The New Pepsi Challenge: Health

Remember when Walmart decided to sell energy efficient light bulbs and cut down on packaging waste and, because of its size, the dial actually started to move on energy usage in this country?

Well, the newest "Pepsi Challenge" may be a game changer on health in the same vein.

A recent article in Fortune written by Betsy Morris, senior editor, reports that Pepsico is changing its stripes:

PepsiCo today has a completely different flavor. Old Pepsi: Fritos and Cheetos. New Pepsi: Stacy's Simply Naked (pita chips) and Flat Earth (fruit and veggie chips). Old Pepsi: Diet Pepsi and Mountain Dew. New Pepsi: Naked Juice Pomegranate Blueberry and IZZE Sparkling Clementine. Old Pepsi: ill-fitting acquisitions like North American Van Lines and Wilson Sporting Goods. New Pepsi: joint ventures with compatible partners like Lipton (bottled ice teas) and Starbucks (canned frappuccino).

New Pepsi was so early getting beyond soda pop and into the healthier, faster-growing noncarbonated beverages (bottled water, sports drinks, and teas) that it commands half the U.S. market, about twice Coke's share, according to Beverage Digest. Not that PepsiCo is anywhere near becoming purely a health-food company, mind you. The bulk of its products (upwards of 70%) are still in what it euphemistically calls 'fun for you' foods, as opposed to its two other internal categories, 'better for you' and 'good for you.' But its acquisitions and product reformulations, even in fried-food-loving markets like Mexico, indicate the strategic shift is more than just show.

According to the article, Pepsico's new CEO, Indra Nooyi, is leading this transformation and more at this Fortune 500 company: "Very early on she made the right calls on the green issue as well. She so readily loosened the capital expenditure requirements for water- and heat-related conservation projects in a Frito-Lay meeting eight years ago that executives remember being stunned by it. "Was that a yes? Can we do that?" sustainability VP David Haft recalls asking his boss immediately after. Those kinds of projects now save Frito-Lay $55 million annually. "

Many will argue that Pepsico's strategy is more about avoiding regulation or circumventing public criticism for the role of junk food in the nation's catastrophic obesity rates. However, we've argued that "new corporate social responsibility" is about better strategies to use the market mechanism to improve lives and, in this case, health on a scale that the nonprofit and government sectors could not achieve. We're cheering for PepsiCo, and for others like them to follow suit.

Carla E. Dearing