The next time you eat Doritos for dinner, perhaps you can claim you did it because you’re really watching what you eat. It may not be as far fetched as you think. In announcing its long-range goals, PepsiCo Inc. has said it will triple its sales of healthier foods in the next decade, which includes cutting sodium from its offerings, reducing the sugar added to its beverages, and eliminating 15 percent of the saturated fats in its foods.
Some of the changes are government mandated, but PepsiCo claims the new goals are driven by consumer demand as much as anything else. Thus, ongoing research searches for new ways to increase the nutritional value of “junk” foods (e.g., a new salt that dissolves faster, so that less of it creates the same taste effect). Yet it also recognizes that revenue from its “healthier” product lines, such as Tropicana juices, Dole fruits, Quaker Oats, and tazo teas make up 18 percent of its total earnings. Better educated and more careful consumers worldwide may enable PepsiCo to reach its goal of earning $30 billion in revenue from healthier offerings by 2020—though that ambitious level is still less than the $50 billion it currently earns from Lay’s potato chips and its namesake soda.
PepsiCo treats its “healthy” and “unhealthy” product lines as separate businesses, each of which requires a different approach. For chips, soft drinks, and the like, the company rapidly introduces multiple versions and flavors, but tea, fruit and juice brands cannot create too many variations, or brand focus declines. For the healthier offerings, PepsiCo even limits its hiring to marketing staff with previous experience marketing healthier foods.
Despite the lower percentage of corporate revenues that healthy options constitute, PepsiCo is claiming a significant focus on developing these product lines. Today people appear willing to pay more for products that they deem healthier, even as they cut back spending in other areas. Healthier choices, especially if they mimic well-liked snack foods, offer a growth industry that cannot be ignored.
1. Do people actually want “healthy” Doritos?
2. Consider PepsiCo’s organization into healthy and unhealthy lines. Does this division make sense?
Emily Fredix, “PepsiCo to Go on a Health Kick,” Boston Globe, March 23, 2010.