PepsiCo Steps Up to Sell Healthier Foods

It’s a work in progress, as consumers continue to want their favorite full-calorie snacks.

December 13, 2016

NEW YORK – At a “trade show” in Atlanta this past October, which we’re going to go out on a limb and say was the NACS Show, the Wall Street Journal reports that “an array of new products … told the story of two PepsiCos.” One display featured PepsiCo’s better-for-you options, such as snack bars and packaged beverages, while another side of the booth featured the company’s salty and indulgent snacks.

“Here is a company pulled in two different directions,” writes the news source, adding that while consumers say they want to eat healthier, what they often grab for are the chips. Even with brands such as Quaker, Naked and Sabra, “PepsiCo Inc. fell behind the goal it made in 2010 to triple revenue from nutritious products to $30 billion this decade,” notes the Journal. PepsiCo’s new 2025 goal is for sales growth among its nutritious products to outpace the rest of its portfolio.

And PepsiCo is not alone in the plight to sell healthy. The news source says that the world’s biggest food companies “have been trying to ramp up healthier offerings for years, but consumers haven’t given up their love for all things sweet and salty.” Nestlé SA, “deep into a big push into healthier food,” is at risk for missing its revenue growth target for the fourth consecutive year, and General Mills has reported weak Yoplait yogurt sales.

“Everybody is looking for this transformation, and yet the big wheels of commerce don’t support this transformation,” former PepsiCo President Zein Abdalla told the news source.

Chief Financial Officer Hugh Johnston declined to compare growth rates or profit margins of PepsiCo’s “good for you” products, which have positive nutrients like grains, fruits, vegetables and protein, with “better for you” products, which are low in sugar, salt and fat, or what it calls “fun for you’’ products such as Cheetos.

PepsiCo’s goal is not to turn into a health food company, according to Johnston, but to offer consumers a choice in the products they want to buy for different needstates. “When consumers want to indulge, we have indulgent products,” he said. “When consumers want to eat healthy, we have healthy products.’’

Johnston also predicts that PepsiCo’s products will “come out on top” as retailers winnow shelf space dedicated to healthier offers to focus on top sellers. PepsiCo is investing heavily in innovation and can scale up more easily through its highly developed agricultural procurement,” writes the Journal.

Next year PepsiCo is planning to launch its new Off the Eaten Path Mosaic Veggie Crisps, made with rice, black beans and green and yellow peas. The company is also making strides in combining sweeteners and replicating the taste of full-calorie versions. PepsiCo also plans to expand distribution of reformulated 7UP and Mirinda sodas with 30% fewer calories, as well as continue reducing sodium from products. PepsiCo was among the first to remove transfats from its snacks more than a decade ago, and plans to launch baked chips in 25 more markets over the next 18 months.

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