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PepsiCo Frito-Lay

Sustainable Brand Setbacks: Tesla Roadsters Recalled, SunChips Packaging Shelved

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Advocates for environmentally sustainable business are having a rough week. Two products beloved by the movement, the Tesla Motors Roadster, an all-electric vehicle, and PepsiCo Frito-Lay’s SunChips, the snacks sold in biodegradable bags, are suffering setbacks.

Tesla voluntarily recalled Roadster models 2.0 and 2.5 when the company heard from a customer with this problem:

[A] low voltage auxiliary cable in [the] vehicle chafed against the edge of a carbon fiber panel in the vehicle causing a short, smoke and possible fire behind the right front headlamp of the vehicle. This issue [involved the] 12V low voltage auxiliary cable and… not the main battery pack or main power system.

Tesla’s stock price, which remained steady immediately after the Oct. 1st recall, dipped more than 3% within the week as media and industry analysts discussed the Tesla Roadsters’ fire risk along with the company’s looming expenses and competitive outlook.

Tesla’s chief executive Elon Musk will soon have to cut checks for: recruiters to bring in hundreds of new engineers and their salaries; continued work on a new, Model S sedan; and production of new vehicles along with fixes for the recalled Roadsters, which numbered fewer than 500 vehicles.

Skeptics worry about how long it will take Tesla to generate more money than it spends on all of this in the name of the environmentally sound but still sweet ride.

Challenges to Tesla in the market are also varied, including other electric vehicles like the Nissan Leaf, and hybrids like the Porsche Cayenne S Hybrid.

Shortly after the smokey Roadster recall, PepsiCo Frito-Lay announced it would scale back the use of plant-based, biodegradable plastic packaging for SunChips due to complaints about the bags making noise.

All but one of the flavors of SunChips will now be sold in “traditional” plastic sacks instead of the non-petroleum, compostable stuff. That’s at least until the company comes up with or purchases another green alternative.

Back in April 2009, when Sun Chips introduced the biodegradable bags, the company ran extensive print, TV and digital advertising touting the green initiative (as MediaPost reported then). Now, PepsiCo Frito-Lay seems to blame the bags’ noise for the widely reported 11% sales decline in SunChips over the last 52 weeks.

Alexis Madrigal, a writer for The Atlantic went so far as to lament how much capital, human and otherwise, was invested in the SunChips sustainable packaging effort in the first place:

This is where we put our productive talents to work…The great machinery induced by billion dollar markets for everything (anything) can be reconfigured for any purpose, even something as mind numbing as flexible, lightweight chip containers.

Typical “flexible, lightweight chip container” materials — namely petroleum-based plastics — represent some 8% of the nation’s waste stream according to the U.S. Environmental Protection Agency.

Other writers suggested that consumers should have tolerated the noise or poured their chips in a bowl if the idea of keeping petroleum-based (and quieter) plastics out of the waste stream mattered to them, really.

Will PepsiCo’s investors feel good about the company ditching the sad sacks in response to customers’ demands, or will they be inspired by the fact that PepsiCo Frito-Lay tried to actually do something game changing in the first place? Its stock price was dipping at the opening of the market on Thursday Oct. 7th following widespread media discussion about the bags. PepsiCo is, unlike Tesla Motors, such a massive global food and beverage business there’s a chance that SunChips’ sales didn’t even move the needle for investors.

Environmentalists will be watching both brands, hoping for improved sales and stock prices, and case studies that prove sustainable business can also be profitable and competitive, and these setbacks were just a price paid by pioneers.

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