PepsiCo Inks Deal With Loop for Sustainable Product Packaging

PepsiCo, Inc. PEP has taken a step closer to eliminate non-recyclable plastics by signing a multi-year supply agreement with Loop Industries, Inc. LOOP, a leading technology company in sustainable plastic. This deal will allow PepsiCo to buy production capacity from Loop Industries’ joint venture in the United States and use Loop PET plastic for sustainable product packaging by early 2020. Notably, Loop PET is a complete recycled material.

Loop Industries’ technology makes PET plastic by recycling low-value plastics. Also, it recycles plastic bottles and packaging, clothing and other polyester textiles as well as ocean plastics. These advanced and innovative technologies can help PepsiCo to become a major company in using recyclable plastics and minimize waste by offering sustainable and reusable packaging solutions for its products.

Per management, this latest move will help PepsiCo in building a circular economy for plastics and packaging. Also, it reflects the company’s dedication toward adopting various measures to solve problems related to plastics and waste, and is in sync with its Performance with Purpose vision. Apart from sustainable and healthy packaging, this partnership includes marketing and communication plans to raise awareness among consumers about recycling, sustainability and the plastics’ circular economy.

Other important players like The Coca-Cola Company KO and Mondelez International, Inc. MDLZ have also announced initiatives to recycle plastics and eliminate waste. Earlier this year, Coca-Cola stated that it plans to recycle its 100% packaging by 2030 via redesigning its product packaging solutions. Also, Mondelez recently made a commitment to make all its product packaging recyclable by 2025, as part of its strategy.

Coming to PepsiCo-Loop Industries deal, we believe that Loop Industries’ innovative and latest technology solutions will enhance the former's packaging sustainably and address consumer’s need efficiently. Also, PepsiCo is expected to further strengthen the Loop’s brand value and mission of speeding up the world’s pace to sustainable plastic and packaging.

While PepsiCo's shares reacted little to the news, Loop Industries gained 16.4% yesterday. In the past three months, PepsiCo has lost 3%, narrower than the industry’s 7% decline.

PepsiCo currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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