food and drink innovation network - ethics seminar andrew smith head of corporate responsibility...
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Food and Drink Innovation Network - Ethics seminar
Andrew Smith
Head of Corporate Responsibility
PepsiCo UK & Ireland
Health and
Environment
Health and Health and Environment: risks, Environment: risks, opportunities and opportunities and
dilemmasdilemmas
• Health and environment challenges facing food manufacturers• PepsiCo responses• Risks, opportunities and win-wins• Dilemmas• Public policy gaps
Food and Drink Innovation Network - Ethics seminar
What about ethical
trade, community
impact, poverty
footprint,
responsible
procurement…..?
• Health and environment challenges facing food manufacturers• PepsiCo responses• Risks, opportunities and win-wins• Dilemmas• Public policy gaps
Food and Drink Innovation Network - Ethics seminar
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 theenvironmental impact of everyday products
Source: Populus
• 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
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
Carbon governance
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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
PepsiCo Corporate Values
“To deliver SUSTAINED GROWTH….…(selling) only products we can be proud of”Source : PepsiCo Internal Values Statement
Performance with Purpose
Human Sustainability
“we have a fundamental belief that humansneed 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”Source : PepsiCo Annual Report 2006
Source: PIUK Internal
TFY
BFYITFY
GFY
73
28
2
0
14
17
5
31
22 27 31
50
2005 2006 2007
GFY – ‘absolute’ nutritional standardsBFY – strong relative nutritional improvement and/or positive nutrition enhancementITFY – nutrition improvement/enhancement or natural/organic claim
PIUK Portfolio Evolution
Transforming the shape of our portfolio
Transforming the shape of our portfolio
Transforming our business Transforming our business
PIUK Foods Total PIUK (Food and Juice)
TFY
BFYITFY
GFY
TFY
BFYITFY
GFY
88
35
3
0
18
22
6
39
6 8 12
64
2005 2006 2007
73
28
2
0
14
17
5
31
22 27 31
50
2005 2006 2007
81%76%
Annual Per Cap ’07 ‘08
’07-’08
Serving XX XX X%
Added Sugar(g)
XX XX X%
Fibre (g) XX XX X%
Vitamin A (mg)
XX XX X%
Vitamin C (g)
XX XX X%
’08 ’09 ‘10
CAGR ’08 - ’11
XX XX XX X%
XX XX XX X%
XX XX XX X%
XX XX XX X%
XX XX XX X%
Category ForecastStrong governance to monitor and manage strategy
PIUK Beverage nutrient scorecard
Dilemmas and challenges
How best to build trust
around what we are
doing?How to report more
transparently in a
potentially cynical
and hostile
environment?
How best to
structure the gathering,
and then actioning, of
stakeholder feedback
on our forward plans
and strategies?
Transforming our food and drink portfolio
2004 2005 2006 2007
Children’s cracker without artificial flavours or colours
Children’s crisp with less
fat, less saturated fat,
less salt
Saturated Fat ReductionBaked Walkers
Sunbites
GranolaLower fat crisps
2008
Transforming our food and drink portfolio
2004 2005 2006 2007
Lower fat crisps
2008
New product development
Reformulation
New product development
Acquiring new businesses
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, insight and experience
• 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 chain.
£360 per tonne , April 2007
£950 per tonne , April 2008
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)Tropicana smoothies (Feb 2008)
Sunbites (Sep 2007)
There is convincing epidemiological evidencethat 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
Understand and reflect the science
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
Suggested Daily Amount
Average UKdaily intake
(Adults)
48g**
23g*
We’re not eating enough wholegrain
We’re not eating enough wholegrain
“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.“
Dr Susan Jebb, Head of Nutrition and Health Research at the Medical Research Council
Develop solutions that meet nutritional needs
Enabling consumers toincrease their Wholegrain in-take..
23g
16g
SDA
Amountper 25g pack
Average UKdaily intake
(Adults)
48g
More than 1/3rd of the suggested daily amount of wholegrains
67% wholegrains
Contain fibre & essential nutrients
Saturates0.6g
Fat6.2g
Sugar2.1g
Calories132
7% 2% 9% 3%
Salt0.3g
5%
One 28g pack contains
of an adult’s guideline daily amount
Already a £5m brand, Stakeholder praise and recognition
Dilemmas and challenges
How best to build trust
around what we are
doing?What happens
when the science
is less clear cut,
or consumer
beliefs contradict
it?
Health claims
must be tightly
regulated, but
have we got the
right balance if
we want to
promote healthier
options?
Transforming our portfolio – new product development
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
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
Walkers Baked:
• Launched Sep 2006• 70% less fat than regular crisps
Walkers Baked:
• Launched Sep 2006• 70% less fat than regular crisps
Dilemmas and challenges
How best to build trust
around what we are
doing?
What if healthier
cooking methods
(baking v frying)
have a higher
carbon footprint?
How can niche
products be…
Microwave
simmering But, in turn, a kettle
can be 35-60% more
efficient than a hob
To boil water, a hob
can be 36 to 92%
more energy
efficient than
a microwave
Source: University of Stockholm, Energy Use for Cooking and Other Stages in the Life Cycle of Food
Acquisitions are also helping to transform our portfolio
Making healthy choices accessible and affordable
• Consumer target
• 16-30’s, all social backgrounds
• Affordable price point (99p/£1.99)
• Accessible & interesting range of flavours:
• Apple, Kiwi and Lime• Strawberry, Apple and Rhubarb• Orange, Mandarin and Guava• Strawberry and Banana
PJ’s smoothies re-launched at an accessible price point
PJ’s smoothies re-launched at an accessible price point
99p£1.49
99p
Bra
nd
sp
ec
ific
Nu
trit
ion
Fa
ctf
ile
s
Engaging our people
TARGET GROUP CONTENT
MODULE 1e-learning
Basic Nutrition (45 mins)
MODULE 2Interactive Workshop
General Nutrition (1 day)
MODULE 3Interactive Workshop
Specialist Nutrition (60-90 mins)
AMContext
PMCategory Specific
All Employees
TBMs/marketers/managers
R&D Specialist areas
Engaging stakeholders
What type of community
health programmes is it
legitimate for food
companies to support?
Public policy gaps
Recycling infrastructure
Everyday activity (planning, transport and the school run)
Climate change adaptation
Investment in consumer insight
Green-wash marketingIncentivise technology transfer
Renewables and micro-generation
Feedback / engagement
Andrew Smith
Head of Corporate Responsibility
PepsiCo UK & Ireland
07912 971090