PepsiCo 2009 Annual Report

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Water

1. In 2009, PepsiCo saved more than 12 billion liters of water through eco-efficiency improvements within our operations. These water savings represent improvements in the efficiency of our water use, expressed per unit of production, in 2009 versus our baseline year of 2006.
   

   Note: 2009 data will be assured by Bureau Veritas, an independent data verification agency, and a final report is expected in April 2010. Asterisk: data represent water consumption for company-owned manufacturing operations prior to the merger with the bottler operations.

2. In the U.S., we began cleaning new Gatorade bottles with purified air instead of rinsing them with water. It works so well that we're spreading this and other conservation techniques to bottling plants around the world, saving billions of liters of water that otherwise would go down the drain.
3. In the U.S., Aquafina uses an equally innovative method to save water during its packaging process. By feeding the pre-forms of bottles directly onto a blow molder, we are able to produce a sanitary bottle and fill it directly, eliminating the need to rinse the bottles with water.
4. In the UK, the PepsiCo Walkers' business has already reduced its water usage at its largest potato chip facility by 42 percent. Potatoes naturally contain a lot of water, and PepsiCo is working to capture that moisture and use it to make the UK facilities essentially self-sufficient in water.
5. Agriculture uses 70 percent of the world's water. That's why in key markets, we're sharing conservation techniques with our local farmers. These efforts have cut the water usage required to grow potatoes for Lay's potato chips in China by more than half.

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Water

1. In India, PepsiCo's manufacturing team has reduced water usage by more than 45 percent since 2005, conserving more than three billion liters of water and, in 2009, achieving a positive water balance–that is, giving back more water than our facilities consumed.
2. One of our most successful initiatives has been our work with farmers to reduce the amount of water used in rice cultivation in India. We introduced a new technology called "direct seeding." Rather than growing the seedlings in a nursery, plant them, then flood their fields, we are advocating direct seeding, which allows the seed to be planted directly into the ground, bypassing the nursery. This also removes the need for flood irrigation, and saves as much as 30 percent of the water needed. In 2009, direct seeding was extended to more than 6,500 acres of land, saving more than 5 billion liters of water.
3. In Australia, the PepsiCo Smith's snacks manufacturing facility commissioned its first process wastewater reuse system, which dramatically reduced stress on local water resources as the country faced one of the worst droughts in history.
4. In China, we're teaching our farmers to grow potatoes and other cash crops in desert conditions. Our farmers are replacing traditional flood irrigation with pivot and drip irrigation. In drip irrigation, small holes in pipes literally 'drip' water on the field, reducing water usage by up to 50 percent.
5. In Casa Grande, Arizona, PepsiCo equipped its Frito-Lay facility with a state-of-the-art water filtration and purification system to recycle and reuse approximately 80 percent of the process water used in production. For 10 consecutive years, PepsiCo has significantly reduced the amount of water used to make our Frito-Lay products in North America.
6. The Gatorade Mexico plant's rainwater harvesting system collected 640,000 liters of water in 2009. This has helped recharge the underground aquifer, which is being depleted as Mexico City's population continues to grow.

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Water

1. Since 2005, the PepsiCo Foundation has committed more than $15 million to initiatives that provide access to safe water and sanitation to communities in developing countries.
2. In 2011, The PepsiCo Foundation will reach its goal of providing access to safe water and sanitation to 1 million people. It expects to achieve this goal through the support of such partners as Water.org, Safe Water Network, The Energy Resources Institute (TERI), China Women's Development Foundation (CWDF) and the Earth Institute at Columbia University. These projects are helping to install village water and irrigation systems; establish water health centers; construct nearly 750 rainwater harvesting cisterns; improve sanitation programs; and recharge aquifers in developing communities, particularly in Ghana, Kenya, Brazil, China and India.
3. The PepsiCo Foundation and PepsiCo China have contributed $2.5 million to bring access to safe water to 56,000 people in western rural areas of China since 2001.
4. In Asia, we have launched a pilot program, WaterHope, which uses innovative microfinance and business models to partner with the communities to develop safe water supplies in a sustainable way. Please watch this brief video.

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Land and Packaging

1. PepsiCo continues to be the industry leader in our use of rPET with 10 percent recycled content in carbonated soft drink bottles in the U.S.
2. In the U.S., Naked Juice commercialized the first 100-percent recycled PET bottle in the grocery channel.
3. In Guatemala, in partnership with our bottling partner Mariposa (Cabcorp) and the NGO FUNDES, we have developed an innovative model that aims to close the recycling loop by promoting recycling as an income-generating activity in communities, collecting the PET from communities through reverse logistics and, finally, reinserting that PET in our bottles.

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Land and Packaging

1. For many years, PepsiCo has been proud of our efforts to lightweight our containers–designing the thinnest possible packaging that still meets specs for strength and safety.
2. PepsiCo is also committed to ensuring containers are easily compatible with U.S. recycling systems and that they utilize recycled content.
3. PepsiCo has supported programs, such as Keep America Beautiful's Great American Clean-Up, the nation's largest volunteer program, to ensure our containers are recycled.
4. Our U.S. bottlers have been active in their communities supporting funding, infrastructure and special event recycling.
5. In order to achieve this new goal, PepsiCo will:
1. Work with other U.S. industry leaders in support of programs and policies that effectively increase recycling.
2. Develop innovative U.S. retail customer and consumer programs that support the recycling of beverage containers.
3. Partner with our U.S. bottlers, communities, suppliers, governmental entities and non-governmental organizations in support of innovative efforts to encourage increased recycling.
4. Help educate consumers on the environmental need to and efficiency of recycling.
5. Continue to ensure our primary beverage packaging (aluminum, glass, PET) is easily recyclable in U.S. recycling systems.
6. Continue to be the industry leader in the use of recycled content in our primary beverage packaging to ensure a market for recycled beverage containers.
7. Set our efforts in context with PepsiCo's other environmental packaging initiatives, including efforts to reduce, recycle and reuse both primary and secondary packaging.

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Land and Packaging

1. We are one-third of the way to our 2012 goal of reducing packaging weight by 350 million pounds, avoiding one billion pounds of landfill waste over the three-year term of this goal.
2. In the U.S., we began a program to reduce the weight of the plastic cap and bottle threads to reduce material. Our efforts have reduced bottle waste by more than six million pounds so far, and we are to convert all U.S. beverage manufacturing facilities to the lighter-weight bottle/cap by the end of 2011. We have expanded this program to our China beverage business, where more than 85 percent of the beverage manufacturing facilities had been converted by 2009. PepsiCo is reapplying the learning from the China and U.S. executions to other international markets in Europe, Asia and Latin America to drive material optimization across our packaging. In addition to this initiative, we have other weight reduction programs underway globally to help us achieve our reduction targets.
3. In Europe, package lightweighting initiatives have reduced bottle waste by more than 11 million pounds. These reductions have occurred across our carbonated soft drinks bottles as well as Tropicana and Punica bottles.
4. In the U.S., the Aquafina water bottle has a long history of weight reductions, resulting in significantly less weight going to landfills. The bottle was 18.5 grams in 2001, was reduced to 15 grams in 2006, further reduced to 13.2 grams in 2008 and now is an industry-leading 10.9 grams.
5. The Propel and Gatorade bottles have undergone significant lightweighting, removing almost 40 million pounds of potential landfill weight.
6. Frito-Lay is launching a fully compostable snack package on its Sunchips brand for April/Earth month, 2010. The structure is made from 90 percent renewable, plant-based material and has been certified to meet industry biodegradability standards.

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Land and Packaging

1. In the U.S., Frito-Lay experienced a greater-than-45 percent decrease in waste to landfill from 2007 to 2009. By engaging employees to perform "dumpster dives" to sort through our operations waste and categorize the different waste streams, the business re-purposed much of the waste for alternate uses, ranging from fuel pellets, chicken feed and pet food to handbags and purses.
2. At Frito-Lay, 14 manufacturing facilities are disposing less than one percent of solid waste to landfill–well on our way toward our goal of eliminating all solid waste to landfill from the Frito-Lay manufacturing facilities.
3. In 2008, PepsiCo UK pledged to achieve zero landfill waste across its total supply chain within 10 years. By the end of 2009, eight of its manufacturing facilities hit the target of no longer sending waste to landfill. The UK team cites two key ingredients to its success: the enthusiasm of employees, and the appointment of "waste marshals" to provide people at key sites with the responsibility and empowerment to get the job done.
4. In 2008, PepsiCo UK made a public pledge to reduce waste to landfill by 20 percent in 2009, and it achieved a 39-percent reduction in waste to landfill–nearly double its goal.

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Climate Change

Note: 2009 data will be assured by Bureau Veritas, an independent data verification agency, and a final report is expected in April 2010. Asterisk: the data represent electricity consumption for company-owned manufacturing operations pre-merger with the bottler operations.

1. Frito-Lay sales operations completed lighting upgrade projects at 110 distribution centers. As a result, it conserved more than six million kilowatt-hours of electricity–a savings of nearly $1 million.
2. A Tropicana manufacturing facility improved the efficiency of its anaerobic wastewater treatment plant in Bradenton, FL. As a result, the facility was able to shut down motors used in the aerobic process and save more than 5,500 MWH of electricity a year.
3. In India, we installed a remote wind turbine to provide renewable energy for our beverage plant in Mamandur. In its first year of continuous operation, the Remote Wind Turbine generated clean energy equal to 50 percent of the electricity needs of the Mamandur plant while also avoiding approximately 3,000 tons of greenhouse gas (GHG) emissions. International operations have been implementing energy reduction projects globally since 2006 through our ReCon (Resource Conservation Outreach) program. Our manufacturing locations use ReCon, an internal PepsiCo tool, to realize energy, fuel and water reductions. Electricity reductions have come in the form of solar lighting, lighting motion sensors in offices, compressed air optimization, installation of energy efficient motors and numerous other energy-saving projects. Since 2006, ReCon has contributed to a 16 percent reduction in per-unit use of energy in our beverage plants, and a 7 percent reduction in our Snack plants.

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Climate Change

Note: 2009 data will be assured by Bureau Veritas, an independent data verification agency, and a final report is expected in April 2010. Asterisk: data represent fuel consumption for company-owned manufacturing operations pre-merger with the bottler operations.

1. The Gatorade manufacturing facility in Guadalajara, Mexico implemented a heat recovery project that uses heat from thermally processed beverages to preheat the cool product coming into the pasteurizer. This helps save 73,000 liters of fuel, 105,000 KWH of electricity and two million liters of water, preventing more than 200,000 tons of carbon dioxide from being sent to the atmosphere every year.
2. In India, we continue to use more energy from renewable sources. Of our total energy requirement in India, renewable energy comprises 36 percent in beverage operations and 14 percent in the foods business. Some key initiatives include conversion of some existing boilers to a fire biomass process, and the installation of a new biomass boiler in Kolkata that is powered by rice husks and meets 75 percent of the food plant's energy requirements.
3. Our Gatorade beverage manufacturing facility in Tolleson, AZ has saved 3,300 MMBTU of energy by generating hot water with renewable energy, providing an annual savings of $70,000.
4. Our Quaker Oats facility in Columbia, MO achieved a fuel intensity reduction of 10 percent as it installed a Quikwater direct-contact industrial water heater in 2008. The heater is 99-percent efficient and is estimated to save $40,000 per year in natural gas.
5. Our Quaker Oats facility in Bridgeview, IL installed two high-efficiency gas-fired steam boilers to reduce gas fuel use at the plant. These boilers were commissioned in April 2009 and are projected to save 18 percent to 20 percent of natural gas use compared with the previous fire-tube boilers. Natural gas savings are estimated to be $60,000 per year.
6. The PepsiCo best-practice sharing program, ReCon (Resource Conservation Outreach), has contributed to realizing fuel savings through projects such as the use of biogas generated from on-site wastewater treatment in Belgium and Holland; the use of solar thermal technology in Turkey to generate steam for production of food product; the use of solar heating of water for dissolving sugar in China, combustion optimization and preheating of combustion gases; and the capture of waste heat from our process lines. These projects as well as many others have realized a 32 percent reduction in fuel usage per unit in international beverage operations and 11 percent per unit in international snack operations since 2006.

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Climate Change

1. In 2010, the U.S. Environmental Protection Agency (EPA) awarded PepsiCo a 2010 ENERGY STAR "Sustained Excellence Award" in recognition of our continued leadership in protecting our environment through energy efficiency. This marks the fourth consecutive year in which PepsiCo, an ENERGY STAR partner since 2004, has been honored for its long-term commitment to energy efficiency, and the third time it has been honored for "Sustained Excellence." PepsiCo is continually working to address the issue of climate change, from scaling up the company's use of renewable fuel sources to reducing energy consumption.
1. The EPA recently awarded PepsiCo's Chicago downtown corporate plaza with an ENERGY STAR certification, the national symbol for superior energy efficiency and environmental protection. The ENERGY STAR designation signifies that this building is now among an elite group of properties that have instituted innovative and meaningful energy efficient initiatives.
2. In May 2008, PepsiCo introduced new Sustainable Engineering Guidelines that apply to all new construction and major reengineering projects worldwide.
3. PepsiCo also significantly expanded its impact through an outreach program that encouraged more than 90 PepsiCo suppliers to join ENERGY STAR and focus on improving energy efficiency.
4. In early 2009, our Gatorade manufacturing plant in Tolleson, AZ began producing renewable energy with the start-up of Arizona's largest roof-top solar thermal concentrator. The system, capable of producing 5.2 billion BTUs of energy per year, was a collaborative partnership with the electric utility, Salt River Project, and PepsiCo to reduce greenhouse gas emissions in Arizona by almost 400 metric tons of carbon dioxide per year.

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Climate Change

1. The Frito-Lay manufacturing facility in Killingly, CT launched its co-generation system, which will generate almost 100 percent of the site's electrical requirements. To maximize the system, the facility will utilize the waste heat, which is generated to produce steam, to help with the facility's manufacturing of snack products. The implementation of this new system is another step to help the facility reduce its environmental footprint and help alleviate the significant load already on the heavily congested power grid in the northeastern U.S.
2. One way to move toward an absolute reduction in GHG emissions is to "design for green" from the start. PepsiCo expanded its commitment to "green building" across the enterprise with LEED (Leadership in Environmental Engineering Design) certification of five additional buildings, including PepsiCo's first-ever platinum certification.
1. The PepsiCo Chicago Sustainability Center was one of a select group of 21 buildings around the world in April 2009 to be recognized with the LEED Commercial Interior Platinum Certification from the U.S. Green Buildings Council. The Center includes unique features such as seating made from 100-percent post-consumer recycled beverage bottles and flooring, carpeting and other materials constructed from recycled materials, including oat hulls from the Quaker plant in Cedar Rapids, IA.
2. PepsiCo's R&D facility in Valhalla, NY achieved LEED Gold status, and is the first PepsiCo R&D building to be honored with this certification.
3. In Chongqing, China, we opened a new beverage manufacturing facility in 2009 that is designed to use 22 percent less water and 23 percent less energy than existing PepsiCo manufacturing facilities in China. By employing a combination of technologies, the plant will reduce carbon emissions by an estimated 3,100 tons, and conserve 100 million liters of water each year. Best practices from this plant will be shared with other facilities across the PepsiCo system.
4. Through its Resource Conservation Outreach initiative (ReCon), PepsiCo has made tools, expertise and training available to key suppliers. In 2008, ReCon, a 3-day training and energy audit tool developed to build capability at company-owned facilities, was delivered to participants in the program at three separate events, which attracted more than 100 individuals from 15 companies. One event, held at a contract manufacturing site, identified more than $1 million in energy and utility savings projects. Participants were strongly encouraged to implement and follow energy management practices promoted by the ENERGY STAR program, which more than 40 suppliers have joined. In addition, the ReCon initiative included follow up with the participants to ensure that suppliers actually implemented energy-management initiatives. A scorecard allows senior management to easily monitor supplier progress and provide motivation.
5. In April 2009, PepsiCo held an inaugural Global Environmental Sustainability Summit, attended by more than 400 associates representing every division and 15 countries, as well as some of our franchise bottlers, co-packers and other suppliers. The objectives of the Summit were to deliver environmental compliance and energy conservation training to build capabilities; provide a forum for networking and sharing of best practices and projects; improve environmental management programs; and to enable achievement of energy and utilities productivity as well as GHG reduction targets.

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Community

1. In 2008, we developed and published our Global Sustainable Agriculture Policy, which demonstrates our approach to sustainable development across our entire agricultural supply chain–including water savings, waste reuse, soil protection and chemical use. Our global policy addresses six broad objectives within the agriculture supply chain: water management; soil conservation and preservation; agrochemical management; energy management; farm economics and land management; and social and community improvement.
2. In 2009, through Tropicana in the U.S. and Red Sky chips in the UK, we introduced landmark sustainability initiatives jointly with our consumers and Cool Earth, a not-for-profit organization, to "rescue the rainforest." Working together, this initiative preserved more than 135 million square feet of threatened land.
3. In 2009, PepsiCo launched its Naked Juice sustainable agriculture initiative by converting all Naked Juice products to 100 percent Rainforest Alliance-certified bananas.
4. According to a survey conducted by AC Nielsen in India, PepsiCo has brought superior technology to basmati paddy farmers. The PepsiCo seeds provide better yield, and the farmers are willing to pay a higher price for the benefits they get from the better seeds. Contract farming with PepsiCo has brought more land under basmati paddy cultivation, and the yield growth from PepsiCo technology is superior to yield growth from other non-PepsiCo technology.
5. This type of contract farming with PepsiCo, in collaboration with the local farmers, has enhanced farmers' incomes, which is an example of sustainable development in action.
6. In 2009, we developed a communications brochure for sustainable agriculture which is specifically geared to our growers, and which shares case studies of successful agricultural practices for each of the planks of our Sustainable Agriculture Policy. In 2010, this will be broadly distributed among our agricultural supplier base.

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Community

1. In Mexico, our snacks food business, Sabritas, actively participates in a program that contributes to the overall development of low-income farming families in corn-producing communities. In partnership with the Mexican Foundation for Rural Development (FUNDAR), Sabritas contributes to technical and business training for farmers, transfers relevant technology to the communities and, initiates farming contracts. Sabritas and FUNDAR intend to gradually bring about profound cultural change in these communities that will lead to the creation of small, sustainable agribusinesses.
2. At the onset, the program began in the state of Jalisco, located near Sabritas' facility in Guadalajara, and now spans six municipalities in Mexico. Sabritas pledged 9.1 million pesos to fund several initiatives including:
1. The organization of corn producers to use their collective bargaining power to better negotiate competitive contract prices for corn crops;
2. The launch of a social education program focused on training farmers;
3. The purchase of contracts with corn producers; and,
4. The increased use of technology to produce higher yields.
3. In 2009, the Sabritas/Fundar partnership, through its Educampo program, positively impacted the lives of 297 farmers in Mexico. It increased their yield of corn, increased their income by 165 percent, and provided 57,850 hours of education and training on good agricultural practices.
4. Throughout the program, Sabritas works toward an improved understanding of the farmers' needs to become independent business partners. The program also benefits our business. Strengthening the capabilities of the suppliers located near our manufacturing facilities means saving in warehouse and transportation costs as well. We know that engagement with rural farming communities and private-public partners is integral to returning the positive social and economic impact of this program.
5. By contributing to the overall development of low-income farming communities, Sabritas is helping reduce poverty while improving productivity, profitability and sustainability of small-scale farming.

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Community

1. In Latin America, our beverage and snacks businesses have teamed together to promote overall environmental awareness of our associates. To do this, they created an internal educational website, called pepsicoecofootprint.com, in multiple languages. Users of the site answer a short list of simple questions about their personal lifestyle, and then the website tells them how many planet earths would be required if everyone had their same way of living.
2. In the UK, our Walkers Environmental Sustainability Leadership Team developed an awareness building tool which highlights the risks we face as a business if the environmental crises go unchecked. This tool has been applied to all levels of associates, from the plant-floor workers to the UK senior management team.
3. PepsiCo's Latin America business has been working with waste pickers and their associations to develop sustainable "waste to wealth" programs that contribute to improving our environment, enhancing the quality of life of recyclers, and the development of a local recycling market. For example, In Brazil, in partnership with the business association CEMPRE (Compromisso Empresarial para Reciclagem), we support a "waste to wealth" program which operates through the establishment of associations of waste pickers, and it includes: training of waste pickers; professional development; waste management & recycling training as well as business management practices to help waste pickers increase their income; and human development focusing on the dignity of their work. In 2009, the program collected 24,000 tons of solid waste; created or strengthened 600 associations; reached 6,000 beneficiaries directly and indirectly; and provided monthly income of USD$200 per capita.
4. In India, the "Waste to Wealth: Exnora/PepsiCo Zero Waste Management Program" is an award-winning, income-generating partnership to manage domestic solid waste in an environmentally friendly manner. It has provided a clean environment to thousands of households in 2009 through projects at seven locations in India. The program won the BSE NASSCOM Social and Corporate Governance Award in 2008.

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Community

1. During 2010, we will adapt current health and environmental impact assessment approaches to new business plans. For PepsiCo, these issues are critical for the long-term sustainability of our business and for the communities we serve. We are now strengthening our relationships with internal and external stakeholders to create a coherent and transparent strategy for achieving this goal.
2. Throughout 2009, PepsiCo's Health and Environmental teams worked with Forum for the Future, a UK-based not-for-profit organization, to develop a Strategies and Scenarios 2030 report. This report–which included intensive surveys of senior executives, thought leaders, and subject matter experts across the world–helps identify the long-term health and environmental risks and opportunities we face as a business and as a society over the next 20 years. This has become a critical tool for awareness building and strategy development.