Environmental Sustainability

In our manufacturing, distribution and sales operations, we strive to continuously improve every aspect of our business. We have invested heavily over the last several years to align and integrate our operations to serve our customers and consumers better while increasing energy efficiency, reducing our waste stream and lowering the amount of water and other resources used per gallon of finished product.

This poses unique challenges for a relatively young company like DPS. Our approximately 150 principal sites joined our business through the acquisition of dozens of brand and bottling companies over many years, and each brought its own set of processes and procedures. Each year, we have taken strides in understanding the environmental impacts of these various operations, and the integrity and precision of our data continue to improve.

We have simultaneously taken a new look at how we calculate manufactured production gallons across the business. With the help of third-party resources and a comprehensive internal examination of our measurement and reporting processes, we can now more accurately report the amount of product we make each year. Because many of our goals depend on this measurement, accuracy in this area is key.

This year, we will be revising the baselines for some of our environmental goals, but the goals we set out two years ago will remain unchanged.

In 2011, DPS began using third-party resources to get a more complete picture of our energy and water usage by site across our company. Over the ensuing year, the new processes have become embedded in our operations, and our manufacturing facilities are now able to more accurately and consistently report on consumption at each location.

With renewed confidence in our ability to track our utility usage over the past year and into the future, combined with the data we have collected since our spin-off in 2008, we now have the ability to understand the changes in our energy consumption over time and use the data in a more meaningful way to identify opportunities for improvement within our operations.

As we make progress toward our 2015 goal to improve energy efficiency in our manufacturing locations by 10 percent, it is important that we understand the causes of any changes in our year-over-year data. For example, our absolute usage of energy may increase simply due to our output of gallons of finished product increasing in line with the growth of our business. By focusing on continuous improvement in lighting, cooling, heating and production-line operations, we will strive to produce more with less on a per-gallon basis.

In 2011, we used approximately 270 million kWh of electricity in our manufacturing operations to produce approximately 1.6 billion gallons of product. This equates to usage of 0.17 kWh per gallon of finished product on a normalized basis.

Last year, we reported 276 million kWh used in 2010. While our total electrical consumption has dropped, we are not claiming this as year-over-year progress toward our goal due to changes in the way we measure gallons of finished product. Instead, we will use our 2011 numbers as the new baseline for our 2015 goal, reflecting the latest improvements in our data-collection processes. Our target for 2015 is 0.15 kWh per gallon of finished product.

Beyond our manufacturing locations, our commitment to energy efficiency and reducing CO₂ emissions remains as strong as ever. All told, our operations, including corporate offices, distribution centers and other locations, used 315 million kWh of electricity in 2011.

Our ongoing RCI initiative has produced results that contribute to reduced energy use as well. In our warehouses, RCI activities continue to drive efficiencies in the storage and delivery of our products, frequently with an energy savings associated. Through a project focused on server consolidation, our IT department was able to decommission nearly 50 servers, freeing us from their costs and energy usage. With more than 150 RCI projects completed to date, we expect that these efforts, while focused on freeing up people, time and cash to grow the business, will continue to benefit our sustainability efforts in the future.

Our program to replace outdated vending machines and coolers continues to drive energy efficiency outside of our operations, lowering costs and improving service to our customers. In 2011, we replaced 13,000 older units with Energy Star-rated coolers and vending equipment, which combined with our 2010 efforts brings us more than halfway to our goal of replacing 60,000 units by 2015. Each unit represents an energy savings of up to 30 percent, yielding a total of 55 million pounds of CO₂ removed from the atmosphere, as much as would be produced by 4,855 cars. In addition, the establishment of a new cold-drink equipment control process in our business will give us greater insight to where our equipment is being used and by whom, helping us to speed decision making on replacements in the future.

The opening of our Victorville, Calif., plant in 2010, which completed our hub-and-spoke distribution system, has been a game changer for DPS. With the elimination of cross-country shipping of many finished goods such as Mott’s, Clamato, Hawaiian Punch and mixers from our Aspers, Pa., and Williamson, N.Y., facilities, we have been able to remove 33 million pounds of CO₂ from the atmosphere per year.

This has provided the foundation for us to focus on increasing fuel efficiency in our operations, beginning with a reassessment of our data collection and measurement techniques. Last year, we improved our processes for tracking and analyzing our fuel use data. We used these insights to revise our 2009 baseline in last year’s report, but further research revealed that more refinement was necessary. Following an intensive review process, we are now confident in our data and have established a new baseline for fuel efficiency.

To be clear, we are not revising our goal. We will still strive to achieve a 20 percent increase in product shipments per gallon of fuel. In 2011, we shipped 40.1 cases per gallon of fuel used. This will serve as our new baseline with a goal of reaching 48.5 cases per gallon of fuel used by 2015.

While our route optimization efforts are ongoing and continue to reduce total miles driven to get our products to our customers, our RCI efforts have recently added momentum to our fuel efficiency efforts. Our warehouses and distribution centers are consistently finding ways to reduce the total number of trips our trucks make each day, improving delivery speeds to customers while reducing our fuel usage and costs. At just two of our sites, for example, recent projects to maximize the number of pallets carried per truck per trip is expected to reduce carbon emissions by up to 1 million pounds of CO₂ annually.

We’re also saving fuel by leaving the roads entirely, as we rely increasingly on intermodal transportation to move our product long distances. Since 2009, our use of trains to transport product has saved approximately 68,416 tons of carbon when compared to transportation by truck. This is the equivalent of removing 11,260 cars from the road.

Our small fleet, not including our commercial vehicles, continues to see improvements. More than 75 percent of the vehicles added to our small fleet in the last four years meet the U.S. Environmental Protection Agency (EPA) standard for “green vehicles,” and we expect this trend to continue in the future.

In addition, DPS is one of more than 2,900 companies to join the EPA’s SmartWay Partnership since its founding. SmartWay partners have saved more than 50 million barrels of oil since 2004, and DPS is looking forward to contributing even more to their success in the future.

As a beverage company, DPS will always have an important role to play in water stewardship. Water is the primary ingredient in our products, and it is as important to us as it is to the communities in which we manufacture beverages. As with other resources, we expect our total usage to increase with the growth of our company, but we are committed to reducing manufacturing water usage and wastewater discharge by 10 percent per gallon of finished product by 2015.

In 2011, we used approximately 3.1 billion gallons of water to produce 1.6 billion gallons of product, which equates to 1.97 gallons of water used per gallon of finished product. Our wastewater discharge was approximately 1.4 billion gallons, which equates to 0.88 gallons per gallon of finished product. These numbers will serve as the baselines for our 2015 goal, reflecting improvements in the way we measure gallons of finished product. Our goal is to get to 1.77 gallons of water used per gallon of finished product and 0.79 gallons of wastewater discharged per gallon of finished product.

We will achieve this through ongoing maintenance and facilities improvements, system upgrades on our production lines and the implementation of best practices in our manufacturing processes and technology. Most of our water is derived from municipal sources, and wastewater in our DPS manufacturing facilities is pretreated to meet local specifications prior to discharge to municipal wastewater treatment plants. In our manufacturing locations without access to public wastewater treatment plants – such as our Williamson, N.Y., and Tehuacan, Mex., facilities – we fully treat wastewater onsite via multistage systems prior to discharge.

In Mexico, Grupo Peñafiel is leading the way in water stewardship with the launch of its “New Way of Life” nationwide water awareness campaign. The campaign, while initially employee-focused, has extended into the neighborhoods surrounding our sites. Events have included everything from flash mobs to visits to local elementary schools to banner advertising, all in the service of promoting the responsible consumption of water. Through the use of improved water dispensers for employee consumption alone, Grupo Peñafiel saved approximately 35,000 gallons of water in its operations while highlighting easy ways to conserve.

Of course, we couldn’t get our products to consumers without using plastic, aluminum and other materials as containers. We recognize that there is a significant opportunity to reduce, reuse and recycle these materials as well as the packaging and shipping materials we use in manufacturing and distribution.

Beginning in 2010, we have been collecting comprehensive waste data from all of our manufacturing locations. In 2011, we recycled more than 81 percent of our manufacturing solid waste, diverting more than 37,000 tons of waste from landfills across the nation. This number exceeds the original goal we set out in 2010 and puts us well on our way to achieving the 90 percent goal we communicated in last year’s sustainability update.

While all of our plants have recycling measures in place, we are currently expanding the number that work with third-party recycling companies not only to increase the efficiency of our landfill diversion, but also to drive revenue for the company. At just nine of our sites in 2011, we were able to divert nearly 7,780 tons from landfills and realize $1.3 million in gains, proving once again that sustainability is not just a benefit to our communities, but to our business as well.

Our RCI efforts also have increased our efficiency in avoiding the creation of waste in our manufacturing facilities. Whether it’s using reusable totes and recyclable bags to transport Hawaiian Punch, or simply reducing our backlog of inventory and avoiding the warehousing and storage materials that go with it, sites across our business are finding ways to save money while reducing the volume of waste they produce.  

The lightweighting of our packaging remains one of our greatest opportunities, and our successes continue to drive reductions in the use of PET plastic. Our leadership position in bringing the “1881 Standard” finishes and closures (the threaded bottle necks) to the market has served us well, and we continually investigate new technology and supply options for lowering our PET use.

In last year’s sustainability update, we laid out a number of programs we were investigating in 2011. Each of these has met with some degree of success, although tests are ongoing. These include:

• Commercial implementation of 100-percent post-consumer recycled (PCR) single-serve containers in select markets, with select brands. This project is ongoing, with quality and cost continuing to be the greatest challenges. Recent encouraging trial runs on quality will spur this effort forward as we continue to examine cost opportunities.
• We have developed reusable multi-serve juice and secondary display packaging, which has proved to be a high-quality alternative to disposable corrugate boxes. Feasibility in the market is under investigation, with some market tests seeing increased product sales to consumers.
• We exceeded our expectations for rolling out Green Ink^TM printing technology beyond Deja Blue. This technology is now used on 7UP, A&W and Diet Rite, as well as Sunkist soda, Sun Drop and Canada Dry in many markets.

All told, we reduced our PET usage by 14 million pounds in 2011, bringing our total conservation since 2007 to approximately 31 million pounds, more than halfway toward our 2015 goal. During this same period, our PET reductions have saved the company nearly $25 million in costs.

The issue of post-consumer recycling of our packaging is another big opportunity we have in the years ahead. We have heard from our consumers and know that making a substantive change in post-consumer recycling will require effort from everyone affected by our industry, including consumers themselves. We are working with industry leaders such as the American Beverage Association (ABA) and are an integral part of their efforts. The ABA, for example, recently became a founding member in the National Recycling Partnership, created to reinvigorate recycling in the U.S. This first step will move us forward on our sustainability journey, and we expect to have more to report in the future.