Balancing Smart & Fun

PepsiCo touts healthy statistics

Published in CSP Daily News

PURCHASE, N.Y. -- Snack and soda maker PepsiCo Inc. now gets 70% of its new-product revenue from items that can promote better health, the company said in a telephone news conference late last week as it highlighted its efforts to offer consumers more healthy choices , reported the Dallas Morning News.

PepsiCo, which owns Plano's Frito-Lay Inc., also said it is planning to target African-American and Latino consumers through a healthy lifestyles program.

"Our commitment to health and wellness has never been stronger," said Steve [image-nocss] Reinemund, PepsiCo's chairman and CEO, according to the report. Reinemund called the sale of healthier products a key growth area and a global opportunity. "This is a terrific business opportunity, and our results continue to prove that point."

Since June 2004, the Purchase, N.Y., company has promoted its healthier products in a major marketing campaign focused around a small green-and-white "Smart Spot." Nearly 250 products are now in the Smart Spot lineup, ranging from Baked Lays potato chips to Near East Original Couscous.

Products in the group meet nutrition and benefit standards based on statements from the U.S. Food & Drug Administration (FDA) and the National Academy of Sciences, the company said.

This summer, PepsiCo partnered with the National Urban League, the National Council of La Raza and the fitness organization America On the Move Foundation to encourage African-American and Latino consumers to become more active and look for ways to prepare their meals with fewer calories. The company calls the program "Perfect Storm." An Urban League spokesperson told the newspaper that 2,500 consumers have signed up to participate in activities since the program launched in June.

With lessons learned in that partnership, PepsiCo plans to pick one city for a pilot program with a more extensive campaign, the report said. It will include targeted advertising, education, retail displays and messages at some healthcare facilities.

Brock Leach, the company's chief innovation officer, said the company's efforts have shown returns.

Smart Spot items account for 41% of North American sales year to date, said the report. Traditional snack items, which the company calls the "fun for you" group, still make up 59% of sales. But revenue for those items has grown 4% this year, compared with 13% for the Smart Spot offerings.

Analysts said the health focus should make PepsiCo less of a target for obesity litigants and position the company for growth, according to the report. "It's a very good risk-management strategy," UBS analyst Caroline Levy told the paper. She said that as the company's revenue breakdown gets closer to 50/50, "they become much less of a target than if they'd done nothing."

Citing consumer buying trends, she added, "In order to stay a growth company, they had to do this. 'Not-so-good-for-you' snacks, as a category, are not growing."