Asahi Europe: Enabling growth through procurement
Japanese beverage company Asahi is internationally known for products such as its eponymous Super Dry lager. More recently, it has acquired several European brands such as Peroni and Grolsch under its Asahi Europe subsidiary. Asahi Europe was indirectly formed following the acquisition of SABMiller by AB InBev, with one of the conditions being to divest part of its European business. Ian Brenton is Head of Procurement at Asahi Europe, having formerly been at SABMiller. “I was responsible for a number of the packaging categories globally. When Asahi acquired the Western European Business Unit from SABMiller they needed a Procurement team. They kindly offered me the opportunity to move from running a Packaging specific agenda to managing the entire Procurement agenda. As such, we’re a team of 23 people, working from the UK, Italy, Holland and Switzerland.”
Brenton’s procurement department has been key to supporting the growth aims of Asahi Europe’s purchases. “Asahi bought the businesses because they wanted a footprint with global premium brands, to help offset the declining domestic revenues” says Brenton. “The procurement function’s primary aim is to support the growth of the business through competitive, predictable costs, improved working capital, assured supply and supplier-sourced innovation, all generated in an environmentally & socially sustainable manner.” As part of that journey, the company acquired the beverage, brewing and distribution business of Fuller, Smith & Turner PLC in 2019, which brought its own challenges in terms of procurement. “In the UK we used to be a predominantly import-focused business. We had little manufacturing of scale, but almost overnight we acquired half a million hectoliters worth of manufacturing in three different production locations – in London, Cornwall and West Sussex. We've had to take a procurement team that used to focus solely on Indirect Procurement and very quickly introduce some experience in procurement of Brewing and Packaging. It means we've doubled the size of the procurement team in the UK.”
A number of partnerships have been crucial to maintaining and accelerating that level of growth. Aside from gleaning market information from a valuable source of trusted suppliers, Asahi Europe has also partnered with procurement intelligence firm Beroe. “We retained a strong relationship with Beroe after working with them previously. From a market intelligence standpoint, Beroe offers a great deal. Whether we need it for budgeting or sourcing activities, they give really good insight that we’ve found very beneficial.” Other partnerships have come into play across the company. “On the agricultural side of the business, staying close to our farmers and cooperatives is really important to us. These relationships have led to the development of proprietary maize. Similarly, by working with agricultural development companies we have met our primary aim, significantly increasing our hop yields and developing innovative downstream products for use in our premium portfolio .
One of the key tasks procurement fulfils is in providing packaging, to contain products as well as emphasising their premium nature. “Part of the challenge is ensuring that we can readily respond to business requests overcoming the specific challenges unique to each packaging type. Primary packaging, in most cases, is quite a capital intensive business - there's quite a large capital investment before you bring on stream new capacity.” For cans, Asahi Europe partnered with a new entrant in the market. Their mutual relationship helped the upcoming company to establish itself, while Asahi gained a partner aligned with its strategy. “Supporting growth in glass or aluminium, or stainless steel for kegs, are not quick decisions to implement,” says Brenton. “You have to plan for the long term, and we often see five year plus contracts. If it's corrugated or cardboard, typically used for consumer facing secondary packaging multi-packs, there are many suppliers and therefore more competition. This means that change can be implemented more quickly and contracts therefore tend to be a lot shorter.”
Field Sales Distribution Units (FSDUs),Point of Sale Materials (POSMs) & glassware are examples of how we interact with consumers in the off trade. To meet the glassware needs of a relaunched Asahi Super Dry and updated Peroni, it was crucial to find suppliers who could act as both glassmakers and decorators to produce a premium product, which the company duly accomplished. For FSDUs, these are in-store display units and key opportunities to emphasise the premium nature of products. A tender for suppliers resulted in a 50% reduction in lead times as well as a move to higher quality printing, whilst paying significantly less than before. POSMs, meanwhile, were previously delivered by a number of different suppliers. Following a tender, Asahi Europe has been able to consolidate orders for fewer shipments, streamlining the process and having the knock-on effect of reducing the carbon footprint stemming from reducing its need to ship goods around the planet. For Asahi, sustainability is always a consideration in the process of procurement. “From a sustainability standpoint, when we work with suppliers we deliberately look for programmes which will help to reduce our CO2 footprint, improve recycling rates, reduce wastage, increase recycled content and aid our transition to greener energy,” says Brenton.
For Brenton, Asahi Europe’s aim for the future is simple: “to become a premium beer powerhouse.” To achieve this target will require the contribution of every part of the business, but it is clear that procurement has an important role to play. From its packaging efforts supporting premiumisation to integrating its latest UK acquisition, the work of procurement means that Asahi Europe is indeed becoming a premium beer powerhouse.