Chinese market important to PepsiCo's PwP 2025 goals

By Li Ying Source:Global Times Published: 2016/11/3 18:58:39


Mike Spanos, the president and CEO of PepsiCo Greater China Region

Mike Spanos, the president and CEO of PepsiCo Greater China Region Photo: Courtesy of PepsiCo

Leading food and beverage company PepsiCo, Inc. announced its 2025 global sustainability agenda Performance with Purpose (PwP) in October, aiming at creating a healthier relationship between people and food. The new initiatives continue PepsiCo's commitment to develop business growth in a way that responds to changing consumer and societal needs. How can PepsiCo boost performance while increasing sustainability? What are the company's Chinese strategies when the economy steps into its "new normal?" Global Times (GT) talks with Mike Spanos, the president and CEO of PepsiCo Greater China Region (GCR).

GT: What are the key elements of the PwP 2025 agenda?

Spanos: Performance with Purpose is not a new initiative as we firstly introduced it back in 2006. Our new PwP 2025 goals, which will focus on products, planet and people, are designed to create a healthier relationship between people, food and the planet we live on. We are focused on using our global scale and resources to influence positive change across our entire value chain. Starting with the way ingredients are grown and sourced, all the way through to its purchase and package disposal.

Here are six stats that show the breadth of the agenda:

·         Two thirds - The percentage of its beverages that PepsiCo hopes to have a sugar-related calorie count of 100 or less per 12-ounce serving.

·         Seven million acres - PepsiCo plans to expand its Sustainable Farming Initiative to this size, or about 75 percent of its entire agricultural based spend.

·         Three billion servings - The number of servings in its Everyday Nutrition program reaches underserved communities and consumers.

·         Fifteen percent - The improvement PepsiCo expects in its water-use efficiency among agricultural suppliers in high-water-risk sourcing areas.

·         Twenty percent - PepsiCo's goal for reducing absolute greenhouse gas emissions across its value chain by 2030.

·         $100 million - The amount PepsiCo will invest, working with the PepsiCo Foundation, in initiatives targeted at helping 12.5 million women and girls.

GT: How can China's market contribute to the PwP 2025 goals?

Spanos: In China, we take pride in the remarkable progress we have done in living Performance with Purpose since its launch in 2006. We would like to share the most recent examples under each pillar - products, planet and people - of the new goals. In terms of products, PepsiCo's total investment in China over the past 30 years has exceeded more than 15 billion yuan ($2 billion). To better serve the demand of our growing consumer base, PepsiCo launched a new innovation center for food and beverage products in Shanghai in November 2012. For example, we have launched a series of popular new Lay's potato chip flavors. To further meet Chinese consumers' increased demand for a more balanced diet, we opened the new Beijing Quaker plant in October 2015, which is producing high-quality, tasty and healthy oats in China. In the meantime, we have also been supporting the communities where we operate by leveraging our expertise. For example, last December PepsiCo made 1 million yuan donation, including cash and in-kind contributions, for launching "PepsiCo Nutrition In Action" program by joining hands with China Foundation for Poverty Alleviation and Chinese Nutrition Society.

Concerning the planet, PepsiCo has a long history of developing and deploying the best tools to ensure that our operation platforms are energy efficient in the following aspects: water, energy, greenhouse gas emissions and waste minimization.

In terms of people, we have developed a strong female representation across all levels, as well as in our senior management team in China. By the end of September, 55 percent of our executives in our Greater China Region are female. As part of our commitment to the communities we serve, PepsiCo Foundation and GCR actively support a range of public welfare programs, including our more than 10-year association with Water Cellars for Mothers, delivering clean-water access to people in water-stressed regions of central and western China. 

GT: What are the challenges facing the company to achieve the sustainability goals?

Spanos: Technological change is disrupting entire industries and trust in institutions is near all-time lows, as consumers increasingly expect companies to do more than making money. To succeed in this kind of environment, corporations and the executives who lead they need to do three things exceedingly well: focus on delivering strong financial performance, do it in a way that is sustainable over time and be responsive to the needs of society. This is a journey we have been on as a company for more than 20 years. We will continue to expand and enhance our policies over time as science evolves, supply chains mature, and tools, practices and processes improve.

Our new targets are designed to build on our progress. They have been informed by the latest dietary guidelines of the World Health Organization and other authorities, and we have broadened our focus beyond key markets to take a more global approach. Based on our progress to date, our R&D pipeline and our brand strength across key categories, we believe we will achieve those sustainability targets in the next few years.

GT: China has experienced an economic slowdown. Does the slowing economy affect PepsiCo's performance in China? What is the company's strategy in Chinese market?

Spanos: China is a dynamic food and beverage market that is a critical engine of growth for PepsiCo. China is already PepsiCo's largest beverage market outside the United States. PepsiCo remains fully committed to investing in China and we are making broad-based investments in expanding new facilities, scaling up our research and development operations and expanding our agricultural and brand-building initiatives across our food and beverage business.

To better serve the demand of our growing consumer base, PepsiCo launched a new innovation center for food and beverage products in Shanghai in November 2012. It is our largest world-class R&D Center outside of North America and the R&D center is mainly used for developing food and beverage products suited to the tastes and preferences of Asian consumers.

Over the past several years, we have been actively pushing our e-commerce agenda in China. We have established a dedicated team to serve our e-retailing customers across all aspects, from assortment planning and adaptation, category insights and growth strategy, online merchandising and content management, to day-to-day operational partnership. Apart from e-commerce, for years we have also put tremendous investment behind digital consumer engagement programs in China. For example, our "Bring Happiness Home" campaign has always been an integrated digital experience. It has been running for five consecutive years, and is PepsiCo's brand program for the Chinese Spring Festival. In 2016, PepsiCo launched a video "Monkey King Family" in order to carry forward classic works of art and pay tribute to great artists. By the end of the Chinese New Year, the Monkey King Web video had been viewed more than 830 million times.



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