Supply Chain

We produce and distribute more than 2 billion unit cases of our products annually across our territories. Our supply chain therefore plays a central role in our business and is responsible for the company’s procurement, planning, manufacturing, engineering and sustainability. In all our processes we minimise our environmental impact and consider sustainability in our value chain - from sourcing raw materials and manufacturing the end product to distributing it to our customers.

Our success lies with our people's expertise, our absolute focus on quality and our continuous investment in advanced technologies.

PRODUCTION

To produce our products, we use water, sweeteners, sugar, beverage concentrate and glass, aluminum, PET resin or carton packaging plus energy for the overall manufacturing process. We source these using sustainable practices and seek to use them efficiently. In 2021, we achieved 80% certification of agricultural ingredients on average across all CCH related crops under the Coca-Cola System framework of the Principles for Sustainable Agriculture (PSA) and we are working towards 100% certification by 2025. 

More specifically in 2021 we achieved below PSA Certification:

·        100% for High fructose Corn Syrup (HFCS)

·        75% for Sugar produced from Beet and Cane

·       96% for Juices related to Fruit Crops 

We have re-stated our zero tolerance for failure to meet standards and deployed a maturity continuum measurement, with stringent processes in place to minimise the occurrence of quality issues. However, when they do arise, we have robust processes and systems in place so we can deal with them quickly and efficiently, ensuring that our customers and consumers retain confidence in our products. As the result of best-in-class industry benchmarking, each of our markets has developed tailored plans to support and further develop our quality and food safety culture.

Quality and food safety remain our top priorities, to make sure we meet customer and consumer expectations while delivering against our cost leadership commitments. This is why we commit to it publicly in our Quality & Food Safety policy.

Health & Safety

The health and safety of our people and partners always comes first. It is managed as a principal risk, emphasising the critical importance of ensuring the wellbeing of everyone in our workplaces.

We conduct annual health and safety weeks in all our countries to build knowledge and capabilities and strengthen the awareness about health and safety among our emplyoees. As an example, in 2019 our internal health and safety campaigns provided helpful information addressing stress at work, machine safeguarding, ergonomics and warehouse traffic safety.  

Transforming, innovating and digitalising our supply chain

To ensure our business is fit for the future, we are investing in advanced technologies and transforming and digitalising many of our supply chain processes.

Operating in 29 diverse markets, our aim is to build a borderless supply chain that operates effectively, efficiently and enables us to imbed innovative technologies, fast. We are applying innovation within our supply chain to expand our technical capabilities while ensuring productivity and cost, energy and water savings.

To do that, we’re investing in advanced technology that will optimize our infrastructure and transform our existing plants into efficient mega-plants that can effectively serve a country or an entire region. This requires us to utilize new and different technologies and processes. 

Optimising infrastructure to support a 24/7 portfolio

Optimising and developing our infrastructure also supports our expanding 24/7 portfolio. By centralising our production planning system for the whole Group, with each plant serving regional needs, we have been able to meet market demand with speed and agility. This is supported by expanding production capacity in targeted markets, including Nigeria and Russia, where we anticipate strong future growth.

We have also upgraded production lines to support product innovation. For example, we invested in a new premium glass packaging line for FUZETEA in the Czech Republic and Romania and for Coca-Cola Energy in Hungary, as well as investments to support the production of Cappy Lemonade and Coca-Cola signature mixers in Romania.

In Italy we recently invested in new production capabilities for different package sizes, a new aseptic PET line at our Nogara plant to accommodate Adez in our expanded 24/7 portfolio and new TriBlock technology in a PET line in our Marcianise plant. TriBlock technology helps us use production space more efficiently and reduce water and energy consumption.

To manage the increased output from our mega plants and the complexity of our expanded 24/7 portfolio, we continued investing in automation for our high-capacity warehouses. Automated warehouses, and automatic guided vehicles, improve both efficiency and service quality.

Sustainable sourcing

The sourcing of our raw materials accounts for a large portion of our economic, operational and environmental footprint, and the behaviour of our suppliers directly impacts our sustainability performance. We therefore consider our suppliers as critical partners, as well as contributors to the ongoing and sustainable success of our business.

Ingredients are sourced under a common approach across the Coca-Cola System and governed by The Coca-Cola Principles for Sustainable Agriculture . 

The PSA and the System is covering a large scope of ingredients, including but not limited to, sugar, HFCS, different types of juices, cereals, dairy etc. As the majority of the key ingredients are purchased together with The Coca-Cola Company (TCCC), as a result, we address many of the issues that we face in our supply chain as a joint Coca-Cola system.

Each bottler has a different mix of agricultural ingredients in scope, always relevant to their market and product mix. Of all PSA categories, the ones that are relevant to Sweeteners (Sugar & HFCS) and Juices (Fruit crops).  

CCHBC we also operate as Distributors for a number of products that we treat as Finished Goods Distribution business. We purchase the requirement of coffee, tea and plant-based drinks (Soya, Almond, Coconut, Oat & Nuts) for Coca-Cola trademark beverages from TCCC. All coffee, tea and plant-based drinks suppliers of TCCC must demonstrate compliance with the PSA by using global sustainable agriculture standards and assurance schemes, including Rainforest Alliance and Fairtrade.

As part of the Coca-Cola System and one of the biggest bottlers participating, our principles are routed in protecting the environment, upholding human and workplace rights, securing biodiversity and helping to build more sustainable communities. These principles are showcased in the Principles for Sustainable Agriculture (PSA), which provide guidance to our suppliers of agricultural ingredients. The PSA is covering a large scope of ingredients, including but not limited to, sugar, HFCS, different types of juices etc. Each bottler has a different mix of agricultural ingredients in scope, always relevant to their market and product mix. Of all PSA categories, the ones that are directly sourced by CCH are only Sugar, HFCS and Juices (Fruit crops).  The scale and uniform approach of the Coca-Cola System helps us source our raw materials sustainably, while mitigating business risks. This helps us balance the costs of sustainability by leveraging relationships and initiating new opportunities, ensuring that our agricultural suppliers and their suppliers have a sustainable business. All suppliers are required to meet our Supplier Guiding Principles. These principles communicate our values and expectations of compliance with all applicable laws and emphasise the importance of responsible workplace practices that respect human rights.

Bonsucro is the Coca-Cola System most preferred sustainable sugar standard. TCCC, on behalf of the System, worked with Bonsucro members to create the first global metric standard for sustainable sugar cane production, and was the first to purchase Bonsucro certified sugar in 2011. TCCC also achieved Bonsucro Chain of Custody Standard certification, which enables the tracking of claims on the sustainable production of Bonsucro sugar cane and all sugar cane-derived products along the entire supply chain.

Through our active recruitment of our sugar suppliers and continuous support of the Bonsucro Certification, we leverage Bonsucro specialists to work with businesses of all kinds across the sugarcane sector to improve their social, environmental and commercial performance, bringing together a thriving international community that is creating a sustainable modern industry.

Bonsucro use their expertise to deliver training, develop resources and run impact projects and help our critical T1 and T2 supply base make the changes needed to achieve sustainability and gain independent certifications when they successfully do so.

Responsible production and resilient supply chains create lasting value. Businesses, communities, and the environment all benefit from high standards. Certified Bonsucro members perform better than the average on key metrics (source: Bonsucro):

• Certified mills produced 4.9 million tons of sugar using 2.2 million m³ less water compared to 2017
• Bonsucro-certified operations globally exceed their target yields by an average of 8.65 additional tonnes of sugarcane per hectare
• On average wages are 20% above national minimum wage on Bonsucro-Certified farms
• Certified mills reduced their CO₂ emissions by 5.5% after just one year

This framework for sustainable sourcing is integrated into internal governance and procurement processes. Our 2025 target for ingredient sourcing is to achieve 100% certification of our key agricultural ingredients against the Sustainable Agriculture Guiding Principles. In 2021, 80% of the key commodities we purchased for use as ingredients were certified, down from 82.4% in 2020. Specifically, we achieved 75% in Sugar & 100% in HFCS (79.3% in Sugar & HFCS together) and 96% for Juices (Fruit crops). The small drop is attributed primarily to our healthy growth rate in sales for non-European markets where we are still working towards the certification of our local suppliers. Our work to certify our key agricultural ingredients will continue to expand in 2022, with close cooperation with suppliers and the Coca-Cola System.

Our suppliers

We consider our suppliers as critical partners, contributing to the ongoing and sustainable success of our business.

As a critical part of our value chain, the performance of our suppliers directly impacts the sustainability performance and commitments of Coca‑Cola HBC.

In October 2021, we committed to achieving net zero emissions across our entire value chain by 2040. To address the 90% of emissions in scope 3 resulting from third party actions, we will broaden our existing partnership approach with suppliers.

Under a unified procurement framework, we segment our supply base universe of around 16,400 suppliers into direct and indirect spend suppliers (actively used for purchasing transactions in 2021).

• Direct spend suppliers include ingredients and packaging suppliers.
• Indirect spend suppliers include categories such as IT, production equipment, spare parts, maintenance services, secondary packaging, logistics providers, fleet vehicles, utilities, real estate, facilities management, professional and other consultancy services, personnel and temporary labour.

Coca‑Cola HBC also segments suppliers into three categories based on criticality and potential opportunities:

Group Critical Suppliers are those that fulfil any of the following criteria: high percentage of spend, critical components (including but limited to Sweeteners, Juices, Resin, Cans, Glass, Preforms, Closures, Aseptic Packaging, Secondary Packaging, Cold Drink Equipment etc.), limited alternatives and partnership supporting our business strategies.

Country Strategic Suppliers are those which have strategic importance at a local or regional level.

Both Group Critical & Country Strategic suppliers are considered critical to the overall competitiveness and success of Coca‑Cola HBC.

Tactical Suppliers represent low-volume and/or low-spend suppliers, supplying goods or services where there are many alternative sources available, enabling a flexible supply base.
 

Note: TCCC and Finished Goods (FG) are not Procurement Addressable

TCCC (The Coca-Cola Company) and purchased Finished Goods are inspected and tracked for risk assessment and sustainability performance by the Quality Safety & Environmental Department (QSE) and Commercial Department before they are accepted for market distribution. In such cases our Company is acting as Distributor and not Direct Manufacturer. 

We place significant focus on forming partnerships with suppliers that have supply points located within our countries, both multinational and local while also developing strong local suppliers across our territories. These efforts support our strategy for local sourcing and contributing to socio-economic development in the countries where we conduct business. These suppliers significantly contribute to our business; more information is available under the 2021 GRI Content Index Section 102-9 “Supply Chain”.  

Coca‑Cola HBC annual spend with suppliers in 2021 reached €3.6 billion of Direct & Indirect spend (Procurement Addressable Spend) and appr. €5.0 billion including concentrates and traded goods. Our practice is to source locally, provided that goods and services are available to meet our requirements and quality standards in an economically viable way. We target over 95% of our spending is local in our countries of operation or from within the European Union, which is considered local for EU countries. In 2021 we had 98.15% sourced locally representing €3.5 billion spend.

This means transport distances play an important role and through our local sourcing strategy are optimized. As an example, for sugar in the following countries that there is local sugar production & enough capacity i.e. Austria, Bosnia, Czech, Poland, Serbia, Romania, Russia, Ukraine, Belarus, Nigeria, Switzerland, Bulgaria we source from the country. For other EU countries, where they have no sugar production, or the capacity of production is limited we source from the closest and most cost-efficient sources within the EU. Similar approach we apply for Juices production. This way we also achieve to reduce CHG emissions for the transport of Ingredients and other direct materials. 

Our Logistics efforts are expanding beyond passenger vehicle solutions. In Serbia we introduced in collaboration with or local logistics partners, new types of LNG heavy dedicated trucks, recording >50% lower emissions. We also increased capacity of light-weight trailers by 6%, which limit the routes needed and contribute to further emissions reduction. We have also successfully visited the bulk deliveries of critical raw materials as part of our continued efforts to optimise materials deliveries from a cost and environmental perspective. Following the optimisation of sugar deliveries that we focused on 2020 and 2021, we have introduced for the first-time bulk resin deliveries from Asia via sea cargo in Nigeria, moving away from containerised deliveries in vessels. Our Nigeria pilot proved 55 MT CO2 emissions reduction and we expect in 2022 to expand further and save 4-times more emissions in resin deliveries for the country.

In collaboration with our Logistics experts, we have concluded a global tender that aims to transform our passenger vehicle choices and enhance fleet options by introducing an extensive range of fully electric and other alternative power trains such gas and (plug-in) hybrids as part of our solid plans to continue with our GreenFleet initiative across CCH throughout 2022. This will bring significant reduction in emissions, while maintaining high calibre fleet options at competitive pricing. Ireland is our first country to achieve 14% of fleet to be already electric with an additional 2% of cars being plug-in hybrids and expect by 2023 to reduce passenger vehicles emissions by 40% vs 2019.

The purchase of green electricity is a key activity in CCH. For 2021 we have managed 96% of green electricity coverage in the European Union and Switzerland and also turned 100% our Russian energy grid supplies to 100% green electricity, representing a reduction of CO2 scope 2 emissions by further 60,000 MT.  

Engaging with our suppliers

We collaborate with our suppliers to improve our overall performance and build a responsible and sustainable supply chain.  We actively seek to partner with them in providing new technologies for materials, equipment, packaging, cold drink equipment, vending machines, renewable energy.  With our logistics providers to work on ways to minimize our environmental footprint.

At Coca‑Cola HBC, we are committed to high standards of performance related to human rights, labour practices, minimizing environmental impact, ensuring health and safety, ethical business and unsurpassed quality in our supply chain. Our supplier partners play a critical role in ensuring that we deliver against these standards.

Given the diversity of countries from which we source, we are well aware that the practices of our suppliers reflect directly on the reputation of the Coca‑Cola System overall and thus we stand committed to maintain high standards of performance across our supply chain.

To ensure proper governance and that our suppliers meet our standards, we have implemented policies including our Coca‑Cola HBC Supplier Guiding Principles (SGP) and Coca‑Cola HBC Principles for Sustainable Agriculture (PSA) and The Coca-Cola company Principles for Sustainable Agriculture. In addition, we have developed an environmental, social and governance supplier pre-assessment process for our strategic buy segment which includes multiple criteria for supplier selection across all main pillars of our guiding principles. We monitor compliance of our critical suppliers by utilizing The Coca‑Cola Company Supplier Guiding Principles compliance audits and EcoVadis CSR Platform. We also recognize supplier certifications as per international standards including ISO 9001, 14001, 50001, FSSC 2200 and ISO 45000. For agricultural commodities, we recognize the Rain Forest Alliance, Fairtrade International, BonSucro (Mass Balance Chain of Custody Standard V 4.1), Sustainable Agriculture Initiative Platform (SAI Platform), Global G.A.P.  & GRASP certifications. For more details on our CCHBC Sustainability Monitoring Program please refer to the documents section at the end of this page.

Our Suppliers acknowledge our Supplier Guiding Principles and are expected to comply as a minimum with applicable environment and local labour laws and core international conventions. These principles also communicate our values, and our expectations for responsible business practices.
 

We aspire 100% of our suppliers accepting our SGPs by utilizing our ‘SGP Coverage Triangle’ with three checkpoints throughout the Procure-To-Pay process:

In our own business, we are promoting a 100% quality culture with zero tolerance for failure to meet standards. This approach extends to our suppliers as well. We monitor compliance of our critical suppliers through third party’s compliance audits leveraging multiple credible sources such as TCCC SGP Audits, SEDEX SMETA 6.0 and EcoVadis CSR assessment platform Suppliers are required to submit corrective actions to the 3^rd party audit bodies when a non-conformance is identified during the audits as a remediation activity. In 2021 we have identified 134 Suppliers with significant environmental impact findings, of which all developed corrective action plans and demonstrated improvement through the year such as missing supporting documentation over declared practices, policies etc. or missing regular formalised environmental reporting for relevant KBIs, expired or lack of supporting documentation (e.g. ISO 14001, measures on energy consumptions & GHG emissions), no endorsement of external CSR initiatives or principles (e.g. UN Global Compact), not adequate reporting on environmental issues. In 2021 we have identified 54 Suppliers to have labour & human rights critical findings, of which all developed corrective action plans and demonstrated improvement. Types of these findings identified: Health & Safety incidents, Wages & Benefits corrections needed, Workhours and extended overtime, Lack of supporting documentation against declared practices, polices etc (locations: Russia, Nigeria, Belarus, Kosovo, Switzerland, Ukraine, UK, Serbia, Poland), One supplier reported in Nigeria with issue in Forced and Compulsory Labour as reported in detail under 2021 GRI Content Index Section 409-1 “Forced or Compulsory Labour”.

We also engage with our suppliers through our joint value creation initiatives, sustainability events, industry associations, workshops on sustainable supply, annual supply chain innovation workshops, materiality survey and CSR platform for ethical and sustainable supply chains. We invest in joint value creation programs, ranging from developing climate-friendly cold drink equipment to increasing local beet sugar production.

 Partnering is the only way for businesses and society to find sustainable solutions. Coca-Cola HBC held its first Group Supplier Sustainability Event on 14th April 2021: “Doing Good Together”, which was attended by over 300 participants from all over the world. During the virtual event, company and external experts provided context on the international drivers and challenges on environmental, social, and governance (ESG) factors facing the industry as well as examples of best practices and new opportunities arising from sustainability. This included presentations on Coca-Cola HBC’s sustainability goals - Mission 2025, risk management, ensuring a culture of ethics and compliance, human rights, the approach to countering climate change and the journey towards a World Without Waste.

Following the Supplier Sustainability Event, in October 2021, our Company announced our commitment to achieving net zero emissions across its entire value chain by 2040. To this respect Procurement function initiated formally our work together with our key packaging partners Crown, Ball and TetraPak on our mutual 2030 science-based greenhouse gas emission reduction targets and longer-term net zero aspirations. Moreover, we launched further collaboration with additional critical suppliers, reflecting our joint commitment to reduce emissions efficiently in an accelerated manner together with the Coca-Cola System. In 2021 we also continued with the 3rd series of Suppliers Innovation Days where selected key strategic partners in packaging, manufacturing and digital supply chain applications were invited to share with us their most fresh, smart, and innovative ideas. All ideas have been presented to key stakeholders and some we are pursuing further in a joint manner with our strategic partners.

Our critical suppliers are invited to subscribe to EcoVadis, a third-party CSR assessment platform, hosting a collaborative network to manage the sustainability performance of suppliers. The platform monitors CSR risks utilizing 21 criteria divided in 4 themes based on international standards as UN Global Compact, ISO 26000, GRI, ILO etc. Starting in 2017 we piloted 140 critical suppliers at the platform by April 2021 we have exceeded 1250 of critical suppliers assessments with EcoVadis. Our plans are to extend the third-party CSR assessments in order to ensure more objectivity and equity amongst our suppliers.

Acceleration through partnership

CCHBC CEO, Zoran Bogdanovic opened the event, underlining that sustainability is at the top of our agenda. He said: “Sustainability is fundamental for our growth. And it can only happen through partnership, especially with our suppliers. For us, creating value means supporting the socio-economic development of the societies in which we operate as well as building a more positive environmental impact, together with our stakeholders. “90% of our Coca-Cola HBC’s carbon footprint comes from scope 3 emissions, which are emissions that occur in the value chain that are linked to the company’s operations but generated from sources that we do not have full control over. CCHBC Group Chief Supply Chain Officer at that time, Marcel Martin, further highlighted: “It is important that we work closely with our suppliers to accelerate our sustainability journey, as their environmental and social impact has an effect on the footprint of our value chain and vice versa”. Within the breadth and scale of societal, ecological and environmental challenges facing the world, it is impossible that one single stakeholder can have all the answers. Partnering is the only way for businesses and society to find solutions.

More information of key joint activities with strategic vendors can be found under the 2021 GRI Content Index Section 102-9 “Supply Chain”.

Supplier Sustainability Events

• Warsaw, Poland - November 2021
• Athens, Greece - September 2021
• Virtual Supplier Sustainability Event - Group Level, April 2021
• Vienna, Austria -May 2019
• Budapest, Hungry - May 2019
• Warsaw, Poland - June 2018
• Schimatari Plant - June 2018
• Brüttisellen, Switzerland - March 2017
• Belgrade, Serbia - September 2017
• Moscow, Russia - November 2017

Becoming a Coca-Cola HBC supplier

Coca‑Cola HBC aspires critical suppliers to gain certification to the following:

• ISO 9001 (quality);
• ISO 14001 (environment);
• ISO 45000 (health and safety);
• EcoVadis Assessment
• CDP Climate & Water disclosure
• SBTi Commitments

Ingredient and packaging suppliers must also achieve certification to FSSC 22000 for food safety or equivalent for FSSC 22000, recognised under GFSI framework.

A prerequisite to become listed as a Coca‑Cola HBC new supplier is to commit to the Coca‑Cola HBC Supplier Guiding Principles, as well as, to the extent these apply to supplier, Coca‑Cola Hellenic Code of Business Conduct and Anti-Bribery Policy. These Policies make clear the values and behaviour we expect and audit in our value chain.

KEY INFORMATION LIBRARY AND CONTACT INFO:

• Interested in becoming a Coca‑Cola HBC Supplier?
• How to register in Ariba - Step by Step Guide
• CPO Letter 2022
• Coca-Cola HBC Procurement Info Sheets update May 2022
• Responsible and Sustainable Sourcing
• CCHBC Sustainability Monitoring – Program Description May 2022