Benefits all round for growers groups
Dedicated supply groups are gaining in popularity, offering benefits to both grower and buyer. Robyn Vinter reports
Molson Coors is now the UK’s only integrated maltster and brewer, using 140,000-145,000t malting barley a year, all sourced from British growers.
The Molson Coors Growers Group, made up of growers in the Midlands and further south, produces about 20% of this.
Growers sign a three-year contract to commit a portion of their annual yield to Molson Coors. Individual growers each supply between 200t and 900t a year and must commit to a minimum of three loads.
“We’d been supplying Molson Coors with malting barley for several years and this worked very smoothly,” says Andrew Flux, grain procurement manager at Frontier Agriculture.
“They said they wanted more security of supply so we put a growers group together,” he said.
Fragmented group
Set up in 2008 by Frontier and with guidance from supply chain consultancy EFFP, the group began by supplying malting barley for the Carling brand under the name Carling Western Growers Group.
“The biggest hurdle in setting up the group was co-ordinating the 60 odd growers – which has now become more than 90,” says Stuart Thomson, partner at EFFP.
“Obviously they’re spread across the country, so it’s quite a fragmented group and it’s very time consuming establishing these relationships.”
The success of this group has meant it will supply 29,000t this season compared with 19,000 per year in the previous three-year cycle and now supplies not only Carling but also other Molson Coors brands such as Worthingtons, Coors Light, Grolsch and Cobra.
Jerry Dyson, head of strategic sourcing at Molson Coors in the UK, says that with some growers moving to other crops to improve profits and reduce risk, ensuring a committed source of malting barley was fundamental to the decision to set up the group. However, there are other benefits for the company.
“We wanted to ensure a sustainable supply and the idea was to build a better relationship with farmers, to deliver value and efficiencies,” says Mr Dyson.
“We noticed that there was potential to deliver value on a number of fronts and we’re now able to meet aspirations for corporate responsibility – for example, with water efficiency. We can now progress those on at least 20% of barley we use.”
There are many benefits for growers too, including knowing the customer you’re supplying to and having a number of options for how to market your crop, says James Cox, Maltsters’ Association of Great Britain Grower of the Year who has been involved with the group from the start.
“It’s beneficial to us as growers because we can build a relationship with Molson Coors. We can help shape our contract,” says Mr Cox.
“It’s an extreme market that can be very volatile and the contract gives us the opportunity to achieve good average prices at harvest.
Flexibility
Mr Dyson says that despite its three-year length, the contract offers a lot of flexibility for growers.
“Farmers can fix the price of some of their barley, which is advantageous to each party. This takes out many of the issues around 100% fixed-term contracts and avoids the situation where one side wins and one side loses.
“50% is priced at harvest so there’s no issue of a massive differential or big defaultable charges.
“We generally have harvest movement contracts so we make it as favourable as possible for growers in the group. They get preferential movement and terms,” he says.
Contract terms are agreed by a steering group made up of regional representatives of the growers group. The steering group monitors growers and meets regularly with Molson Coors and Frontier to provide feedback. EFFP oversees this and provides a mediation role, allowing growers to approach EFFP with concerns without damaging their relationship with their buyer.
“The main challenge is trying to find a balance with what works well for growers and what works well for Molson Coors, so there’s a need for compromise,” says Mr Thomson.
“Needless to say, Molson Coors will be trying to get the barley as cheap as possible, and growers will want to get the best price so it can be a challenge coming to an agreement and pricing structure that everyone is happy with.”
Mr Cox is a steering group member. “We represent growers and discuss all aspects of the group in meetings,” he says.
“The contract has to work for every farming business that gets involved. Although the financial aspect is important, the group is more about connection with the customer, understanding what they want and progressive growing to the best possible means.”
Attitude
Since the growers group was established, the quality of the barley delivered has improved significantly and outperforms non-group supply. For Mr Thomson, this is partly due to finding growers with the right attitude.
“We need those who genuinely want to get involved with the group and are looking for a good company with a good brand to supply to and in turn, we’re looking for good growers who are efficient and going to invest.
“This attitude is very strong in the group.”
Part of this long-term approach is working towards sustainability, and growers have been using LEAF’s water management tool to monitor water usage on farm.
“For us, it’s about taking responsibility in the marketplace. It’s important to the group and it’s important to Molson Coors,” says Mr Dyson.
As well as the annual conference, which all members can attend, and workshops where growers can discuss varieties and agronomy, group members often meet socially. This year, they are organising a charity bike ride with the theme “Grain to Glass” to raise money for the Price’s Countryside Fund.
Looking to the future, Molson Coors hopes to expand the group, taking in more growers.
Mr Thompson says the success of this group and similar ones in other industries should encourage more companies to consider doing it.
“The approach that Molson Coors growers group has, the focus and good working relationship is an exemplar for the industry,” he says.
The Molson Coors Growers Group uses social networking site LinkedIn to keep in touch and share technical knowledge. The online group was set up over a year ago by one of the growers and has 30 members. It has proved a handy tool for a very dispersed group.
“LinkedIn is a useful way of communicating,” says Mr Cox, who is a member of the LinkedIn group.
“It offers us the opportunity to talk, offer advice and reassurance to other members as it’s quite a fragmented industry.”
Molson Coors
• Market share of almost 20% of the UK beer market
• 2,000 employees in the UK
• Breweries in Burton on Trent, Tadcaster and Sharp’s brewery in Rock, Cornwall
• Produces Worthingtons, Coors Light, Grolsch and Cobra, as well as Carling, the UK’s bestselling lager.
Benefits
For growers –
• Known customer and market
• Support and training with sustainability
• Flexible contract terms
• Advantageous rates for nitrogen and moisture content
For Molson Coors –
• Committed source of malting barley
• Progressive growers
• Traceability
• Ability to work closely with committed growers on corporate social responsibility issues