Coca-Cola HBC Issue Brief #10. November Health and Nutrition

Transcription

1 Coca-Cola HBC Issue Brief #10 November 2017 Health and Nutrition

2 Health and Nutrition Our water use intensity by 30%* direct carbon emissions intensity by 50%* We will take 40% of the total energy we use from renewable and clean energy sources We will recover for recycling an average of 40% of the total packaging we introduce to our markets primary packaging by 25% per litre of beverage produced Our 2020 commitments highlight our determination to grow our business responsibly, profitably and sustainably. They are part of our long-term strategy that has enabled us to become leaders in sustainability among beverage companies. We will source 20% of the total PET we use from recycled PET and/or PET from renewable material SUPER SECTOR LEADER IN DOW JONES SUSTAINABILITY INDICES FOR THE FIRST TIME & BEVERAGE INDUSTRY LEADER FOR THE FOURTH CONSECUTIVE YEAR IN 2017 Ranked #1 by Dow Jones Sustainability Indices (DSJI) We are the first company to achieve four consecutive wins in the world s most prestigious business sustainability rankings and now we also lead the Food, Beverage & Tobacco Industry Group as a whole. In 2017 we were one among only 25 companies from all industries to be recognized as a global leader in corporate sustainability areas for climate and water by the Carbon Disclosure Project (CDP) billion litres We will invest 2% of our annual pre-tax profit in communities and double the number of employees taking part in volunteering initiatives during work time to 10% of our people *Water consumption and direct carbon emissions per litre of beverage produced, versus 2010 In the past 2 years WATER USAGE reduced by ~ 1 glass of water for everyone on Earth TWIST bottles are 22% lighter than previous containers In million spent on COMMUNITIES to support wellbeing, environmental and water stewardship, youth development We will certify over 95% of our key agricultural ingredients against the Coca-Cola system s Sustainable Agriculture Guiding Principles PACKAGING Fully recyclable PLANTBottles contain 30% #1 In the past 6 years CARBON FOOTPRINT reduced by 1.15 million tonnes carbon emissions intensity in the value chain by 25% annual emissions of over 215,000 passenger cars plant-based material - available in 10 of our markets We will certify all of our plants in European Water Stewardship or Alliance for Water Stewardship standard. RECYCLING 26% increase in the use of recycled PET versus The issue Consumers around the world are changing. Reducing sugar consumption is becoming increasingly important for many. People are more health conscious than ever and living healthier is the new normal for consumers. In addition, they are concerned about artificial ingredients and look for natural alternatives. Finally, consumers are becoming used to having more choice and are looking for beverages with new functional features, more health benefits and more natural ingredients. Our approach and our progress to date As the leader of the beverage industry, we choose to do more not just say more when it comes to the global fight against obesity. To meet evolving consumer needs and preferences, we offer a diverse product portfolio and we have an exciting pipeline of new products and packaging options. We are focusing on offering consumers more of the products they want, including low- and no sugar options, across categories and in more packages. We therefore put a lot of effort in supporting our juice, water and Ready-to-Drink Tea categories, which accounted for approximately 30% of Coca-Cola HBC s sales in Importantly, as a System we support the current recommendation by several leading health authorities, including the WHO, that people should limit their intake of added sugar to no more than 10% of their total energy/calorie consumption. We have begun a journey toward this goal and we are evolving our business to become even more responsive to people s changing tastes and needs: We are rethinking many of our recipes around the world to reduce sugar and calories across many of our brands while making our low and no-sugar drinks more visible and easier to find. We are offering more new drinks that provide benefits like organic tea, coconut water, grab-andgo coffee, juices and purified water to more people in more places. We are making smaller, more convenient packages so that controlling sugar intake is easier. We are giving people the information they need to make truly informed choices. We are diligently following our longstanding policy not to target advertising to children under age 12 anywhere in the world. Our consumers are changing and so are we. We are listening carefully and working to ensure that consumers are firmly at the center of our business so we can continue to grow responsibly. Our strategy behind our actions can be best explained as: INSIDE THE BOTTLE: Focusing on the actual drinks we make, including how we sweeten them and the various benefits they provide. OUTSIDE THE BOTTLE: which includes everything apart from the drink itself, such as the packaging we develop and policies we implement to help consumers make the right choices for themselves and their families. Health and Nutrition 1

3 SUGAR SUGAR SUGAR INSIDE THE BOTTLE We are taking action to help people around the world to consume less sugar. In 2016, we reduced sugar in more than 200 of our drinks globally to help consumers drink less sugar when they buy our products. In 2017, we will reduce sugar in more than 500 of our drinks around the world adding to the 1,100+ drinks we make that are already low or no-sugar. We are making low and no-sugar versions of the drinks that people love easier to find in more places. Since 2014, as a System, we have launched nearly 500 new low or no-sugar drinks globally. Approximately 30% of the more than 3,900 beverages we make fall into the low or no-sugar categories. In addition, 18 out of the 20 top brands we make feature a low or no-sugar option. We are shifting some of our marketing budget to make people more aware of these low and no-sugar options in their local markets. For example, in 2016, we launched our One Brand global marketing strategy, which highlights our lower and no-sugar versions of Coca-Cola right alongside Coca-Cola original taste. It also underscores the System s commitment to choice, offering consumers whichever Coca-Cola suits their taste, lifestyle, and diet with or without sugar, with or without calories. We are also exploring and bringing to market new sugar alternatives that help us keep the great tastes people love but with less sugar and fewer calories. Coca-Cola Life, made with a blend of sugar and stevia leaf extract, has 50% fewer calories and less sugar than Coca-Cola original taste, but with the Coca-Cola taste people love. In Greece, we have launched Coca-Cola Stevia in 2016, a zero sugar, zero calorie variant sweetened also with stevia leaf extract. We are fully committed as a System to helping consumers better control the amount of sugar they get from our drinks without giving up the great tastes they know and love. We are also looking for ways to make many of our beverages better and more nutritious whenever we can by e.g. providing vitamins or minerals, that help fuel your active body, while we are looking for ways of adding new, sophisticated flavours to keep up with consumers rapidly evolving taste preferences UNESDA SUGAR REDUCTION COMMITMET BY EUROPEAN SOFT DRINKS INDUSTRY ACCELERATES SUGAR REDUCTION TO DELIVER A FURTHER 10% FROM Addressing changing consumer preferences ZERO 0% Responding to the EU call for reformulation and sugar reduction across the food industry BUILDING ON THE 12% REDUCTION ALREADY ACHIEVED SINCE 2000 AND TRIPLING THE REDUCTION PACE The first sector to answer the EU added sugars annex and its 10% sugar reduction target On 7 February 2017, The European soft drinks industry 1 has announced it will reduce added sugars in its products by a further 10% by The soft drinks sector is an early mover in added sugars reduction with its journey beginning in the 1970s when the first average reduction from no sugar and no calorie soft drinks were introduced. increase in availability TASTE The industry of pack sizes reduced smaller than sugar in still and carbonated 330ml (standard can) United Kingdom since 2006 soft drinks by 12% from , so the new 44% different packs CONSUMER commitment triples to choose this from pace by adding another 10% ACCEPTANCE reduction over the next five years. This initiative responds to changing consumer preferences regarding of new product introductions are no and reduced sugar REGULATORY HURDLES 30% of sales in some EU 0 LOW markets are no and low sugar intake and sugar/calorie calls drinks from Member States and the European Commission for a coordinated approach to reformulation and sugar reduction. The commitment We welcome the EU policy approach: will be rolled out across Europe. Partnership based, involving all stakeholders Flexibility to optimise tools available to reflect local situations Allows us to deliver efficiency, speed and scale 5. ACCELERATION OF THE SPEED AND SCALE OF ACTIONS Tripling the pace of added sugars reduction between (vs ) -12% % 10% aggregate sugars 80 reduction across Europe, impacting over YEARS 5 YEARS million consumers Calorie/sugar content 4. COORDINATED EU POLICY ON REFORMULATION & SUGAR REDUCTION (1) UNESDA Soft Drinks Europe is the trade association representing non-alcoholic beverages such as carbonates, fruit based drinks and dilutables. UNESDA represents 80% of the European soft drinks industry by value. We hope other food categories will follow suit to generate critical mass 6. EMPLOYING A WIDE ARRAY OF TOOLS TO ACHIEVE OUR AMBITIOUS TARGET AND REDUCE THE SUGAR MIX ACROSS THE SOFT DRINKS PORTFOLIO Investing in the Innovating to Increasing availability of smaller promotion of drinks introduce new pack sizes to increase portion with reduced or no products with control and moderation no or sugar to encourage reduced consumer choice sugar, including the use of 0 0 Reformulating existing products low calorie SUGAR including the use of low sweeteners calorie sweeteners ZERO RESEARCH Progress will be monitored using independent third party auditors and shared with stakeholders ZERO 2 Health and Nutrition 7. INNOVATION AND SUGAR REDUCTION IN ACTION Health and Nutrition 3 INTRODUCING SMALLER PACKSIZES Average 330ml can of regular carbonated soft drink = 36g sugar REFORMULATING EXISTING DRINKS At least INTRODUCING PRODUCTS REDUCED IN SUGAR OR WITH NO SUGAR AT ALL PROMOTING DRINKS REDUCED IN SUGAR OR WITH NO SUGAR The UK s leading OUTSIDE THE BOTTLE: We know what we put in our bottles is only half of the story. We have to go beyond what is inside the bottle to make a real difference. We are providing smaller, more convenient packages, making it easier to control sugar sugar intake. Today, about 40% of our sparkling brands come in these smaller, more convenient packages of 250 ml or less. We are working to launch mini-cans and smaller packages in more markets around the world, which provide just the right amount of your favourite drink when you want a little less. In fact, you can now buy Coca-Cola in more convenient sizes (250 ml) in 140 countries around the world. We are looking to introduce a wider variety of beverages to retail and cinema customers, including low and nosugar options, and encourage them to examine the serving sizes they offer to consumers. Consumers around the world have told us they want straight-forward information about what they are drinking. We voluntarily put clear, easy-to-find calorie information right up front, so our consumers can make informed choices without the guesswork. In September 2009, we were the first beverage company to commit to front-of-package calorie labelling globally on nearly all our packaging and we continue to do this today. In fact, we lead the food and beverage industry in voluntary front-of-package calorie labelling because it is simply the right thing to do. Where it is not possible for us to do front-ofpackage labelling, for example on returnable glass bottles in some countries, we make this information available on our websites or by other easily accessible means. We are diligently following our longstanding policy not to target advertising to children under age 12 anywhere in the world a policy that applies to all products and brands we sell, everywhere in the world. Although, we cannot control everything every child sees, we can and we will proactively push the industry to advertise responsibly by being careful and thoughtful about any media placement where children are a significant percentage of the audience. It is not just about following the letter of the policies, but the spirit of them as well. We do not place advertising in media where the audience is over 35% children under 12 years old. This policy applies to all media including television shows, print media, websites, social media, movies, SMS/ marketing, animation, 3rd party characters, celebrities/games/contests, branded toys/merchandise, talent selection, point of sale, and merchandise items. We will not design our marketing communications in a way that directly appeals to children under 12. We openly participate in audits by external organizations that monitor our advertising to demonstrate compliance. Coca-Cola leadership actively engages with public health leaders, government officials, and civil society to fully understand their concerns. UNESDA SECONDARY SCHOOL COMMITMET EUROPEAN SOFT DRINKS INDUSTRY TO STOP SALES OF SUGARY DRINKS IN SECONDARY ACROSS THE EU OUR GOAL: No sugar-sweetened soft drinks in secondary schools by the end of 2018 Impacting 50,000 secondary schools and 40 million young people UNESDA has taken a lead in responsible behaviour in schools for over 10 years 1. STRENGTHENING UNESDA S EXISTING COMMITMENTS IN SINCE 2006 IN PRIMARY No sales of any soft drinks in primary schools across the EU No presence in primary schools Signatories to the UNESDA commitments have no presence in primary schools across the EU: No sales of soft drinks No advertising or This initiative builds on overall efforts to reduce added sugars in soft drinks consumed across Europe Source: Canadean/GlobalData SUGARY DRINKS AS A PERCENTAGE OF TOTAL SECONDARY SCHOOL SALES IN SECONDARY Drinks only sold in unbranded vending machines respecting the commercial-free character of schools 100% SUGAR-SWEETENED SOFT DRINKS 54% 39% DRINKS Involving school authorities and parents in the choice of drinks available 2. MARKETING TO CHILDREN & : OUR ACHIEVEMENTS TO DATE FREE No advertising of any products on TV, in print, online and on social media, irrespective of their sugar content Third party auditing demonstrates compliance rates of: no advertising to under 12 s in print media, online media SUGAR-SWEETENED SOFT DRINKS Drinking water should remain the foremost drink in EU schools. PwC research confirms it is available free in 86% of secondary schools Source: PriceWaterhouseCoopers 99% 0% Source: PriceWaterhouseCoopers no advertising to under 12 s on TV

4 3. BUILDING ON OVERALL STRATEGY OF REDUCING SUGAR CONTENT IN SOFT DRINKS Soft drinks industry s contribution to the prevention of obesity LOW EUROPEAN HEALTH AUTHORITIES confirm childhood obesity is an ongoing challenge EU ACTION PLAN ON CHILDHOOD OBESITY, Promote healthier environments, particularly in schools 4. ALIGNED WITH CALLS FOR ACTION FROM: Make sure the healthy option is an easy option % average added sugars reduction achieved EU COUNCIL CONCLUSIONS, JUNE 2017 urging actions that contribute towards halting the rise in childhood obesity Restrict marketing to children Monitor and evaluate WHO Europe 2017 Report 'Child and Adolescent Health' confirms recent decreases in reported consumption of sugared soft drinks are notable On 6 September 2017, The European soft drinks industry, represented by UNESDA, announced that it will voluntarily cease sales of drinks containing added sugars to secondary schools across the European Union. This pledge maintains the industry s long-standing commitment to responsible marketing to children and adolescents, and expands its existing policy - first introduced in not to sell any beverages in primary schools nor advertise any beverages to children under 12. The commitment will be introduced across the 28 European Union member countries with complete implementation by the end of From then, UNESDA member companies will provide only no- and low-calorie soft drinks to secondary schools. We recognize that water must remain the foremost drink available for schoolchildren. UNESDA estimates that this voluntary effort will reach more than 50,000 secondary schools and over 40 million young people across the EU. STOP commitment to a further 10% reduction Source: WHO Europe report, Adolescents obesity and related behaviours: trends and inequalities in the WHO European Region, , May 2017, blications/2017/adolescent-obesity-and-related-behaviours-trends-and-inequalities-inthe-who-european-region, Source: SECONDARY Company salesforces will be directed to stop sales of sugar-sweetened soft drinks to secondary schools Source: /06/17-epsco-conclusions-food-product-improvement/ 5. HOW WE WILL DELIVER ON OUR COMMITMENT Wholesalers and third parties will be encouraged to also support our policy 6. IMPLEMENTATION, TIMING AND MONITORING The new policy will be fully implemented by UNESDA member companies by the end of 2018, across the EU28 SCHOOL We will work with organisations operating in secondary schools to ensure consistency of approach Compliance will be monitored using third party auditors We will respect the commercial-free character of schools Source: Canadean/GlobalData Beside that, we also help to develop and implement other voluntary industry codes of conduct. The premise of these various codes is not to target marketing at children under 12 years old. Codes have been implemented throughout our business and industry compliance is independently verified by third party audits. These include: EU Pledge on advertising to children Global Guidelines on Marketing to Children International Council of Beverage Associations To ensure that our approach continues to meet expectations, we engage with a wide range of stakeholders. In 2013, our Company s Annual Stakeholder Forum focused on health and nutrition issues. We invited nutritionists, academics, consumer representatives and industry peers to review our progress to date. The Group Director of Public Affairs and Communications is responsible for stakeholder engagement on consumer health. Reducing preference for sugar sweetened beverages will require concerted action on several levels from creative food scientists and marketers in the beverage industry, as well as from individual consumers and families, schools and worksites, retailers and governments. Despite of all measures taken above, we know we aren t there yet. Therefore, we reach out to you in order to gauge your opinion and collect your ideas, to ensure that we address material issues for them and our business. In particular, consumer health and wellness remains a key focus in 2017 and beyond. Case studies, country examples Greece Over the last 10 years, the Coca-Cola System in Greece reduced the average calories in our soft drinks by almost 20% and for all major soft drink brands there is a low or no calorie choice. Coca-Cola Light, the first zero-calorie Coca-Cola, was launched in 1986 and since then 12 more beverages with low or no calories entered the Greek market. Currently there are five different variants of Coca-Cola and four of them are without calories. In 2017 Coca-Cola No Calories, and with sweetener from Stevia Plant was launched, the fifth addition to the Coca-Cola family that has the great taste, but with zero calories. In 2017, the promotion of zero-sugar Coca-Cola choices was further strengthened so that more consumers can learn about all the different choices available to them. Consumers can choose among seven different packages from 150ml to 2L family pack. Servings per pack are communicated on the labels of our multi-serve bottles (e.g. 1L = 4 serves) to provide consumers with information on number of servings in a bottle. Clear, easy-to-find calorie information is voluntarily put front of pack and there is no advertising to children below 12. Hungary In Hungary, we reduced total calories in the portfolio by 5.3% between 2015 and Today, 47% of the Hungarian Coca-Cola portfolio consists of low- or no sugar variants and the ratio of low/no sugar products in the total portfolio has increased by 12% since To consumers there are also provided products in smaller, more convenient packages and 73 different products in 170 different packaging and 11 sizes. The Hungarian food industry is united and committed to improve public health of Hungarian consumers. In 2014, Hungarian food industry signed a voluntary initiative led by the Hungarian Food and Drink Association. The initiative includes 11 industry commitments including the commitment on reformulation, innovation, food labelling and supporting active, healthy lifestyle programs. Each year a report is published while the local governmental and civil organizations monitor the results and progress of our commitments. Austria In 2017 a new recipe for Coca-Cola Zero was introduced to improve the taste that is now even closer to the great taste of Coca-Cola, but without the sugar. To offer consumers more sugar-free versions Fanta zero sugar was launched in Austria in On top, sugar in Sprite was reduced by 67%, it now contains 1,9 g/100 ml. The sugar in Coca- Cola Life that initially had 36% less sugar was further reduced to 50% less sugar and contains the sweetener from stevia plant. More than a half of the Austrian portfolio is now with low or no calories and almost 30% without or with low sugar. In order to help consumers to better control their sugar intake, sparkling soft drinks are now also sold in 250 ml cans. Media budget on Coca-Cola Zero was doubled from 2016 to 2017 and tripled to provide free product samples to the consumers. 4 Health and Nutrition

5 28 countries 136 brands 2,058 million unit cases Established markets OUR PUPOSE Bring togetherness, spread happiness and inspire a better future motivates our employees to make a meaningful contribution to business and society. 31,000 employees Our broad geographic footprint We operate across 28 countries and three continents. Our territories extend from as far west as the Dingle Peninsular in County Kerry, Ireland, to Petropavlovsk, the easternmost point of Russia, and from the Arctic Circle to the tropics of Nigeria. This breadth provides attractive growth opportunities and reduces our dependence on any particular market. 3 continents Developing markets OUR MISSION We seek to refresh our consumers, partner with our customers, reward our stakeholders and enrich the lives of the people in our local communities. Austria Cyprus Greece Italy Northern Ireland Republic of Ireland Switzerland 518 m EBIT Croatia Czech Republic Estonia Hungary Latvia Lithuania Poland Slovakia Slovenia 56 plants 264 Emerging markets OUR VISION To become the undisputed leader in every market in which we compete. warehouses and distribution centres Armenia Belarus Bosnia & Herzegovina Bulgaria FYROM Moldova Montenegro Nigeria Romania Russia Serbia Ukraine 595 million consumers Find all of our locations: interactivemap Business model Our business model is at the heart of everything we do. It supports our growth and defines the activities we engage in, the relationships we depend on and the outputs and outcomes we aim to achieve in order to create value for all of our stakeholders in the short, medium and long term. Leveraging our growth model Capitals engaged Value added by Value created Human Working with partners We work continually to develop the competencies, capabilities and talent of our people, a critically important asset. Our partnership with The Coca Cola Company gives us exclusive rights to manufacture, sell and distribute their branded products in our territory. They also produce and supply our Company with the concentrate, or syrup, that is the main ingredient for our beverages. By running a profitable, sustainable, responsible business, we create value which is subsequently both retained by our business, making it stronger, and shared with all of our stakeholders. Natural Water, energy and other natural resources are important inputs to our value creation processes, and we seek to use them efficiently. Marketing Brand investment The Coca Cola Company Serving customers effectively Employees Create demand In-store activation Coca Cola HBC Financial We seek to use all funds efficiently, whether obtained through financing or generated from operations or investments. In-market execution Intellectual Working with suppliers Producing cost efficiently We rely on our supply chain for many types of inputs to our business, including equipment and machinery and consultancy services and software. Partnering with responsible, dependable, efficient suppliers allows our Company to focus on what we do best producing and distributing beverages that bring smiles to consumers. Using concentrate from The Coca Cola Company, and other ingredients, we produce, package and distribute products. We produce nearly all of the products we sell at our production facilities that also have distribution centres and warehouses. Utilising these facilities wisely helps us produce products responsibly and is key to our profitability. Social and relationship capital includes our reputation and our ability to earn and maintain the trust of key stakeholders. Our knowledge-based assets include our brands and brands we license, as well as proprietary technology, standards, licences and processes. Manufactured We carefully manage our stock of manufactured capital, including equipment and buildings, held to produce and distribute our products. Growth in category volume We offer a range of beverages to satisfy evolving consumer preferences. By providing products that meet consumer needs and operating a responsible, sustainable business, we create value for the communities where we operate. Share gains Cost efficiencies Investment in production optimisation Operating expense reduction Use of cash Working capital management Disciplined CapEx investment Price and mix improvements Leverage top-line growth Enhanced EBITDA growth Customers Our efforts to produce products efficiently and responsibly build value for our customers businesses. Serving consumers and communities We manage customer relationships as well as promotions and displays at the point of sale. Our customers rely on us to have a full range of quality products on the shelves every day, so that they can satisfy consumers refreshment needs. In order to give our customers the best possible service, we segment each market and serve each customer based on size and need, taking into account prevalent market conditions. Social and relationship Developing, recognising and rewarding our people secures a skilled and motivated workforce. Grow the top-line Expand margins Invest in the business Direct employment 31,083 Met or exceeded customers expectations 94.8% Shareholders Net profit Through the process of managing all inputs to our business well, we create profits which benefit shareholders through dividend payments and share value. 344m Suppliers Supplier spend As we create value, we support businesses throughout our value chain, and support job creation beyond our business. 3,138m Communities Total taxes When our business is profitable, sustainable and responsible, the communities where we operate benefit through job creation, tax payments to governments, useful products and services, and minimisation of environmental impact. We also have a commitment to invest 2% of our pre-tax profits in programmes to support communities in our territory. 281m Information about the Company PLEASE CONTACT US AT Coca-Cola HBC is ranked food, beverage and tobacco industries leader in the Dow Jones Sustainability World and Europe Indices. It is also included in the FTSE4Good Index and has a AAA rating on its ESG performance by MSCI. Coca-Cola HBC has a premium listing on the London Stock Exchange (LSE: CCH) and its shares are listed on the Athens Exchange (ATHEX: EEE). Panagiotis Vergis Group sustainability policy and reporting manager Coca-Cola HBC AG E: panagiotis.vergis@cchellenic.com T: