January 29, 2002

Steven S Reinemund
Chairman of the Board and
Chief Executive Officer
700 Anderson Hill Road
Purchase, NY 10577

Dear Mr. Reinemund,

We are writing to you on behalf of the Grassroots Recycling Network (GRRN) to urge PepsiCo take immediate voluntary steps to reduce packaging waste from your used beverage containers. We ask that PepsiCo make a public commitment to use 25 percent plastic recycled content and to achieve an 80 percent recycling rate for all of your beverage containers by 2005.

GRRN is a North American network of waste reduction activists and professionals dedicated to achieving sustainable production and consumption based on the principle of Zero Waste.

PepsiCo repeatedly emphasizes its commitment to environmental leadership, and its brand value depends on excellence. Yet PepsiCo has no comprehensive recycling strategy that includes quantitative goals for boosting recycled content in its U.S. beverage containers or for enhanced rates of beverage container recovery in the U.S.

Meanwhile, PepsiCo's main competitor has set a goal for using recycled content in plastic bottles and participated in a process, the BEAR Multi-Stakeholder Recovery Project (MSRP), that attempted to objectively analyze the state of beverage container recovery and seek solutions. PepsiCo has done nothing on recycled content - may even be backtracking with a newly acquired brand - and spurned the MSRP process.

Recycled Plastic. Both Coca-Cola and Pepsi promised to use 25 percent recycled plastic in 1990. Coke made a significant investment at the time, but ultimately both companies broke the promise when pressure faded. As a result of renewed consumer pressure, however, Coca-Cola's CEO made a public commitment at the April 2001 shareholder meeting to use 10 percent recycled content in all of its bottles by 2005. We understand that Coke is already ahead of this schedule and is currently using 10 percent recycled plastic in three-quarters of their North American bottles.

By comparison, PepsiCo appears to be headed backwards. After you acquired Gatorade -- the primary user of recycled plastic in drink bottles for the past 9 years --

PepsiCo told the bottle supplier to stop using recycled plastic, saying it "brought no value" to the company, according to a report published in Plastics Recycling Update. Although outside pressure forced PepsiCo to backtrack temporarily, rumors are swirling in the recycling industry that PepsiCo has told its supplier that it will neither specify recycled plastic nor renew the contract.

Container Recovery. As you may know, U.S. recycling rates for both plastic and aluminum have been declining for six years, to the point where the recycling rate for beer and soft drink containers (plastic, aluminum and glass) is a mere 41 percent, with the majority of recovery coming from 10 deposit states. In fact, container recovery rates are more than three times greater within the 10 deposit states than in the 40 non-deposit states. Financial incentives are indisputably the only proven method to increase recovery significantly. Yet PepsiCo continues, through the National and State Soft Drink Associations, to lobby aggressively against container deposit legislation, and has put no effective alternative proposal forward.

PepsiCo touts its support for EPA's Solid Waste hierarchy. Soft drink containers are indeed a relatively highly recycled consumer package; but this feat has been accomplished largely by the 10 states that have the beverage container deposit laws that you oppose, and by taxpayers and local governments who pay the cost for disposal of your containers in cities with curbside collection. These latter costs, which add up to tens of millions of dollars annually, amount to an 'unfunded mandate' paid by financially strapped local governments and by citizens who may not even consume your product.

Even more significant are the unnecessary environmental, health and energy costs associated with producing aluminum cans and glass and plastic bottles from virgin resources rather than from recycled containers. For example, as you probably know, it takes a fraction of the energy to produce new aluminum cans from recycled cans than from newly mined and processed bauxite ore. Each such can has an embodied energy content equivalent to the gasoline that would fill that can one-third full. At present, almost half (45%) of the 102 billion aluminum cans sold in the U.S. each year are wasted - buried, burned or littered.

This is not an environmentally sound or sustainable path.

PepsiCo appears to have seized the initiative on fronts such as 'New Age' and healthy beverages that appeal to young people. We can think of little that would do more to appeal to young people and give PepsiCo credibility with this demographic group than an environmental initiative that was sincere, effective, and powerful.

The environmental community hereby calls on PepsiCo to make a real commitment to establishing a system that achieves an 80% collection rate (a rate that is already being met or exceeded in most U.S. states with container deposit systems), and to specify to all of your plastic bottle suppliers a minimum of 25 percent recycled content (the level that has been used in most Gatorade bottles).

If both of these initiatives are undertaken together, existing industries can utilize as feedstocks all collected plastic, glass and aluminum without market disruption. The impact on employment, tax revenues and wealth creation could be substantial and significant. And Pepsi could rightly take credit for this monumental achievement.

The GrassRoots Recycling Network initially focused attention on Coca-Cola because they were the market leader. Today, Coca-Cola is making serious efforts to address environmental concerns and engaged in a constructive dialogue to resolve this issue.

PepsiCo can no longer ride Coca-Cola's coat tails. Environmental activists, including student and youth leaders, are prepared to refocus their campaigns on PepsiCo's failure to address the appalling and needless wasting of beverage containers. The ball is now in PepsiCo's court to produce actions commensurate with your company's rhetoric of environmental concern. America's youth -- PepsiCo's future consumers -- demand no less.

A rapid and strong commitment by PepsiCo to these pro-environmental policies would have an enormous impact and demonstrate that the company has the boldness and foresight to seize the baton of leadership and carry it forward.

Sincerely,

Bill Sheehan
Executive Director