Pepsico Plans Slow Reforms in the Fast Food Market
1. Pepsico has set out an ambition to be a “radically different” business in 10 years by going on the acquisition trail for healthier brands and developing more nutritious New Product Development (NPD). This business “whose profit and growth would come from healthier products” includes pledges that by 2012, 65% of carbonated soft drink can and bottle sales will be no-sugar, up from 61% in 2008; and 50% of its savoury snacks will be baked or include positive nutrition – no more than 35% fat plus a portion of fruit, veg, fibre, or wholegrain – by 2015, up from 10% in 2008. A calorie cap of 160 calories across single-serve savoury snacks “without positive nutrition” by 2015 was a particular challenge, as a standard bag contains 183 calories and a grab bag 264 calories. The cap means that 70% of higher R and D spend would need to be dedicated to new healthier lines from 2012, says Rob Hargrove, European Vice-President of R and D PepsiCo. “NPD will be a key focus in reshaping Pepsi Co UK’s portfolio.”
2. All this effort accompanies fierce activity in the sports drinks and snacks market for products on hand for the Olympics in London in 2012. So what does Richard Evans, President of Pepsico, say of the company’s recent achievements and plans? We quote from an article in The Grocer (27/03/10):
2i “Our first UK Health Report, announced alongside the global goals, sets out our long-term vision to reshape the UK business to one whose future profit and growth will come from selling healthier products. The commitments we are making will involve significant investment in the further reformulation of our snacks and soft drinks portfolio, and the creation of products based on positive nutrition such as fruit, vegetables, wholegrain, and fibre. For example, we are committing that by 2012, we will deliver 1.8bn servings of wholegrain; by 2015, more than 50% of our snacks will be baked or include positive nutrition; and at least 65% of our carbonated soft drink sales will be ‘no sugar’”.
2ii He declares a wish to lead change, not respond to it: “We have already made a good start. In recent years we have responded to public concerns about health and obesity by tackling the core of our business. We reformulated much of our existing portfolio, significantly reducing the satfat and salt content in Walkers products, introduced new healthier products such as SunBites, acquired new healthier brands such as Quaker and Tropicana, and built strong no-sugar Pepsi brands. We’ve invested significantly in R and D to support reformulation and develop new lines.”
3. What of the immediate future? (Enter – or, strictly, Re-enter): “Mountain Dew, the £1bn US sports drink brand is storming into the UK next month ‘to revolutionize the energy-drink industry’” It’s called New Mountain Dew, will be launched by PepsiCo and its UK bottling partner Britvic in a bid to capitalize on the sales boom in energy and glucose drinks, and will be available in convenience-stores and forecourts from May ahead of a wider roll-out to the multiples next year (The Grocer, 03/04/10).
4. This is the second time Mountain Dew has appeared in Britain. Its first UK roll-out in 1996 lasted just two years before the brand was pulled. While the UK Mountain Dew features more than a dozen flavors, the British version will comprise only a citrus flavor in a 500ml PET bottle. PepsiCo describes the UK version as a fruit carbon drink, and the recipe will be altered for the UK market to position it as a glucose stimulant, although the brand logo will remain “broadly” the same as the UK original.
5. Britvic’s marketing director Simon Russell comes in on cue: “It’s the number 2 selling soft drink in convenience and impulse in the USA (behind Coca-Cola) and more than 10,000 people have petitioned for its UK launch.” He added that the drink has “a cult-like status” among “younger video-consumers,” through social and digital media activity…..”While marketing support would be relatively low key, online activity would be designed to appeal to the core gaming community” (just the people the captivated Tory party wants matters of education, consumerism, and health services to dump on the gurus of the food industry – and what friendly bankers it can rustle up, we note).
6. Britvic announced a few days ago, at the launch of its annual Soft Drinks Report, that sales of glucose and stimulant drinks had increased in value to £567m over the past year, with volumes up 7%.
7. Our Food Standards Agency and President Obama have common cause over these energy soft drinks for “gaming” children. And now – at the VEGA Command Module – there have arrived in the last week 3 promotions for double-sized pizza with 2-for-the-price-of-1 or bogofs on Pepsicola (A 12-inch pizza contains 3 times as many calories as one which will need only an 8-in plate. A recipe is in preparation for VEGA’s Eating Plans that is nutritionally superior and is meat,-dairy,-and cruelty-free). Let’s know where the candidates in the hustings stand in all this, and what examples of resistance and desistance they can demonstrate by themselves and their families.