Why water might be the biggest threat to the snack sector’s future

Key takeaways:

• Water scarcity is fast becoming the most disruptive risk facing the global snack sector.
• PepsiCo’s gains in agriculture, packaging and nutrition show progress, but these efforts depend on stable, long-term water availability.
• The industry’s biggest challenge is speed – companies, governments and farmers must act together before water stress reshapes supply chains.

If you want to know where the food industry’s real pressure points are, forget carbon for a moment. Look at water. The global numbers are grim enough to stop you mid-sentence. A quarter of the world’s food is grown in places already under serious water stress, according to the World Resources Institute. The UN says more than three billion people live in agricultural regions where drought risk keeps rising and if nothing changes, the world could fall 40% short of the water it needs by 2030.

Those headlines aren’t academic for the snack world. Wheat, corn, potatoes, oats, rice, nuts – everything that fills the snack aisle – depends on steady, reliable water. And the FAO’s warning that over half the global population faces severe water scarcity for at least part of the year feels like one of those statistics the industry will later look back on as a breaking point.

This is the backdrop to PepsiCo’s 2024 ESG Summary. And while these reports usually span targets on everything from packaging to Scope 3 emissions, water runs through the document in a way that feels more urgent than in previous years. Most people instinctively link PepsiCo and water to its beverage business. But water is just as central to its snacks and cereals operations. No water means no potatoes for Lay’s, no corn for Doritos, no oats for Quaker. And that’s before you consider the processing side: no cleaning, steaming, cooling or even line sanitation.

So when PepsiCo reports replenishing 24 billion liters of water last year, it’s not waving a CSR flag. It’s trying to get ahead of a fast-moving, global constraint. And it’s exactly where Archana Jagannathan, PepsiCo EMEA’s chief sustainability officer, sounds the most grounded and the most concerned. She calls water a human right, but also the quiet ingredient behind every product PepsiCo sells.

Pep+ in motion

Water may be the headline risk, but it’s not the only thing PepsiCo’s been tracking. The company’s pep+ framework spreads across agriculture, packaging, energy, logistics and nutrition. Jagannathan touches each of these areas with the bluntness of someone who’s used to navigating complexity.

Take regenerative agriculture. PepsiCo has now helped spread regenerative, restorative or protective practices across 3.5 million acres and counting.

“Farmers and farming communities are proving how regenerative agriculture practices can positively impact soil health, emissions, biodiversity, watersheds and crops,” she says. It’s the kind of progress most companies in the category would lead with in an ESG update. But she immediately undercuts any sense of victory lap: “We’re proud of the progress we’ve made but the truth is we can’t do it alone.”

It’s a reminder that regenerative farming, for all the momentum, is still moving slower than climate volatility.

Packaging is another front where the challenges are systemic. PepsiCo cut virgin plastic tonnage by 5% and reached 15% recycled content across key markets. But Jagannathan knows the limits. “Sustainable packaging transformation requires extensive collaboration and comprehensive solutions across the entire value chain,” she says, pointing to infrastructure, policy gaps and the scramble for circularity. Her view: packaging reform is moving, but not nearly fast enough without wider industry and government alignment.

Then there’s the push to decarbonize the value chain. PepsiCo sourced 89% of its global electricity needs from renewables, combining PPAs, onsite generation and renewable energy attribute certificates. And she says enabling suppliers is the only way to meaningfully push Scope 3 down.

“Equally important is enabling suppliers to set targets and access tools to track their own sustainability progress.” For regions with weak renewable infrastructure, she argues, “collective action, innovative financing and shared learning” are the real unlocks.

Nutrition reformulation might seem far removed from climate, but Jagannathan links them tightly. PepsiCo hit its sodium and sugar reduction goals a year early and she frames it not only as a health milestone but as a structural shift in sourcing.

“Reducing added sugars and sodium often means rethinking ingredient sourcing,” she explains, adding that whole grains and plant-based ingredients tie directly back to regenerative agriculture goals. “Our nutrition goals are not separate from our climate goals – they’re deeply interconnected.”

Her comments reflect something unusual in corporate sustainability reports: a sense that all these metrics sit on the same fault line. Progress in one area bumps into constraints in another.

When the conversation circles back to water

Even with progress across agriculture, packaging and energy, the discussion keeps circling back to water, partly because Jagannathan keeps circling back to it. She doesn’t dramatize the issue. She just states the reality: “Water irrigates the crops we use; it’s an ingredient in many of our food and drinks and it’s essential to ensuring we meet the highest product safety and quality standards.”

PepsiCo reached about 75% replenishment in high-risk watersheds in 2024. It’s a strong number and the company has now supported safe water access for 96 million people since 2006. But Jagannathan doesn’t pretend replenishment alone solves the future. Water insecurity is growing faster than infrastructure, policy or corporate intervention can stabilize it. And manufacturers are already feeling it.

Europe’s potato shortages. Heatwave-driven corn volatility. Uneven oat harvests in Canada and the Nordics. It used to be that a bad year meant a bad year. Now one bad season can ripple across multiple categories.

For Jagannathan, the concern isn’t only that water shortages disrupt supply chains. It’s that they undermine all other sustainability ambitions companies hold. “The global food system is at an inflection point,” she says. “Collective action is needed to protect the future of agriculture.”

A system under strain – and one last warning

Jagannathan doesn’t frame the global sustainability challenge as a technical problem. She frames it as a pace problem. “We have to move faster and faster,” she says. More companies off the sidelines. More governments writing enabling policies. More financiers supporting farmers. More alignment across the board.

And then the line she’s probably delivered dozens of times, but lands differently in the water context: “Meaningful progress at the speed needed cannot be achieved by individual companies acting in isolation.”

She’s talking about climate. About agriculture. About emissions and packaging and supplier engagement.

But the subtext is clearest when applied to water.

Without coherent action – and soon – water won’t just be one item in the snack sector’s sustainability matrix. It’ll be the constraint that decides what can be grown, where it can be grown and whether manufacturers can count on the ingredients they’ve built their brands on.

Which is why PepsiCo’s ESG report, for all its metrics, reads like a quiet warning to the rest of the category: you can make progress on packaging, on nutrition, on climate. But if the water picture continues on its current track, none of those gains will matter as much as you hope.

And at that point, water stops being a sustainability concern. It becomes a business continuity one.