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Business
Alicia Roache Business reporter roachea@jamaicaobserver.com  
April 20, 2010

Pepsi goes for health

PEPSIJAMAICA is on a healthy campaign that may see its products be less fatty, salty and sugary.

Indra Nooyi, chairman and CEO for PepsiCo, which co-owns PepsiJamaica Limited with Latin American Company Cabcorp, said that by 2015 Pepsi’s products, including the soda of the same name, will be seeing a reduction in sugar by 25 per cent, salt will be reduced by 25 per cent and saturated fat by 15 per cent. The company also announced that by 2012 it will be removing all its sugary drinks from schools worldwide.

Nooyi said the move comes as a strategy to tackle “one of the world’s biggest public health challenges, a challenge fundamentally linked to our industry: Obesity”.

This strategy will see the company reduce not only the amount of unhealthy ingredients in its existing products, which include Frito Lay brands such as Lays, Doritos and Tostitos, but also add new healthier products to its roster that include whole grains, fibre, fruit, vegetables, key vitamins and minerals. The company also aims to promote a healthier lifestyle and encourage its customers to complete the equation by getting adequate exercise.

“We believe it is our responsibility to understand the diet and nutrition needs of populations around the globe, in order to reduce the risk of chronic diseases associated with poor diets,” a statement on PepsiCo’s website read. “We want to make smart choices easier for consumers by providing a wide variety of healthful food and beverage products with easy-to-understand nutrition labelling.”

Mahmood Khan, a doctor hired to run PepsiCo’s Research and Development efforts since 2008, claims there is now less salt in a pack of crisps made by PepsiCo, than in a slice of white bread.

However, the precise impact on the Jamaican operations and products sold locally is not yet known. In a response to questions posed by the Business Observer, PepsiCo, through its New York office said: “It’s too early to determine the specific impact on Jamaica. These are broad, global goals across key brands and they will be measured on a company-wide, global basis – rather than country-by-country or brand-by-brand — over many years”.

Nonetheless, Madelaine Terrier, nutritionist and registered dietician with the Heart Foundation of Jamaica commended the effort by PepsiCo. “That is huge. What is fantastic is that a whole company is becoming more health conscious,” she said. She said while the reduction in sugar, salt and saturated fat in the products is not a substitute for more healthy meals, “the usual purchaser of Pepsi’s products will be benefiting whether they realise it or not”.

“I definitely think that there is a good possibility in the reduction in obesity because a reputed contributing factor to obesity is the consumption of beverages that contain a lot of sugar,” she said.

Terrier said that there are also instances where even the health conscious person may consume an occasional soft drink so the lower sugar content in Pepsi will be a plus to these people. “A low-sugar Pepsi would be a fantastic chaser. They are going to get a drink no matter what, this I think will be a positive thing because they are going to get a product with less sugar,” she said.

PepsiCo has been criticised for attempting to capitalise on the increase in health concerns globally. Nooyi indicated this focus as part of the strategy. “Our aim is to nourish consumers by developing products that satisfy the consumer’s changing preferences and that deliver exceptional taste and convenience. Increasingly, our product portfolio makes it more enjoyable to lead a healthy life. We’re changing because our consumer is changing and because the health of the world’s growing population demands it,” Nooyi said in a letter to stakeholders recently. She said that despite “rising costs, an uncertain economic outlook and shifting currency exchange rates” the company cannot “reduce (its) commitment to responsible business”.

Terrier believes that the effort by PepsiCo is as good a marketing strategy as it is a concern for the well-being of the consumer. “If you are selling something you want people to buy the item. I think that on a whole people’s family members are going to eat these products too. If they are going to consume the products you would want to make it healthier,” she said.

However, there are concerns that a global rehaul of products may not be the best strategy. Given the different tastes and market segments, one customer has indicated on PepsiCo’s website that a better strategy may be to consider the needs of local markets. She argues that persons who live in tropical countries will need a bit more salt in their diet than a North American because the climate causes the tropical dweller to sweat more, and therefore lose more salt. Terrier said that persons in tropical climates do not necessarily sweat more because of lifestyle similarities with persons living in the North.

There is also the consideration that if the taste of the product is changed too much, this might actually cause a decline in sales, especially locally, where schoolchildren account for a great deal of consumption of fast food and snacks such as those sold by Pepsi. Terrier said the major constraint to sales of the new product may be the cost of the ‘healthier’ version relative to the standard products.

Pepsi’s portfolio of healthy products, represented by the Quaker brand- porridge, cereal, cereal bars, and rice crackers, now account for US$10 billion or a fifth of revenues. Nooyi said she expects the figure to grow to US$30 billion in 10 years.

PepsiCo products include flagship product Pepsi, along with brands such as Mountain Dew, Aquafina, Tropicana and Dole, Gatorade and Propel fitness water, Quaker oats, Cap’N Crunch and Life cereals.

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