Sustainability Series: Frito-Lay

September 04, 2009

What began as two small, mom-and-pop chip operations back in the early 1930’s is now the largest snack-selling company in the United States.

What began as two small, mom-and-pop chip operations back in the early 1930’s is now the largest snack-selling company in the United States. Today, Frito-Lay, maker of such favorites as LAY'S®, FRITOS®, CHEETOS® and SUNCHIPS®, has more than fifteen $100 million brands. We talked to Al Halvorsen, Director of Environmental Sustainability at Frito-Lay, about the importance of setting “green” goals – and achieving them.

How does your business define sustainability?

Frito-Lay has a very robust and thoughtful approach to sustainability, nearly fifteen years in the making. Consistent with our parent company’s (PepsiCo) view of sustainability, we strive for Performance with Purpose. That means that we must deliver on performance for our shareholders, but we want to do so in a sustainable and responsible manner.

PepsiCo categorizes its sustainability efforts into three pillars. The first pillar is human sustainability. Under this pillar, we work to deliver products that are of the highest quality and made in the best way possible. For example, we were one of the first major companies to remove trans fats from our portfolio. 

The second pillar is talent sustainability. We want to empower our talent base and employ the best talent possible. 

The third pillar is environmental sustainability. At Frito-Lay we’ve identified five categories where we can have the most impact: water, energy, packing, waste and greenhouse gas emissions. We are looking at the triple bottom line, focusing on reducing the environmental footprints that we have as a corporation. 

We officially kicked off our environmental initiatives in 1999, when we set some aggressive goals to reduce water by 50% per pound of product, natural gas by 30% and electricity by 25%. And we’re honing in on those goals. Year to date, we’ve reduced water by 38%, gas by 29% and electricity by 22%. 

Interestingly, our sustainability strategies have really flown to our bottom line as well. If we had done nothing to reduce water and energy use since 1999, we would’ve spent an additional 55 to 60 million dollars in 2008 alone. Again, this goes back to the concept of Performance with Purpose. We are reducing our environmental footprint and using the impact of these successes to drive productivity.

How are you incorporating sustainable practices into your business?

I’ll tell you about two great projects that demonstrate our Performance with Purpose efforts. The first project is at our Modesto, California plant. We’ve installed large parabolic mirrors that focus the sun’s intensity onto a pipe carrying high pressure and high temperature water, which in turn is converted into steam. The steam is then used in our manufacturing plant to cook our products. This is a different application of renewable energy than we’ve used in the past, and literally takes the sun’s rays to help process our products. At this facility we make SUNCHIPS®, so the brand was able to translate an environmental sustainability project to a consumer message. The brand can make the case that we are really living up to our name. 

A second project that highlights our sustainability efforts is a net zero plant concept at our Casa Grande, Arizona manufacturing facility. We are currently in the process of taking our plant as far off the energy and water grids as possible. This plant will use three main pieces of technology. We plan to recycle and clean/filter our water so that we can reuse it, use solar panels or concentrators to generate renewable energy, and utilize biomass boilers to create renewable steam and electricity.

In the future, the price of commodities could become unaffordable and water might not be readily available. We are using this plant as a learning lab to see where we can take cutting edge technologies and apply them in a way that makes environmental and economic sense.

What are your short term and long term goals?

Short term we’re looking to reduce our footprint and drive efficiencies in the system. By 2017, Frito-Lay would like to reduce water by 75%, fuels by 50% and electricity by 45%. Long term, we are taking a holistic view, looking up and down the supply chain, working cross-functionally. We want to take a broader approach, encompassing all functions and partners. We want the concept of sustainability to be ingrained into the culture of Frito-Lay.

Where do you think you’ll have the biggest impact?

Our energy reductions have driven to the bottom line, but as we get more cross-functional involvement our sustainability impacts will be even greater. We have a very strong fleet sustainability program and are pushing the envelope on tractor-trailer technology, working toward becoming one of the most fuel-efficient fleets in the United States.

We are also testing renewable sources on packaging, enhancing our packaging film to make it more sustainable with less of an environmental impact. Overall, as we go forward, we are aiming for synergy as a company. This is not just an energy program; it’s a sustainability program focusing on the overall company environmental impact.

How do you measure your progress?

We have simple, quantifiable systems to measure energy, and can make adjustments when we find potential waste points. We also stay informed with our consumers and customers, and get ideas and feedback from communities. It’s important that we know how we are perceived by our customers in terms of our sustainability efforts.

How do retailers factor into your efforts?

Whereas five years ago this conversation wasn’t really top-of-mind, today retailers are definitely a factor in our efforts. We share best practices, ideas, and concepts with them. It’s amazing how far sustainability has come into the supermarket space. 

Why are sustainable business practices important to the food industry?

We use a lot of energy to convert raw materials into food products, so, as an industry, we have a large footprint. We are all utilizing resources that are becoming more strained. Our industry is so closely tied to the environment that sustainability should be a top priority. 

Why are sustainable business practices important to the consumer?

As our resources are being pushed to the limit and the world is changing, people’s consumption habits are also changing. Consumers expect high quality, good products that are of value, but they also expect that there will be a purpose behind what a company does. Customers are rewarding companies that have been proactive about mitigating their footprint on the environment.