Sustainability is one of the key factors influencing the packaging chosen by beverage and food manufacturers. On June 8, Keurig Green Mountain (GMCR) announced that it was ranked 14th in the Newsweek’s Green Rankings for 2015, which assess companies’ environmental performances.
Keurig, which has received criticism for the waste generated by its popular K-cups, aims to ensure that 100% of its K-Cup packs are recyclable by 2020. In 2014, Keurig committed $5 million of investment over the next five years to find and implement recycling solutions.
Nonalcoholic beverage companies like Coca-Cola (KO), PepsiCo (PEP), and Dr Pepper Snapple (DPS) are also working to reduce their environmental footprint and increase the usage of recyclable packaging. For instance, in 2013, PepsiCo’s Frito-Lay North America division was able to eliminate over 11 million pounds of flexible film packaging, which is equivalent to 6.5 billion 1-ounce single-serve bags. Coca-Cola aims to source 25% of its PET plastic from recycled or renewable materials. The next part of this series discusses Coca-Cola’s PlantBottle technology.
Coca-Cola, PepsiCo, and Dr Pepper Snapple together constitute ~14.6% of the portfolio holdings of the Consumer Staples Select Sector SPDR Fund (XLP).
Smaller portion sizes
Beverage companies believe that one of the ways to counter the negative image of soda and sweetened beverages is to reduce their portion sizes. Consumers prefer smaller packaging such as mini soda cans for their lower calorie content. These smaller packages are actually more profitable for the beverage companies. The smaller packages, as well as beverages with natural sweeteners, are often marketed as healthy options.
Beverage companies are also working on enhancing the visual appeal of their bottles. For example, the packaging of the new flavors under PepsiCo’s AMP Energy brand was designed with vibrant colors and images to reflect the new fruit flavors of the energy drinks.
One of PepsiCo’s interesting innovations is to integrate aroma into its packaging. PepsiCo’s aroma system, which the company patented in 2013, includes gelatin capsules that release aromas when the consumer opens the container.
However, some packaging innovations have backfired. For example, PepsiCo received severe backlash for its fully compostable packaging made from plant-based material for Frito-Lays Sun Chips due to the excessive noise made when consumers opened the bags.