According to Drinks Industry Sustainability Index – Trends Report 2020 (C&C Group plc, & Footprint Intelligence, 2020), the beverage industry scored only 4.8 (10) on sustainability. The report showed that there were some good practices in the beverage industry, for example, people realize the importance of packaging. But because the beverage industry is highly energy intensive, the carbon footprint is huge considering the transportation and waste of raw materials, packaging and final product.
For Coca-Cola, sustainable agriculture means that ingredients from the farm suppliers should meet standards for human and workplace rights, environmental protection that are set out in the Sustainable Agriculture Guiding Principles (SAGP).
For PepsiCo, it issued a Global Sustainable Agriculture Policy which outlines the aspirations and goals for sustainability at the farm level within agricultural supply chain. PepsiCo has some contract farming in India. Contract farming involves a pre-agreed price between the company and the farmer. The agreement is defined by the commitment of the farmer to provide an agricultural commodity of a certain type at a time and a price and the quantity required by PepsiCo. PepsiCo provided technical knowledge, motivation and other extension services to the farmers, also gave incentives to farmers who have sprinklers in their fields.
Table 1 shows the top five ingredients of Coca-Cola and PepsiCo in the past five years. This shows that tea, sugar and palm oil are three main ingredients of both companies. However, PepsiCo has some particular sustainable programs, particularly with its efforts to improve potato farming in India.
Table 1. Top Five Ingredients of Coca-Cola and PepsiCo in the Past Five Years
|Top 1||Coffee||Cane sugar|
|Top 2||Tea||Palm oil|
|Top 3||Beet sugar||Potato|
|Top 5||Palm oil||Orange|
Potato in PepsiCo
As one of the world’s leading food and beverage companies, a steady, sustainable supply of crops is central to PepsiCo’s business. Sustainable agricultural practices are also critical to meeting the increasing demand for food as the global population grows.
Frito Lay is a brand of PepsiCo, which mainly produces leisure food such as potato chips and corn chips. PepsiCo has a large area of potato growing in India to meet the demand for its products. In 2018, 100% of the potatoes used to make Frito Lay products sold in the U.S. and Canada were sustainably sourced.
Because over four-fifths of Indian farmers are smallholders, in order to help adapt the Sustainable Farming Program (SFP) to their specific needs, the PepsiCo India team pioneered the use of ‘Demonstration Farms’, whereby the team identifies farmers with particularly strong local networks and a true willingness to experiment. SFP requires that farmers are continuously assessed against the SFP Code and efforts taken to address missing sustainable agriculture principles. It is also designed for global implementation and intended to be relevant and adaptable across all cropping systems, and scalable to farm size and market maturity. These farms set aside a portion of land to demonstrate next generation farming practices and technologies aligned with the SFP. These include water-efficient drip irrigation technology, advanced nutrient management approaches and up-to-date health and safety practices.
Having Begun in India in 2017 with just six farms, PepsiCo’s growing global network now numbers more than 230 Demonstration Farms, which span nearly 110,000 hectares across 9 countries.
The impact of Demonstration Farms can be seen by looking at environmental and social criteria, as well as core business metrics like farm performance and crop quality. For example,
it’s found that selecting selected potato Demonstration Farms in India achieved an 8% increase in average yield and a 15% reduction in average GHG emissions over the 2018-2019 crop year.
To enhance this positive impact, the host farmers invited other farmers nearby to participate in a series of ‘field days’ to see the results for themselves and to compare traditional farming with the best practices they demonstrated. By accessing these local peer-to-peer networks, PepsiCo hopes to embed sustainable practices and drive long-term behavioral change across the agricultural landscape.
PepsiCo India launched a series of videos called ‘AwaazMittiKi’, which means ‘Voice of the Earth’ in 2019. The campaign is intended to reflect
s PepsiCo’s support for Indian agriculture in a sustainable way, by advocating that for farmers to gain innovative expertise. Over the past three decades, the close cooperation with farmers and mutual respect have been at the heart of PepsiCo’s efforts. Only by combining the local agricultural characteristics, to meet the farmer’s needs, and investing in education funds for sustainable agriculture, can India achieve economic growth and social development, and PepsiCo become a sustainable sourcing partner.
(Source: PepsiCo Website)
Feature Image : Lucas van Oort
Exclusive for UnbuiltLabs. Summer 2020