Transcript Ethics Health and Environment – Pepsico

Food and Drink Innovation Network - Ethics seminar
Health and
Health and risks,
Environment:
opportunities
Environment and
dilemmas
Andrew Smith
Head of Corporate Responsibility
PepsiCo UK & Ireland
Food and Drink Innovation Network - Ethics seminar
•
•
•
•
•
Health and environment challenges
facing food manufacturers
PepsiCo responses
Risks, opportunities and win-wins
Dilemmas
Public policy gaps
What about ethical
trade, community
impact, poverty
footprint,
responsible
procurement…..?
Food and Drink Innovation Network - Ethics seminar
•
•
•
•
•
Health and environment challenges
facing food manufacturers
PepsiCo responses
Risks, opportunities and win-wins
Dilemmas
Public policy gaps
What about ethical
trade, community
impact, poverty
footprint,
responsible
procurement…..?
Environmental challenges and our business
UK & IRELAND
Each challenge is profound
Environmental risks and opportunities
Environmental risks,
opportunities and
impacts
(Source: Carbon Trust
and PIUK)
Climate change risks and opportunities
We have past experience…
…and weather disruptions are here right now
Responding to the risks
Measuring the carbon footprint of Walkers crisps
Agriculture
Processing - cooking
Packaging supply chain
Transport
Packaging
disposal
The Carbon Trust carbon reduction label
Climate change risks and opportunities
March 2007 – launch of the Carbon Label
Carbon Label is positively received, and driving awareness of the
environmental impact of everyday products
Source: Populus
After the label: engaging our supply chain
•
In September 2007, with Carbon Disclosure Project
and other global companies, new Supply Chain
Leadership Collaboration launched to develop:



•
one single standardized approach to gather
carbon information throughout supply chains.
data-sharing systems so that multiple
retailers and brands can view carbon emissions
and strategies of shared suppliers
awareness through supply chains that carbon
and climate change impact will grow in business
decision-making importance. It will eventually
bring tens of thousands of new suppliers into the
carbon disclosure for the first time
PIUK selected 14 suppliers to take part in 2008, with
focus on Walkers supply chain
After the label: engaging our supply chain
•
In December 2007 Walkers Supplier
Summit brought together key suppliers
of raw materials and packaging. The
summit looked at:
 progress against carbon reduction
targets, and future projections
 common risks and opportunities
 where carbon minimisation
approaches could be shared
 barriers to progress
•
Explicit goal to move towards shared
carbon management and targets,
across our supply chain.
After the label: within our business
•
•
•
•
In August 2007 Walkers announced that
they would switch to sourcing 100%
British potatoes for all their crisps. The
move meant that Walkers would be
buying an additional 40,000 tonnes of
potatoes per year from the UK, on top of
the existing 420,000 tonnes
Small carbon reduction (<1%)
Future packaging developments judged
through carbon lens for first time
Future carbon projections used to
introduce rudimentary carbon
governance
R
A
ou
te
m
A
O
P
h
20
08
Fu
el
lie
rs
le
c
te
c
IE
as
C
ck
at
io
n
Su
pp
G
pa
LE
ar
ke
t
ut
om
to
28
20
07
Carbon governance
160
140
120
100
80
60
40
20
0
Dilemmas and challenges
•
•
•
•
Is there a case for shared supply-chain
carbon-reduction strategies and targets?
(e.g. or should companies act alone / by
diktat?)
What would they look like? (e.g. joint
plans owned between multiple corporate
stakeholders)
What are the barriers? (e.g. short-term
trading/contractual relationships,
restricting corporate purchasing
freedoms, disclosure/confidentiality, fear
of public profile etc)
How could the barriers be overcome?
Responding to confused priorities
Agriculture
Processing - cooking
Packaging supply chain
Transport
Packaging disposal
Consumer focus
Obesity is a critical global challenge
WHO’s latest projections
indicate that globally:
• approximately 1.6
billion adults (age
15+) were
overweight;
• at least 400 million
adults were obese
WHO further projects
that by 2015,
approximately 2.3 billion
adults will be overweight
and more than 700
million will be obese.
Public policy is responding, and reputational risks are huge
Our response
•
•
•
•
Transforming our portfolio
 Product reformulation
 New product development
 Acquisitions and mergers
Access and affordability
Stakeholder engagement and
partnership
Staff engagement
Transforming the shape of our portfolio
PepsiCo Corporate Values
GFY – ‘absolute’ nutritional standards
BFY – strong relative nutritional improvement
and/or positive nutrition enhancement
ITFY – nutrition improvement/enhancement
or natural/organic claim
“To deliver SUSTAINED GROWTH….
…(selling) only products we can be proud of”
PIUK Portfolio Evolution
Source : PepsiCo Internal Values Statement
Performance with Purpose
Human Sustainability
“we have a fundamental belief that humans
need to be nourished in multiple dimensions,
ranging from simple treats to healthier
eats…we’re continuously transforming our
portfolio of products to meet consumer
needs”
GFY
22
BFY
ITFY
5
0
27
31
31
TFY
50
73
14
28
Source : PepsiCo Annual Report 2006
17
2
2005
Source: PIUK Internal
2006
2007
Transforming the shape of our portfolio
Transforming our business
PIUK Foods
GFY
BFY
ITFY
6
6
0
8
Total PIUK (Food and Juice)
GFY
12
22
BFY
ITFY
39
27
31
5
0
76%
TFY
88
50
18
TFY
35
73
14
28
22
3
2005
2006
81%
31
64
2007
17
2
2005
2006
2007
Strong governance to monitor and manage strategy
Annual
Per Cap
’07
’07‘08 ’08
Serving
XX
XX
X%
’08
’09
CAGR
’08 ‘10
’11
Added
Sugar(g)
XX
XX
X%
XX
XX
XX
X%
Fibre (g)
XX
XX
XX
XX
X%
XX
XX
XX
X%
XX
XX
XX
X%
XX
XX
XX
X%
Vitamin A
XX
(mg)
Vitamin C
XX
(g)
XX
X%
XX
X%
XX
X%
Category Forecast
PIUK Beverage nutrient scorecard
Dilemmas and challenges
How to report more
transparently in a
potentially cynical
and hostile
environment?
How best to build trust
around what we are
doing?
How best to
structure the gathering,
and then actioning, of
stakeholder feedback
on our forward plans
and strategies?
Transforming our food and drink portfolio
Children’s
cracker without
artificial
flavours or
colours
2004
Children’s crisp
with less fat,
less saturated
fat, less salt
2005
Lower fat crisps
Sunbites
2006
2007
Saturated Fat Reduction
Baked Walkers
2008
Granola
Transforming our food and drink portfolio
Acquiring new
businesses
2004
2005
New product
development
2006
Lower fat crisps
Reformulation
New product
development
2007
2008
Transforming our portfolio - reformulation
Renovation of core Walkers
• New healthier SunSeed oil
• 75-80% reductions in saturated fat
• 25-50% reductions in salt levels
Now expanded to full snacks range
Progress comes at a cost
•
Learning with third parties
was sometimes complex, but it
brought new skills,£950
insight
per and
tonne , April
experience
2008
•
A public-facing climate commitment
is helping business decisions be
focussed through an environmental
lense.
•
Working with one partner highlighted
the opportunities to engage with
others, especially our own supply
£360 per tonne ,chain.
April 2007
Health and environment challenges can be connected
Dilemmas and challenges
How best to build trust
around what we are
doing?
How to predict the
long-term costs of
product
improvements or
reformulations,
when agricultural
prices are in
dramatic flux ?
Transforming our portfolio - new product development
Tropicana smoothies (Feb 2008)
Sunbites (Sep 2007)
Understand and reflect the science
There is convincing epidemiological evidence
that people who eat more whole grains have:
LOWER risk of heart disease
LOWER risk of developing some cancers
LOWER risk of developing Type 2 diabetes
BETTER intestinal health
Source: Slavin, J. Nutrition
Research Reviews, 2004
Understand and reflect the science
We’re not eating enough
wholegrain
Average UK
daily intake
“Daily intake of wholegrain in
the UK is very low, and with 3
out of 10 adults classified as
non-consumers, it is clear
that new wholegrain-rich
foods are needed if we are to
encourage increased intakes
across the whole population.“
23g*
(Adults)
Suggested
Daily
Amount
48g**
Dr Susan Jebb, Head of
Nutrition and Health
Research at the Medical
Research Council
Source:* Thane et al, British Journal of
Nutrition 2007
**Dietary Guidelines for Americans (2005). US
Department of Health and Human Services.
US Department of Agriculture
Develop solutions that meet nutritional needs
Enabling consumers to
increase their Wholegrain in-take..
67% wholegrains
Average UK
daily intake
23g
(Adults)
More than 1/3rd of the suggested
daily amount of wholegrains
Contain fibre & essential nutrients
Amount
per 25g pack
16g
One 28g pack contains
132
Sugar
2.1g
Fat
6.2g
Saturates
0.6g
Salt
0.3g
7%
2%
9%
3%
5%
Calories
SDA
48g
of an adult’s guideline daily amount
Already a £5m brand, Stakeholder praise and recognition
Dilemmas and challenges
What happens
when the science
is less clear cut,
or consumer
beliefs contradict
it?
How best to build trust
around what we are
doing?
claims
Health
must be tightly
regulated, but
have we got the
right balance if
we want to
promote healthier
options?
Transforming our portfolio – new product development
Walkers Baked:
• Launched Sep 2006
• 70% less fat than regular
crisps
Impact:
•
£37m brand in 18 months
•
Heavily consumed by younger
consumers, and CDE background
(key in Govt obesity strategy)
•
Switching from less healthy
“standard” crisps and snacks
•
Performance with purpose
Dilemmas and challenges
To boil water, a hob
can be 36 to 92%
more energy
efficient than
a microwave
Microwave
simmering But, in turn, a kettle
can be 35-60% more
efficient than a hob
Source: University of Stockholm,
Energy Use for Cooking and Other
Stages in the Life Cycle of Food
How best to build trust
around what we are
candoing?
niche
How
products be…
What if healthier
cooking methods
(baking v frying)
have a higher
carbon footprint?
Acquisitions are also helping to transform our portfolio
Making healthy choices accessible and affordable
PJ’s smoothies re-launched at an
accessible price point
• Consumer target
99p
• 16-30’s, all social backgrounds
• Affordable price point (99p/£1.99)
£1.49
99p
• Accessible & interesting range of
flavours:
• Apple, Kiwi and Lime
• Strawberry, Apple and Rhubarb
• Orange, Mandarin and Guava
• Strawberry and Banana
Engaging our people
CONTENT
All Employees
MODULE 1
e-learning
Basic Nutrition (45 mins)
TBMs/marketers/managers
MODULE 2
Interactive Workshop
General Nutrition (1 day)
AM
Context
PM
Category Specific
R&D Specialist areas
MODULE 3
Interactive Workshop
Specialist Nutrition (60-90 mins)
Brand specific Nutrition Factfiles
TARGET GROUP
Engaging stakeholders
What type of community
health programmes is it
legitimate for food
companies to support?
Public policy gaps
Climate change adaptation
Recycling infrastructure
Renewables and micro-generation
Incentivise technology transfer
Green-wash marketing
Everyday activity (planning, transport
and the school run)
Investment in consumer insight
Feedback / engagement
Andrew Smith
Head of Corporate Responsibility
PepsiCo UK & Ireland
[email protected]
07912 971090