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Food and Drink Innovation Network - Ethics seminar. Health and Environment: risks, opportunities and dilemmas. Health and Environment. Andrew Smith Head of Corporate Responsibility PepsiCo UK & Ireland. Food and Drink Innovation Network - Ethics seminar.

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Food and Drink Innovation Network - Ethics seminar

Health and

Environment: risks,

opportunities and

dilemmas

Health and

Environment

Andrew Smith

Head of Corporate Responsibility

PepsiCo UK & Ireland


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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…..?


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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…..?




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Environmental risks and opportunities

Environmental risks, opportunities and impacts (Source: Carbon Trust and PIUK)






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Agriculture

Measuring the carbon footprint of Walkers crisps

Processing - cooking

Packaging supply chain

Transport

Packaging disposal





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Carbon Label is positively received, and driving awareness of the

environmental impact of everyday products

Source: Populus


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After the label: engaging our supply chain of the

  • 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


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  • 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: engaging our supply chain


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  • In key suppliers of raw materials and packaging. The summit looked at: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

After the label: within our business


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Carbon governance key suppliers of raw materials and packaging. The summit looked at:


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  • 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?

Dilemmas and challenges


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Agriculture strategies and targets? (e.g. or should companies act alone / by diktat?)

Processing - cooking

Responding to confused priorities

Packaging supply chain

Transport

Packaging disposal

Consumer focus


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Obesity is a critical global challenge strategies and targets? (e.g. or should companies act alone / by diktat?)

  • 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.


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Public policy is responding, and reputational risks are huge strategies and targets? (e.g. or should companies act alone / by diktat?)


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Our response strategies and targets? (e.g. or should companies act alone / by diktat?)

  • Transforming our portfolio

    • Product reformulation

    • New product development

    • Acquisitions and mergers

  • Access and affordability

  • Stakeholder engagement and partnership

  • Staff engagement


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Transforming the shape of our portfolio strategies and targets? (e.g. or should companies act alone / by diktat?)

GFY – ‘absolute’ nutritional standards

BFY – strong relative nutritional improvement

and/or positive nutrition enhancement

ITFY – nutrition improvement/enhancement

or natural/organic claim

PIUK Portfolio Evolution

GFY

BFY

ITFY

TFY

Source: PIUK Internal

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 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”

Source : PepsiCo Annual Report 2006


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Transforming the shape of our portfolio strategies and targets? (e.g. or should companies act alone / by diktat?)

Transforming our business

PIUK Foods

Total PIUK (Food and Juice)

GFY

GFY

BFY

ITFY

BFY

ITFY

76%

81%

TFY

TFY


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Strong governance to monitor and manage strategy strategies and targets? (e.g. or should companies act alone / by diktat?)

PIUK Beverage nutrient scorecard

Category Forecast


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How best to build trust strategies and targets? (e.g. or should companies act alone / by diktat?)

around what we are

doing?

Dilemmas and challenges

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?


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Transforming our food and drink portfolio strategies and targets? (e.g. or should companies act alone / by diktat?)

Children’s cracker without artificial flavours or colours

Children’s crisp with less fat, less saturated fat, less salt

Sunbites

2004

2005

2006

2007

2008

Granola

Lower fat crisps

Saturated Fat Reduction

Baked Walkers


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Transforming our food and drink portfolio strategies and targets? (e.g. or should companies act alone / by diktat?)

Acquiring new businesses

New product development

2004

2005

2006

2007

2008

Lower fat crisps

Reformulation

New product development


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Transforming our portfolio - reformulation strategies and targets? (e.g. or should companies act alone / by diktat?)

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


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Progress comes at a cost strategies and targets? (e.g. or should companies act alone / by diktat?)

  • 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.

£950 per tonne , April 2008

£360 per tonne , April 2007


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Health and environment challenges can be connected strategies and targets? (e.g. or should companies act alone / by diktat?)


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How best to build trust strategies and targets? (e.g. or should companies act alone / by diktat?)

around what we are

doing?

Dilemmas and challenges

How to predict the

long-term costs of

product

improvements or

reformulations,

when agricultural

prices are in

dramatic flux ?


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Transforming our portfolio - new product development strategies and targets? (e.g. or should companies act alone / by diktat?)

Tropicana smoothies (Feb 2008)

Sunbites (Sep 2007)


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Understand and reflect the science strategies and targets? (e.g. or should companies act alone / by diktat?)

There is convincing epidemiological evidencethat people who eat more whole grains have:

LOWER risk of heart diseaseLOWER risk of developing some cancersLOWER risk of developing Type 2 diabetesBETTER intestinal health

Source: Slavin, J. Nutrition Research Reviews, 2004


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Understand and reflect the science strategies and targets? (e.g. or should companies act alone / by diktat?)

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

Average UKdaily intake

23g*

(Adults)

Suggested

Daily

Amount

48g**

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


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One 28g pack contains strategies and targets? (e.g. or should companies act alone / by diktat?)

Saturates

Calories

Sugar

Fat

Salt

0.6g

0.3g

6.2g

132

2.1g

7%

2%

9%

3%

5%

of an adult’s guideline daily amount

Develop solutions that meet nutritional needs

Enabling consumers toincrease their Wholegrain in-take..

67% wholegrains

Average UKdaily intake

23g

More than 1/3rd of the suggested

daily amount of wholegrains

(Adults)

Contain fibre & essential nutrients

Amountper 25g pack

16g

48g

SDA

  • Already a £5m brand, Stakeholder praise and recognition


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How best to build trust strategies and targets? (e.g. or should companies act alone / by diktat?)

around what we are

doing?

Dilemmas and challenges

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?


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Transforming our portfolio – new product development strategies and targets? (e.g. or should companies act alone / by diktat?)

  • 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


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To boil water, a hob strategies and targets? (e.g. or should companies act alone / by diktat?)

can be 36 to 92%

more energy

efficient than

a microwave

How best to build trust

around what we are

doing?

Dilemmas and challenges

How can niche

products be…

Microwave

simmering

But, in turn, a kettle

can be 35-60% more

efficient than a hob

What if healthier

cooking methods

(baking v frying)

have a higher

carbon footprint?

Source: University of Stockholm, Energy Use for Cooking and Other Stages in the Life Cycle of Food


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Acquisitions are also helping to transform our portfolio strategies and targets? (e.g. or should companies act alone / by diktat?)


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99p strategies and targets? (e.g. or should companies act alone / by diktat?)

Making healthy choices accessible and affordable

PJ’s smoothies re-launched at an accessible price point

  • 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

99p

£1.49


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Engaging our people strategies and targets? (e.g. or should companies act alone / by diktat?)

TARGET GROUP

CONTENT

MODULE 1

e-learning

Basic Nutrition (45 mins)

All Employees

MODULE 2

Interactive Workshop

General Nutrition (1 day)

TBMs/marketers/managers

Brand specific Nutrition Factfiles

AM

Context

PM

Category Specific

MODULE 3

Interactive Workshop

Specialist Nutrition (60-90 mins)

R&D Specialist areas


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Engaging stakeholders strategies and targets? (e.g. or should companies act alone / by diktat?)

What type of community

health programmes is it

legitimate for food

companies to support?


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Climate change adaptation strategies and targets? (e.g. or should companies act alone / by diktat?)

Recycling infrastructure

Public policy gaps

Renewables and micro-generation

Incentivise technology transfer

Green-wash marketing

Everyday activity (planning, transport

and the school run)

Investment in consumer insight


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Feedback / engagement strategies and targets? (e.g. or should companies act alone / by diktat?)

Andrew Smith

Head of Corporate Responsibility

PepsiCo UK & Ireland

[email protected]

07912 971090


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