Creating a healthier relationship between people and food is integral to our business. While we are transforming the nutritional profile of many of our products by reducing added sugars, sodium and saturated fat, we are also building our portfolio of nutritious products, accelerating a journey that we began before the turn of the 21st century.
Over the years, we have built our nutrition portfolio through a combination of acquisitions and new product innovations, while working to make our existing portfolio more nutritious through product reformulations.
Through acquisition, we have added a number of the world’s most trusted and loved positive nutrition brands to our business. In 1998, we began our journey in nutrition by acquiring Tropicana, and in 2001, we merged with the Quaker Oats Company, which also brought the Gatorade business to PepsiCo. In 2007, we acquired Naked Juice Company. In 2010, we acquired Russia’s Wimm-Bill-Dann, the country’s leading branded food and beverage company and leading producer of dairy products. In 2016, we announced an agreement to acquire KeVita, a leading North American maker of fermented probiotic and kombucha beverages. In 2018, we acquired Bare Snacks, a US-based maker of baked fruit and vegetable snacks, made from simple ingredients that are baked, not fried.
With this range of brands, we deliver against a range of positive nutritional needs, including products with nutrients like grains, fruits and vegetables, protein, and those that are naturally nutritious like water and unsweetened tea. Over the years, we have innovated to further bolster our portfolio. Our notable innovations over the years span a wide range, from Trop 50 in the U.S. to Quaker Oat Dairy Drink in the Philippines to Nutri Upma, a local breakfast in India, to Alvalle gazpacho in Europe. Each of these and other PepsiCo product innovations fit local consumer tastes and preferences while providing consumers with nutrition they are looking for.
At the same time, we have improved the nutritional profile of many of our products outside our portfolio of brands that focus on nutrition. We offer a range of more nutritious snacks, such as Baked Lay’s, Sun Chips and Multigrain Tostitos, as well as low or no-calorie beverages like Pepsi Max and Pure Leaf Iced Tea Unsweetened.
Our move toward building a portfolio of more nutritious options is in line with the direction of consumers, a movement that shows no signs of slowing. This presents promising growth potential for PepsiCo.
We believe that we have an opportunity to positively influence the diets of people around the world through our nutritious products. With a global rise in urban living and “on-the-go” eating habits, consumers are demanding products that are at once nutritious, convenient, great tasting, and are trusted from quality and food safety perspectives. Developing and delivering products that meet these attributes is a priority for PepsiCo.
While one company alone cannot solve the dual global public health challenges of obesity and undernutrition, we believe we are positioned to contribute to a better future for consumers through our portfolio of positive nutrition products, while growing our business at the same time.
Our Performance with Purpose (PwP) 2025 agenda includes goals that are designed to help contribute to a healthier future. These goals including growing our portfolio of Everyday Nutrition products, and providing access to at least 3 billion servings of nutritious foods and beverages to underserved consumers and communities.
To meet our PwP 2025 goals and further accelerate PepsiCo’s product transformation, we utilize the PepsiCo Nutrition Criteria (PNC), a set of science-based nutrition guidelines. These criteria are based on dietary and nutrient recommendations from leading global and national nutrition authorities including the World Health Organization (WHO), the U.S. Department of Agriculture (USDA), the National Academy of Medicine, and dietary guidelines from numerous countries.
The PNC sets standards for nutrients to limit, nutrients to encourage and food groups to encourage that are based on the latest science and country specific dietary guidelines.
- Nutrients to Limits are nutrients that have been well-established as dietary factors that can contribute to the risk of certain non-communicable diseases, when consumed in excess. They include: saturated fat, trans fat, sodium, and added or free sugars.
- Nutrients to Encourage are nutrients that have been identified as being commonly under-consumed in the population. They are sometimes called “shortfall nutrients.” They typically include: fiber, specific vitamins and/or minerals such as iron, vitamin A or calcium.
- Food Groups to Encourage are food groups that have been well-established as contributing to well-balanced diets. They include: fruits, vegetables, and whole grains, among others.
These standards are used by our product development teams both to reformulate existing products by improving their nutritional profile, as well as guide the development of new product offerings. To apply the PepsiCo Nutrition Criteria in a relevant way to our portfolio, we have a tiered set of unique criteria for 20 food categories. Products are evaluated based on their nutrient profile as well as dietary consumption patterns to determine which criteria should apply.
Learn more about the PepsiCo Nutrition Criteria here.
With consumers around the world moving toward more nutritious options, we believe that growing our Everyday Nutrition portfolio is vital to the strength of our business. Our Everyday Nutrition portfolio includes products with nutrients like grains, fruits and vegetables, or protein, plus those that are naturally nutritious, like water and unsweetened tea. As part of our PwP 2025 agenda, we have set a goal that the rate of sales growth of our Everyday Nutrition portfolio will outpace the rate of sales growth in the balance of our portfolio.
In 2017, our Everyday Nutrition portfolio grew from 27.1 percent to 27.5 percent of our total net revenue globally. Additionally, the rate of sales growth of Everyday Nutrition products outpaced the rate of sales growth in the balance of our product portfolio for the second consecutive year.
We strive to make progress on this goal through a combination of existing products, new product innovations, and acquisitions.
In 2017, we launched an innovative new apple pomace juice product in Russia under our J7 brand that has given our business a unique advantage in the category. Pomace is the edible part of fruits that is rich in fiber but is not typically used in mainstream juices. The addition of pomace to the fruit juice is a unique way to narrow the nutritional gap between drinking fruit juice and eating the fruit. The Russian apple pomace product, produced via a process patented by PepsiCo, gives consumers the same amount of fiber per serving as a whole apple. Beyond the nutritional and taste advantages, apple pomace also reduces food waste by using more parts of the apple in the product itself.
In addition to our new product innovations, where appropriate, we are also making smart acquisitions to continue to build our Everyday Nutrition portfolio. We did so in late 2016, when we announced our acquisition of KeVita, a leading maker of fermented probiotic and kombucha beverages in the US. All KeVita drinks are certified organic, non-GMO, gluten-free and vegan. In 2017, we continued to expand our line of KeVita products with new Master Brew Kombucha flavors.
We are also extending our top brands into new spaces. In 2018, we introduced Naked Fruit, Nut & Veggie Bars, extending the brand beyond juices and smoothies for the first time, offering a new form of convenient nutrition.
As part of our Everyday Nutrition portfolio, in markets all over the world, we work to create products that are suited to local needs in terms of both taste and nutrition, with brands that consumers trust.
For example, in India, we recently introduced the Tropicana Essentials line. This is a line of functional juices fortified with essential nutrients, such as iron (considered a shortfall nutrient for the Indian population) or Vitamins A & C that help the general population meet their daily nutritional needs. Also in India, through a joint venture between PepsiCo and Tata called NourishCo, we sell products such as Tata Water Plus, fortified with bio-available copper and zinc, as well as Tata Gluco Plus, which serves as a source of iron, and glucose to provide energy.
A number of our Quaker products in China, including Oats for Rice, Cereal Powder Drink, and Oat Biscuit Bites, are fortified with calcium, considered a shortfall nutrient for the general Chinese population. Within the Quaker Cereal Powder Drink line, our Red Date product is high in iron, while our Purple Potato product is high in fiber, both of which are shortfall nutrients for the general population.
In our Russia business, we sell dairy products such as milk, kefir, and yogurt, as well as purees and juices to the city of Moscow, which distributes these nutritious products to more than 200 infant-feeding centers. These products are then made available to citizens of Moscow, free of charge, to feed children 0-3 years of age, giving all children in the city the opportunity to receive good nutrition, regardless of background.
In Mexico, a key part of our nutrition business is the Quaker 3 Minutos whole grains oat-based platform, described in further detail below as part of our Performance with Purpose goal to provide access to at least 3 billion servings of nutritious foods and beverages to underserved consumers and communities by 2025. 3 Minutos includes 10 percent of the daily recommended value of calcium and 11 percent of the daily recommended value of Vitamin A, both considered shortfall nutrients in the country. In addition, the products within this platform are sold at affordable price points, and a significant portion of volume is sold to populations that are at or below the poverty line.
As a company with global reach, in communities on every continent on earth, our products reach people from virtually every background, including across the economic spectrum. In formulating our PwP 2025 goals, we felt it was important to challenge ourselves to reach the economically underserved and improve access to positive nutrition, to help address the issue of under-nutrition. Specifically, we have set a target of providing access to at least 3 billion servings of nutritious foods and beverages to underserved consumers and communities by 2025.
We believe that this is a goal best reached through a combination of commercial and philanthropic programs that can collectively serve a diversity of underserved populations, each of which faces unique challenges. The issue of accessible nutrition is a nuanced one, and one approach will not serve the needs of all populations. That is why we are taking a portfolio approach, using several different programs to reach different populations, with products that are accessible and nutritionally appropriate for each population.
Our approach includes: plans to reach underserved consumers as part of our Everyday Nutrition business with affordable products, PepsiCo’s Food for Good program, and projects funded by the PepsiCo Foundation.
As of the end of 2017, through these three programs, we have provided a cumulative total of 544 million nutritious servings since 2016.
We believe that for PepsiCo, meeting the needs of underserved populations must be anchored in the business itself. We anticipate that the largest contributor towards our 3 billion servings goal will be from products that address both accessibility and affordability within our Everyday Nutrition business.
Today, we are at the beginning stages of developing and delivering nutritious foods and beverages to underserved consumers, and have developed a set of guidelines for a product to qualify for this goal. These include guidelines on product composition, relative price point, and consumer accessibility, and are tailored to the specific initiative and situation. For example, we have applied these guidelines to our Quaker 3 Minutos platform in Mexico, our primary offering of affordable nutrition today, one that is well-established in the local marketplace.
In addition, beginning in 2015, we began to incubate affordable nutrition in Sub-Saharan Africa, which has a significant underserved population, through fortified Quaker products. Below, we share the methodology we have developed for determining servings of Affordable Nutrition that will count towards our goal, drawing on the example of Quaker 3 Minutos in Mexico, the largest market for the 3 Minutos platform.
Quaker 3 Minutos is a whole grain oat-based product fortified with 7 vitamins and minerals that is primarily sold in Mexico. The product has low levels of nutrients to limit, with 0g of added sugars, 0.01mg/kcal of sodium, and only 0.28g/100kcal of saturated fat. It delivers 10 percent of the daily value of calcium, and 11 percent of the daily value of Vitamin A, both of which are gap nutrients for the populations it is reaching according to the most recent National Health and Nutrition Survey (ENSANUT) taken by Mexico’s National Institute of Public Health and the Secretariat of Health.
For the underserved population purchasing 3 Minutos - those who are considered to be at or below the poverty line - the price point of 10 pesos falls within the most affordable set of food products (20 pesos or less) for this population. This set of food products that are 20 pesos or less make up 63 percent of this population’s purchases in terms of volume, but only 27 percent of its spend, collectively.
While 3 Minutos is sold to a broad population, approximately 34 percent of its volume is sold to consumers in Mexico’s bottom three socioeconomic levels as determined by the country’s National Council for the Evaluation of Social Development Policy (CONEVAL). That is the portion of the volume that PepsiCo counts towards our target of 3 billion servings.
In the US, approximately 13 million children struggle with hunger, a challenge that inspired a group of PepsiCo employees in 2009 to create a program that would make a positive impact on this issue, which they called Food for Good. Over the years, the program has grown from a summer meal plan in Dallas, Texas for children eligible for free or reduced price lunch during the school year, to a year-round service offering nutritious, pre-packed meals to underserved children in 19 U.S. cities, a number that is expected to expand in the coming years. In partnership with local nonprofit organizations and government agencies, the program delivers meals that all meet or exceed USDA standards, and include fresh fruits and vegetables, whole grains, low-fat milk and high-quality snacks. In doing so, Food for Good leveraged PepsiCo’s strength in distribution and logistics in order to successfully deliver nutritious meals to children who needed them the most.
Since 2015, Food for Good has delivered more than 50 million nutritious servings to children across the country, and in the process, created 150 jobs to support the program. In 2017, Food for Good delivered approximately 26 million nutritious servings to underserved U.S. children.
In 2017, Food for Good expanded into three new locations in the U.S. – northwest Arkansas, Anaheim, and Miami – and is exploring the potential for international expansion. In addition, in response to Hurricanes Harvey, Irma and Maria in 2017, Food for Good worked with affected communities and local partners to provide 1 million meals to victims of the storm.
The PepsiCo Foundation is another vehicle for providing nutritious servings to the underserved. Through grants to and collaborative partnerships with selected nonprofit organizations, the PepsiCo Foundation and its partners provide nutritious servings to communities across the globe.
For all Foundation-funded projects, we will work with the local non-profit organization to ensure that the servings provided meet the nutritional criteria of a recognized global or national standard.
Going forward, the projects that the Foundation will fund will fall under one of two categories. One is made up of free feeding programs, in which beneficiaries receive nutritious servings for free. These programs are critical to those most in need and will provide the majority of the servings the Foundation will support. While we are currently in the process of identifying partners and developing plans for delivery against our PwP 2025 goal, support of free feeding programs is not new to the PepsiCo Foundation. For example, we partnered with the World Food Programme in Ethiopia to develop locally sourced, locally manufactured, chick pea-based Ready to Use Supplemental Food (RUSF) to address moderate acute malnutrition – which delivered more than 3 million nutritious servings in 2017.
The second category is that of market-based initiatives – initiatives that generate a revenue stream (which go to the nonprofit organization we partner with, not the PepsiCo Foundation) by selling products at an affordable price in order to cover its operating cost. The PepsiCo Foundation is a founding funder of Daily Table, an innovative start-up nonprofit retail grocery that seeks to develop a sustainable model that sells nutritious prepared meal items, produce, meat and dairy at prices comparable to fast food. In addition to a grant from the PepsiCo Foundation, as Daily Table was finalizing the concept, PepsiCo provided expertise in areas such as marketing and store design.