The PepsiCo challenge: Growth through nutrition?

Let’s be honest. Most people consume soft drinks and chips because they taste good, not because they're healthy.

Many studies cite the ubiquity of snack foods as a key driver in the obesity epidemic, which is responsible for as much as 20 percent of America’s health care costs, but the research remains inconclusive. Even so, the social and environmental implications of manufacturing and marketing low-nutrition foods in an era of expanding waistlines and shrinking natural resources are not lost on PepsiCo, the largest food-and-beverage company in the U.S. and the second-most popular beverage brand in the world.

Wrestling with the conundrum of transforming a business model that profits from sales of sugary snacks and carbonated beverages, PepsiCo — with the guidance of visionary CEO Indra Nooyi — is tapping into an opportunity to capitalize on growing consumer demand for healthier food.

PepsiCo’s goal is to reach $30 billion in nutritional products by 2020, up from $10 billion in 2010, by developing new products and reformulating existing ones to reduce salt, fat and sugar. Given that PepsiCo products are consumed nearly 1 billion times each day in nearly every country around the world, any advances in nutrition and sustainability can have a significant impact on public health.  

But challenges remain for the consumer products multinational that aspires to be known as “the good company.” Will consumer demand for nutritional foods — and investors’ limited patience for transformational strategies — expand at the same rate as PepsiCo’s “good for you” offerings? Meanwhile, what is PepsiCo doing to mitigate the consequences of turning so much of our natural capital into “fun for you” foods? I recently spoke with Jeff Dahncke, senior director of communications, to learn more.

Next page: A supersize opportunity