Whitney’s Weekly Highlight
Company Summary
PepsiCo, a leading consumer packaged goods company, has demonstrated a robust financial performance with a core operating profit exceeding $12 billion in 2022. The company's global footprint, encompassing various regions and product segments, has contributed to a net revenue of $86.39 billion, showcasing consistent growth over the past six years. However, in the face of evolving consumer preferences, regulatory changes, and climate-related challenges, PepsiCo has launched the PepsiCo Positive (PEP+) sustainability plan, recognizing the imperative of integrating sustainability into its core strategy.
Current Landscape: PepsiCo's success in the future hinges on the execution of its sustainability strategy, aligning with its overarching cost leadership strategy. With a focus on steady ingredient supply in a dynamic market, PepsiCo aims to invest in efficiencies and contingencies to navigate shifting consumer preferences, governmental policies, and climate hazards.
Sustainablity as Core Strategy: PepsiCo's sustainability plan, PEP+, emphasizes three pillars – Positive Agriculture, Positive Value Chain, and Positive Choices. This approach addresses the company's reliance on key ingredients like potatoes, wheat, and corn, emphasizing the importance of securing a stable supply chain amid climate challenges.
Whitney's Thoughts
What I LOVE about this sustainability strategy - their focus on agriculture (duh!). But more importantly regenerative agriculture. They not only support the farmer extensively, but they also have a pillar dedicated to education and enriching the consumer's perspective on products. It's called Positive Choices. They are connecting products with their environmental footprint which means connecting the chips on the convenience store shelf to the farmer producing the potato.
Our current food system does not support our farmers. FULL STOP. Big businesses like PepsiCo have enjoyed year over year profits while farmers are continuing to go out of business. But I do believe that the tide is turning. Companies, like PepsiCo, are realizing that if all the farms consolidate, their supply chain becomes incredibly vulnerable to disruptions. But PepsiCo is doing something about it. Not only are they investing in regenerative ag for their current portfolio of crops (1), they are also investing in new ingredients. Ingredients that are also inherently more climate friendly (2).
I could go on for days about PepsiCo's sustainability plan. I believe in it so much that I dedicated two of my MBA classes into a deep dive of pep+ (my ESG and Strategic Management courses). Someone from their corporate sustainability team should just hire me; I probably know the ins and out of their plan better than some employees. I look forward to monitoring their progress over the next 5 years and see the impact they have on how food and beverage companies operate moving forward.
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