simplifying our supply chain. Where possible, therefore, we try to work with local organisations and farmers. To us, this means sourcing products for each of our five regions from the region itself.

Sourcing locally can help improve conditions for sustainable development. Africa is our second largest region for production volume after Europe and as such is an important area for us. Last year we set a target to source 65% of the raw materials used in our African production facilities from the region. We have since raised this target to 70% by 2015, reflecting our increased commitment to Africa. Today, we source approximately 56% of our agricultural raw materials from Africa, compared to 57% last year.

While local sourcing brings economic and social benefits to the communities in which we work, there are sometimes trade-offs in terms of other sustainability impacts. For example while we may reduce our carbon impact with less transport, relying on local agriculture in water-stressed areas can have serious consequences if not managed well. Our challenge is to move towards local sourcing while building capabilities to maintain our high standards of quality and sustainability.

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