Frucor Suntory News Q3 - 2022

Collective 54-year relationship and #growingforgood

These customers have chosen to partner with Frucor Suntory time after time, why?

We’re thrilled to announce we’ve continued to be preferred supplier across these iconic New Zealand establishments, an honour as we collectively strengthen our focus and dedication to sustainable practices across these relationships.

They recognise our commitment to sustainability; not only our sustainable environmental practices but our delivery of sustainable business strategies and growth solutions for consumers.

We reached out to our recent renewals to share and understand more about their business, and why we have continued to be the preferred supplier.

Let’s hear from them.

Otago University

Sum up your operation

As part of Otago University, the University Union is a commercial university-owned operation comprising of 29 business units in 19 locations around campus. It is part of the university’s campus and collegiate life services. The business units are divided into three major areas of operation; college catering, retail, and food and beverage. Within our operations there are three retail stores, nine food outlets, one student bar and one historic staff club.

How is sustainability important to your operation?

According to Operations Manager Martin Jones, sustainability is very important to the university.

“The university has its own designated head of sustainability, and that team works in all areas of the university as well as our own area to meet all targeted requirements around sustainability. For example, we were one of the first places within New Zealand to have a reverse vending machine (supplied in conjunction with Frucor Suntory) and we have recently started full

scale recycling of all our one litre tetra packs, as well as installing a large food digester to enable all food scraps to go directly to compost. Our outlets have also removed all single use containers and we encourage our customers to have their own drink containers.”

What were the leading reasons you choose to remain with us as a preferred supplier?

Frucor Suntory’s leading range of non-alcoholic beverages available including low-sugar options, your proven record of bringing new innovative beverages to the market, and...

Martin Jones Food and Beverage Manager, University of Otago

“...your overall commitment to sustainability and ability to work with and listen to customer partners together delivering a range of products on time at the right price to a discerning customer.”

Otago University is the first Frucor Suntory customer to receive a reverse vending machine in New Zealand.

AUT University

Sum up your operation

AUT Hospitality Services runs the commercial arm of AUT University: New Zealand’s second largest university, with 28,000 students over four campuses. This includes all the onsite cafes, food courts and retail as well as all the events operations, audio visual, vending, advertising, and leasing across the university.

In a typical year we can deliver over 1,500 events from awards dinners to global conferences and we pride ourselves on producing and delivering a high standard of diverse cuisines to all our guests and students.

How is sustainability important to your operation?

Sustainability is very important to us and we introduce a new initiative each year to reduce our impact on the environment, and meet our sustainability goals. Some of these initiatives have included food waste separation, compostable takeaway containers, university-run beehives, vertical herb gardens, the elimination of single-use plastics and the sourcing of local produce to reduce our carbon footprint.

“We also partner with our suppliers to make sure that together we can make a positive impact on our environment, a great example being the reverse vending initiative we currently have with Frucor.”

You recently re-signed terms with Frucor Suntory, what were the leading reasons you choose to remain with us as a preferred supplier?

AUT has found Frucor Suntory always to be proactive, responsive, and willing to listen to the needs of their customers. This is especially so in terms of sustainability and adapting their SKUs to meet changing customer demands. They have come forward with new products and promotions, and look to increase their understanding of the university sector by constantly fostering a spirit of partnership across all their New Zealand accounts. Their pricing and service is competitive, and their product range encompasses all our customers’ needs with new products coming online all the time. They are a pleasure to deal with and have become a trusted partner in our supplier portfolio.

David Green Director of Hospitality Services, AUT

University of Canterbury Students’ Association

Frucor Suntory has been our preferred beverage partner for more than 11 years. Its products and pricing resonate with our customers and students, and its commitment to ongoing product development has ensured our customers regularly have new products to sample. They have consistently provided a high level of support to our staff at all levels of the organisation, and regularly demonstrate their commitment to our shared goals of sustainability and waste minimisation.

“Most importantly, throughout our partnership, Frucor has been flexible, innovative and tailored their offering to our audience which has resulted in continued beverage sales growth.”

Jeremy Hanna Commercial Operations, University of Canterbury Students’ Association

Interislander (KiwiRail)

Sum up your operation

Connecting our North and South Island together since 1962, our Interislander ferry service is New Zealand’s original Cook Strait ferry.

Providing a consistent service moving freight and passengers between our islands, this year we’re proud to commemorate sixty years of service to the people of New Zealand.

How is sustainability important to your operation?

In 2025 and 2026 we will welcome two brand new custom designed and rail enabled ferries, which will have less of an environmental impact! We estimate that our new ferries will reduce emissions by about 40%, supporting KiwiRail’s goal to reduce carbon emissions by 30% by 2030 and be carbon neutral by 2050.

The larger ferries are capable of carrying 300% more than rail wagons, shifting freight off roads bringing significant safety and environmental benefits.

As we move to a more sustainable business model, we’ve committed to reducing waste. Our customers want less single use plastic and more recycling options.

Funded and maintained by Frucor Suntory, we’ve added a reverse vending machine in one of our food court areas and plan

to have machines on all our ships by the end of the year. This commitment to recycling has been welcomed by customers who also enjoy a discount off their next onboard purchase.

“Shared sustainability goals, excellent customer service and an ongoing commitment to our business made it easy to decide to re-sign Frucor Suntory as our exclusive supplier.”

Olly Edwards Interislander

The reverse vending machine converts used plastic into sandwich and smoothie containers to use onboard. This creates a continuous recyclable source, closing the loop.

Wellington Zoo

Sum up your operation

Wellington Zoo is New Zealand’s first zoo, and Wellington’s oldest conservation organisation, caring for animals since 1906. The zoo is a not-for-profit charitable trust and has been that way since 2003.

We provide a safe place for our 250,000 annual visitors to connect with their friends, wha nau, and others through the shared experience of feeling connected to nature.

How is sustainability important to your operation?

Wellington Zoo is the world’s first Toitu carbon zero certified zoo, and actively incorporates the United Nations’ Sustainable Development Goals in our organisational strategy; in 2017, we won the inaugural World Association of Zoos and Aquariums’ Environmental Sustainability Award.

We continue to measure and reduce our emissions year on year through this programme, with a 42% decrease in emissions in our last audit from when we started. What we cannot reduce we offset by supporting native biodiversity restoration projects within Aotearoa New Zealand, most recently Hinewai Reserve on the Banks Peninsula.

You recently re-signed terms with Frucor Suntory, what were the leading reasons you choose to remain with us as an exclusive supplier?

Wellington Zoo’s relationship with Frucor Suntory dates back to 2016. We view our relationship with Frucor Suntory as a values-aligned partnership. Our focus as a leader in sustainability and conservation is to work with organisations that are genuinely driven to improve their practices and evolve towards a low carbon and low environmental impact future.

“Frucor strives for continual improvement and walks the walk regarding sustainability. This was one of the key decision drivers when our agreement was up for renewal.”

Frucor Suntory is proud to support refillable water stations at Wellington Zoo – educating and proactively reducing the use of plastic.

During the renewals process, Wellington Zoo also assessed how we could further engage our community with conservation and sustainability by working with a partner keen to explore unique avenues to tell the story of our shared commitment to the environment. Frucor Suntory had been a key supporter of our annual Neighbour’s Night event throughout the length of our partnership. This event is extraordinary as it gives the surrounding residents of the zoo the opportunity to come to spend the evening with their family exploring and enjoying some kai and drinks at no cost, one night of the year. Frucor Suntory were interested in brainstorming other ways to share our stories of conservation to benefit our community, which was another key reason we were excited to re-sign and continue partnering.

Sian Robertson Partnerships Manager, Wellington Zoo

Consumer trend focus: Sustainability

Kiwi consumers are increasingly committed to living sustainably. But what does this mean for packaged drinks?

When shopping for packaged drinks, the predominant sustainability concern for consumers is the recyclability of packaging. This also follows through in terms of consumer behaviour. In a recent diary study of drinking occasions by Frucor Suntory1, the majority of consumers noted they had recycled their drink packaging.

However, sustainability means more to consumers than just packaging. Other key sustainability concerns highlighted in the study include whether or not a product is made locally or made from local ingredients, and whether the brand they are buying has ethical values.

Implications

Most packaged drinks consumers claim to have made at least some changes in what they buy and consume as a result of these sustainability concerns1

A recent study from Kantar NZ2 also highlights the key barriers Kiwis face when it comes to making more sustainable choices. Major barriers include confusing messaging from businesses, as well as cost, effort, and lack of convenience. Finally, a lack of knowledge on how sustainable different products are and the risk factor of trying something new can also act as barriers to buying more sustainably.

Recyclability is a key area of concern in drinks. Making it easy and convenient for consumers to find and buy recyclable drink choices should be a priority.

Sources: 1. Beverage Usage & Attitude Study, n=4,083, 2020.

2. Kantar Better Futures report, Dec ’21, n 1517.

However, the sustainability of drinks is also about more than just packaging. There is an opportunity to help consumers feel good about the choices they make through other elements of the brand and product, such as the ingredients or brand values. When offering sustainable choices, consider sustainability in its broadest definition.

Partnering with The Warehouse Group to reduce our environmental impact

We believe that what we have with The Warehouse Group is more than a business relationship. After nine years working together, we have a well-established partnership that can help to deliver more sustainable outcomes for both of our businesses and our stakeholders.

The Warehouse Group has a unique responsibility to influence positive environmental and social change in New Zealand as the country’s largest general merchandise retailer. We share a similar commitment to keeping sustainability at the core of what we do by integrating sustainability principles into product design, sourcing, production, and distribution.

To make significant changes that achieve more sustainable business practices, we want to learn from the best in business and find collective ways to meet our targets, improve the recyclability of our products and reduce our carbon emissions. The Warehouse Group’s sustainability team, led by Chief Sustainability Officer, David Benattar, regularly meets with Frucor Suntory Head of Sustainability, Ben Walkley to discuss industry challenges and sustainable choices.

“Active industry collaborations and partnerships are essential to supporting Aotearoa’s transition to a circular economy. Our partnership with Frucor Suntory is a great example of business working together to create solutions which make it easier for customers to choose products which are more sustainable,” said David Benattar.

We started by looking at what products we were selling at The Warehouse and Warehouse Stationery stores. An important part of being a sustainable business is making sure that our sustainable and recyclable products are easy to spot in chillers. This makes it easier for customers to identify sustainable product alternatives and to feel confident that the products they are purchasing have a lower impact on the environment and are easier to recycle.

In 2020 we moved to recycled plastic (rPET) packaging in our h2go 825mL bottles which are highly visible in The Warehouse front of store chillers. After launching the new rPET h2go packaging into market and increasing the visibility of our sustainable products, more than half of the products in The Warehouse chillers are produced from sustainable packaging.

Active industry collaborations and partnerships are essential to supporting Aotearoa’s transition to a circular economy. Our partnership with Suntory is a great example of business working together to create solutions which make it easier for customers to choose products which are more sustainable.

David Benattar Chief Sustainability Officer, The Warehouse Group

2021 sustainability highlights

Sustainability goals and targets

In 2019, Suntory Group established a sustainability platform to further its vision of Growing for Good. This means advancing global environmental, social and developmental efforts outlined by the United Nations’ Sustainable Development Goals, including conserving water resources, reducing greenhouse gases, promoting a circular use of resources, and ensuring the protection of human rights in our supply chain.

In 2021 we joined Suntory Group’s commitment to net zero gas emissions by 2050, which we will deliver on by increasing our use of renewable energy, undertaking energy conservation initiatives, utilising next-generation infrastructure, and collaborating with stakeholders.

Using water sustainably is crucial to helping us reach net zero emissions. We assess how we use water across our corporate activities, and think about how we can reduce waste in the face of a global water crisis. This focus has resulted in reaching our water saving targets nine years ahead of schedule.

In addition to this, we are working to switch all plastic (PET) bottles to recycled PET (rPET) or plant-derived materials. We’re committed to ensuring our products stay out of landfill by designing products with circularity that can be recovered and recycled into new products.

See how we’re tracking against our targets on page 12.

Innovation in sourcing, fleet and waste management

We made significant improvements across our sourcing, fleet and waste management to ensure we are on track to meet our 2030 sustainability goals. A particular focus has been improving the energy efficiency of our assets and partnering with local suppliers and businesses to enhance our waste management, including:

. Removing and recycling 1,784 high emission and old technology chillers and replacing them with 982 low emission chillers across Australia and New Zealand.

. Hiring a dedicated, full-time team of staff at our Wiri manufacturing site to ensure better waste separation and bailing efficiency.

. Changing our national waste disposal supplier to improve the accuracy and transparency of our disposal data.

We have continued our membership with Sedex, the largest sharing platform of ethical supplier data in the world, which allows us to engage with our suppliers and gather key information regarding social and environmental compliance.

Filling the space to reduce carbon emissions

A large part of our business requires transporting products to customers by road, sea, air and rail. We’re constantly evaluating how we can reduce the role of freight in ensuring we meet our 2030 CO2 emissions target. Some of our products are shipped in bulk using large 40-foot containers.

We double stack pallets using Astron slip sheets, which are lightweight and made of recycled material. This helps us reduce the weight of containers but also conserves space. Despite this, approximately two tonnes of space remains in the top of our containers suitable for lightweight stow products, such as meat trays and toilet paper. Through our third party logistics provider, we work with other FMCG companies to share container space. Last year alone, 1,030 of our containers were co-packed with additional goods.

Since 2019, our co-packing initiative has helped us save over 95 tonnes of CO2.

In order to divert Tetra Pak packaging from landfill, we are now sending our post manufacturing material to SaveBOARD, a new recycling-led venture which turn beverage cartons into low-carbon construction materials used for a range of purposes, including walls and ceilings.

In 12 months our New Zealand operations reduced waste to landfill by 29%.

Keeping our packaging out of landfill

We’re on a mission to ensure our packaging stays out of landfill and make significant progress towards a circular economy for recycled plastics. We have...

. Improved the recyclability of our PET bottles, replacing green plastic with clear recycled plastic.

. Ramped up research and implementation of light-weighting glass packaging.

. Delivered new light-weighted 330ml V Pure glass bottles, which we estimate will reduce our glass usage by 4 tonnes and carbon emissions by 1.3 tonnes.

Packaging value chain

As members of the Australian Packaging Covenant Organisation (APCO), we share APCO’s vision to co-create a packaging value change that keeps packaging materials out of landfill and retains the maximum value of materials, energy and labour within the local government.

In 2021 we achieved a “Leading” organisational performance in the APCO Sustainability Framework – meaning we have rigorous procedures in place to achieve 100% sustainable packaging.

How we’re tracking against

targets

Water

TARGET:

PROGRESS:

Hearing from the Frucor Suntory Team

Ruth Muller, Chief Research & Development Officer, is a key pioneer and her desire to educate and socialise all things recyclability is fundamental to Frucor Suntory becoming best in practice with research and development of products and packaging in this space.

Guess what? I love processed foods, and with global food supply chains getting more challenged, if we couldn’t prolong the shelf life of food with the help of processing and packaging, the impact would be catastrophic. Whilst I also have my vegan raw food moments, living my life to the fullest requires some busy weekday shortcuts! I love beverages – I’m a V Sugarfree drinker, and I don’t know if I drink it as much for the physical energy, as an emotional energy reset, to have a little break and really enjoy something in the moment.

And I love plastic... Why is that such a controversial thing to say? I used to collect aluminium cans for pocket money as a child, and the image of an aluminium smelter is very accessible, as is the image of molten glass. It is natural to associate these with recyclability. Plastic (I will say PET now – think clear drink bottles and sandwich packs) can conjure up different sorts of images.

“The problem with plastic is that it was never meant to be single use.”

PET can be recycled over and over again and generates lower carbon emissions in the recycling process than many other materials. It should be valued as a resource, and collected and recycled. What we want to see is circularity. This is why transitioning to rPET (recycled PET) is a key part of our sustainable packaging strategy.

This is not a 12-month journey, this is a long-term journey and one we cannot tackle alone as we work towards our goal of 100% recyclability by 2030. Currently 93% of our packaging is recyclable and is largely made up of cans (62%), PET bottles (23%), Tetra Pak (7%), glass bottles (6%) and rPET (2%), and we need to engage with our customers, suppliers, scientists, trade partners and even our competitors to get the scale of change we need to see. This is one of the reasons we are strongly supporting the introduction of a container return scheme in New Zealand.

Carbon emissions contribute to global warming and Frucor Suntory is absolutely committed to doing our bit to reduce ours. Moving from virgin PET to rPET represents a 70% reduction in carbon emissions brought about by our PET utilisation.

So why don’t we move everything to rPET now? There are some challenges, which is why we have a roadmap to change our portfolio over time.

The most common method of recycling is “mechanical recycling”, this involves cutting the bottles up into tiny flakes, processing, decontaminating, and eventually turning them into resin to make preforms, which our PET bottles are blown from. The resulting bottles may not look 100% clear like a virgin PET bottle, because of the reheating and reprocessing it is subjected to. Therefore, we need to do extensive testing on the rPET bottles, because any inclusions or black specks can be weak points, so we must ensure integrity of the bottles to be absolutely certain there will be no leaky bottles in our supply chain. This is especially important for carbonated beverages, as the finished product is pressurised, so the bottles must withstand that. It is also more challenging for larger bottle sizes, as there is a bigger surface area to ensure consistency of bottle thickness.

What does the future look like? The next stage is chemical versus mechanical recycling, which is taking PET back to the molecular level, versus a physical breaking down, and in that process the outputs are indistinguishable from virgin PET. The technology and infrastructure for this method is still being developed and our global team are working closely with scientists, engineers and suppliers.

“We have some world class capability in our packaging team here in New Zealand and we are also fortunate to have the Suntory global packaging team support us with their technical expertise and investment in research for the future.”

There are also commercial and infrastructure challenges. There are limited recycling facilities in New Zealand at this point as the factory set-up cost can be astronomical. Also, not enough used PET is being recycled, so there is not enough feedstock available to warrant investment by companies that convert it, making it hard for them to have a viable business. Flight Plastics in Wellington are an inspirational company who collect every bit of used PET they can, yet still can’t get enough to meet demand. There is also such a high demand of suppliers like us on rPET, as many companies are trying to do the right thing, so supply and infrastructure are still catching up. But increased demand will allow the infrastructure to be put in place over time due to economies of scale.

One ask I have is this – when you are at a BBQ with friends, please tell them this story. Putting PET into your recycling bin, including saving it to take home when you’re out and about, does not end up in landfill. There is a demand, and the more we can recycle and create further demand for rPET packaging (versus virgin PET), the more we can support the industry to build scale to invest in infrastructure.

Ruth Muller Chief Research and Development Officer, Frucor Suntory

It’s important to work collaboratively with our partners, suppliers, and customers to achieve our 2050 ambition of net zero emissions.

Darren Fullerton Chief Executive Officer, Frucor Suntory