How Britvic is embedding sustainability
In this stock feature, Castlefield's Ita McMahon meets with Britvic’s Investor Relations team to discuss how the company is approaching sustainability through the sugar content levels and plastic packaging of its products.
At the end of the second quarter 2023, we caught up with Britvic’s Investor Relations team and its Director of Sustainable Business. This was prompted by a conversation with our External Advisory Committee in which some members had asked about Britvic’s suitability for our fund range, given that the company produces soft drinks, which can have a high sugar content, and are often packaged in single use plastics.
We welcome these discussions and it’s a key reason why we have an Advisory Committee: to challenge us and ask the questions that our clients might be thinking. We’ll be reporting back to our Advisory Committee in September, and in the meantime, we hope this article illustrates to the rest of our client base how Britvic is steadily making its business operations more sustainable.
We started our meeting on the topic of sugar content, and Britvic were quick to point out that 80% of its sold products are now low or no calorie, up from 73% six years ago. It’s clear that the sugar tax has radically altered Britvic (as well as the wider industry), and this is evidenced by its product development activity where 96% of product innovation is now focused on low or no calorie beverages. This represents a significant increase from 68% back in 2017.
The ongoing reformulation of soft drinks also reduces the carbon footprint of products, due to the high carbon footprint of sugar. Moreover, Britvic’s focus on health and wellbeing also extends to its marketing strategy. Its code of ethics prohibits promoting excess consumption of its products, bans marketing to under 12s and requires campaigns to ensure that low calorie versions of branded drinks are included in marketing materials.
On packaging, the company was very open about the challenges the sector faces in sourcing bio and recycled plastics, where demand outstrips supply at present within the UK.
80% of Britvic sold products are now low or no calorie, up from 73% six years ago
Sourcing from further afield is possible but adds to the carbon footprint of the overall product and would mean sourcing from locations with lower standards of employee welfare. There are tradeoffs too on the type of packaging material: glass and aluminum both have a higher overall carbon footprint than plastic, for example.
That said, Britvic has increased its use of recycled PET content in its bottles from 4% to 22% over the past three years, and every year the business is saving hundreds of tonnes of plastics by improving the manufacturing practices. While they continue to look for wholesale solutions to the plastic problem in the short term, they also highlighted three areas of their business that provide the building blocks to longer-term solutions on packaging:
- Dispensers: Some Britvic brands are available in pubs and restaurants via dispensers, thereby negating the need for single serve packaging.
- Flavour concentration: Cordials bring flavour in a format where packaging is vastly reduced.
- Circularity: Closed loop systems where used packaging is collated, recycled, and used as input materials. This is already happening in Britvic’s Brazilian business, which is required by law to collect discarded plastics.
We know the Britvic business well and have been following its sustainability progress for some time. It’s not a perfectly sustainable business. Significant challenges remain.
But it is evident from our interactions with them – and in the detailed data that they publish annually – that there is a strong commitment within the firm to addressing these issues. Investors, like ourselves, can help by continuing to monitor progress and challenge when necessary.
In addition, it’s important to remember that although the transition to a sustainable, low carbon economy needs new technology and infrastructure – like electric vehicles and renewable energy – it also requires existing companies across all sectors to make significant changes to how they operate. Britvic is a good example of a business doing the hard graft of making incremental changes to its business and supply chain, year in and year out.
All stats taken from: Britvic Sustainability Performance Datasheet 2022
Written by Ita McMahon
This piece originally featured within the Sustainable Funds Quarterly - Investment Management Report (Q2 2023)