Pepsi's biodegradable backlash: The snack bag that was too noisy

Sometimes when companies take steps down the path toward sustainability, they run up against unexpected side effects — and other times, it seems no good deed goes unpunished. Take, for instance, what happened when PepsiCo introduced its first compostable chip bags.

Two of the company's snack food brands, Fritos and Lay's, are big and well known. As a result, empty bags discarded in parks and on roadsides were "branded litter" — items which publicly link the company to waste and negatively impact its brands' image for consumers.

In "The Sweet Spot of Sustainability Strategy," in the fall 2013 issue of MIT Sloan Management Review, Gregory Unruh notes that, in the early 2000s, "there was no generic solution to the disposable packaging problem — so a window for strategic action existed." PepsiCo's R&D group had the capability to find an innovative packaging solution to market, and there was a strategic impetus for PepsiCo to look for solutions to litter.

Their solution: biodegradable bags. By 2006, PepsiCo had made progress on a compostable bag that would decompose quickly.

PepsiCo launched the compostable bag for its SunChips product, which the company had positioned as a healthy snack.

Made of biodegradable plant material instead of plastic, the bag looked great. It stored chips fine. Huge lettering boasted "100% COMPOSTABLE CHIP PACKAGE."

There was one small problem: It was noisier than previous bags. A lot noiser.

That might not seem like a big deal, and indeed PepsiCo knew the bags made more crinkly and crackly sounds when they were handled. But the company figured that customers would find the tradeoff worth it. Unfortunately, the noise was an issue for many customers.

"When the new SunChips packaging hit U.S. markets, a backlash ensued, resulting in a dip in market share for SunChips and bad publicity," writes Unruh. The complaining was a little silly, but it was persistent. A Facebook page called "SORRY BUT I CAN'T HEAR YOU OVER THIS SUN CHIPS BAG" got more than 49,000 likes. A video that made its way around the Internet purported to show the crinkling bag registering over 95 decibels, about 25 percent louder than a crinkling Tostitos bag. Complaining spread across the web (a search for "sun chips bag too loud" on Google turns up more than 149,000 results). As one woman told The Wall Street Journal, "The thing is, you feel guilty about complaining since they are doing a good thing for the environment. But you want to snack quietly and you don't want everyone in the house to know you are eating chips."

It may have been tempting for PepsiCo to just throw in the towel. But, as Unruh writes, "because they had publicly committed to producing SunChips in a 100 percent compostable bag, PepsiCo recognized that going back to the old packaging was not an option. Despite some internal tensions, PepsiCo R&D teams persisted and ultimately produced a 'quieter' bag design that was still biodegradable. The new package hit the shelves in 2011 — to a far better response."

The PepsiCo example has three lessons, Unruh explains:

Try out big changes on smaller brands first. Launching the compostable bag with SunChips rather than bigger brands such as Fritos or Lay's minimized the risk.

Persist through the initial setbacks and resolve the problem to gain goodwill. Ultimately, PepsiCo enhanced its reputation with sustainability advocates, Unruh says: "By being the first among its competitors to introduce a compostable snack bag, PepsiCo staked out a first-mover advantage on an issue strategically important to the company."

Poke fun at yourself to defang your critics. When the company brought the SunChips compostable bag to the Canadian market, its ad campaign acknowledged the noise — and offered to send customers a free set of ear plugs. "By addressing the issue upfront, the company avoided the backlash that followed the U.S. launch and garnered positive publicity," writes Unruh.

Final note: Compostable packaging does not appear to have made it to other PepsiCo brands. According to PepsiCo's packaging, waste and recycling page at the company website, the sustainable packaging focus is more on recycling these days. "Printed directions on the [Frito-Lay] product's packaging encourage consumers to visit TerraCycle's website, sign up and recruit others to collect chip bags for recycling," says the PepsiCo site. "Since their U.S. launch in September 2009, our Frito-Lay sponsored TerraCycle bag brigades have diverted over 23 million of our post-consumer snack bags from landfill. The program expanded into Brazil, Mexico and Israel in 2012, collecting more than 6 million bags in just one year. The program now operates 70 brigades in 22 countries."

This article draws from "The Sweet Spot of Sustainability Strategy," by Gregory Unruh (George Mason University), which appeared in the fall 2013 issue of MIT Sloan Management Review. SunChips image by theimpulsivebuy via Flickr.