This year PepsiCo marks the twenty-fifth anniversary of its entry into the Ukrainian market and the tenth anniversary of the purchase of Sandora, a leading national juice manufacturer in Mykolaiv region. PepsiCo Ukraine General Manager Irina Kozlova explains how sustainable development strategies and social responsibility policies are helping to create competitive advantages on the Ukrainian marketplace.
Business is not only about profits
The long-term PepsiCo business development strategy is not limited to profitable growth alone. It is a much broader concept that reflects the new realities of today’s world, where no company can hope to be successful without taking its impact on the wider community and environment into consideration. In October 2016, PepsiCo Chairperson and CEO Indra Nooyi identified the three main focuses for Performance with Purpose (PWP) as the concept enters its second decade: Product, Planet and People. PepsiCo not only declares its commitment to the PWP agenda, but actively implements this approach.
Product means the development of a portfolio focused on nutrition while working to improve the nutritional value of existing products by reducing sodium, sugar and fat content. The ongoing development of the PepsiCo portfolio in Ukraine reflects the credibility of this commitment. The first step in this direction was made in 2007, when the company acquired Sandora, the largest juice producer in the south of Ukraine, represented by juice brands Sandora and Sadochok. The company’s portfolio also includes carbonated drinks Pepsi, 7UP, and Mirinda, cold tea beverage Lipton Ice Tea, and mineral water Aqua Minerale. In the snack market, the company is represented by the Lay’s and “ХрусTeam” brands. In addition, a major part of the company’s nutrition portfolio focuses on the dairy category with the brands Slavyanochka, Chudo, and Smachnenka, together with the baby food brand Agusha, which became part of PepsiCo’s business in early 2011 after the acquisition of WBD.
Overall, the company in Ukraine currently has a diversified portfolio of food and beverages including natural juices, dairy, and baby food. This nutrition portfolio represents 60% of PepsiCo business in Ukraine. We intend to further develop in this direction.
Healthy options, local ingredients
In line with the above mentioned strategy, since 2016 we have begun offering Ukrainians a series of innovative products in a range of categories: Agusha Bilakt and Zasynaiko in the baby food segment; Slovianochka mix of kefir and fruits in the diary segment; Sandora Fitness with minimum calories in the juice category, and Sandora Frutz in the drink segment. Last but not least, Pepsi without sugar entered the Ukrainian market this year. This process will continue as we seek to increase access to more nutritious options and provide products for less well-served demographics.
As part of our policy of supporting Ukrainian agricultural producers, we aim to use local raw materials including milk, fruits, vegetables and sugar at our production sites. In 2016, our Ukrainian plants processed around 145,000 tons of milk and more than 30,000 tons of local fruit and vegetables.
Sustainable environmental performance
As a company, PepsiCo aims to minimize our impact on the environment and celebrate ecological awareness. In addition to working on operational optimization and the maintenance of equipment, a number of water and energy saving projects have allowed us to introduce water recycling, heat and cooling recovery, insulation, automation, and interlocking initiatives.
In 2013, we introduced wastewater treatment facilities at our plant in Mykolaiv region. With four production sites, PepsiCo has managed to achieve significant progress in reducing the consumption of natural resources across the company’s production footprint. This has been possible by applying technologies that reduce the consumption of natural resources and mitigate any negative environmental impact.
Since 2013, after full integration of the company’s dairy business into the PepsiCo structure in Ukraine, we have made visible progress in saving natural resources per ton of produced items: water consumption has decreased by 11.9%, natural gas consumption is down 8.4%, and there has been a 2.2 % reduction in the use of electricity. The company has also been at the forefront of recycling efforts in Ukraine. Around 98% of all waste at our plants in the Mykolaiv region is recycled. Meanwhile, waste recycling has been in practice at all PepsiCo offices in Ukraine since 2014.
Corporate engagement culture
Ukraine boasts one of the most engaged PepsiCo teams in the world. Surveys have identified that over 85% of Ukrainian employees are proud to work for our company, share PepsiCo’s vision, support its strategy, and are optimistic about the business’s future in Ukraine.
We are working to build a more inclusive and innovative future via internal tools like Eureka – a program that allows employees to share their knowhow and ideas, and to receive real support in implementing them. Over the course of the past six years, numerous ideas generated via Eureka have helped us to improve the productivity of our operations and save money. For example, in 2016 alone, we successfully implemented 27 cost-saving initiatives at our plants via this program.
We encourage employees and their managers to identify individually tailored work schedules and locations in order to achieve a flexible and fruitful work-life balance. Many of our back office employees could just as easily work from home, build virtual teams, or choose any PepsiCo location to work from, rather than finding themselves anchored to a certain desk in a certain office.
We also do our best to promote healthy lifestyles for our employees. This has meant supporting an increasing number of Ukrainian associates to take up sports through engagement. For example, our current “Healthy Living” campaign educates employees on how to start and maintain a healthier lifestyle. Its goal is to encourage people to adopt healthy habits in all spheres of their everyday life including diet, physical activity, personal routines and so forth.
Fostering the next generation of leaders is also a priority for us. We develop talent and aim to provide Ukraine’s brightest graduates with the opportunity to build successful careers in our company. This year we have launched a traineeship program for talented students. Seven applicants out of more than 550 initial candidates passed the entrance examination and are now receiving training in marketing, finance, logistics analysis, market research, and manufacturing. The most diligent and successful trainees will be invited to continue their careers with the company once the initial training period is complete.
Social and charitable programs
Our goals in the people sphere are achievable through the promotion of diversity and building up sustainable communities. In other words, it is all about investing in local people. Providing a safe and inclusive work place for our 3600 associates in Ukraine is fundamental. We also actively support and invest in charities, local schools, orphanages, and hospitals across Ukraine.
Since 2013, PepsiCo in Ukraine has installed water purification systems in orphanages and other public places for children in the Mykolaiv region. So far, 28 systems have been installed, meaning that 3000 children in rural areas now have access to clean water for drinking and cooking purposes. This year we aim to expand this initiative to other regions of Ukraine.
In 2016, we donated 160 tons of products to people in need through our long-term partner Foodbank and other charity funds. The company regularly holds cooperative charity initiatives with Tabletochki, Blagomay, and Ukrainian Philanthropic Marketplace to raise donations and help save lives.
Since 2016, PepsiCo in Ukraine has been actively involved in the “School Recycling” project. This initiative teaches children and their families the basic principles of responsible waste recycling. Ecological lessons are already underway at a number of Mykolaiv schools. There are now plans to expand this project to other regions of Ukraine later this year.
For the second year in a row, PepsiCo in Ukraine is a sponsor and active participant in the country’s largest voluntary eco-campaign. This annual mass clean-up event gathers nearly one million Ukrainians for a one-day drive to tidy public green zones. Our participation in this clean-up initiative helps to unite PepsiCo employees from different cities across the country.
We believe that our commitment to Performance with Purpose will lift our company to new heights in the coming years. But we recognize that we cannot reach these heights alone. Delivering solutions to shared challenges will require close collaboration with government bodies, nongovernmental organizations (NGOs), and other stakeholders.
About the author: Irina Kozlova is the General Manager of PepsiCo Ukraine