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Snacks & Candy

Healthy Snack Push to Continue

PepsiCo pursuing its biggest single worldwide growth opportunity; also teams up with YMCA

PHOENIX -- The chairman and CEO of PepsiCo Inc. told an audience at Arizona State University last Thursday that the world's second-largest soft-drink maker was continuing its push for a larger share of the healthful snack food market.

"We want to alter our portfolio so that we have 50% of our products in what we consider health and wellness products and 50% in indulgence products," Steve Reinemund told members of the Hispanic Business Students Association, according to a report by the Arizona Republic. "We think that this is our biggest single worldwide [image-nocss] growth opportunity in moving into health and wellness as a product line."

The company's healthy products include Quaker Oats, which it purchased in 2001. The company has expanded its healthy holdings to include U.S.-based Stacy Pita Chips, Sara Lee Corp.'s nut business in some European locales and Sakata Rice Snacks in Australia. Its indulgence items include the Frito-Lay brand, maker of Cheetos.

Reinemund's appearance was part of the Hispanic student association's distinguished lecture series. Reinemund began his career with PepsiCo in 1984 and took over the top spot in 2001, the report said.

Sales of carbonated beverages, meanwhile, remain downright depressing, the newspaper added, citing a Beverage Digest report that for the first time since 1985, sales of carbonated soft drinks across retail, vending and fountain channels fell in the United States by 0.2%.

At the moment, PepsiCo is a Wall Street darling because it has acquired other noncarbonated beverage products, said the report. The company saw a 13% spike in fourth-quarter profits, mostly due to strong sales of its indulgence snack food and drinks such as Gatorade. Quarterly profits came in at $1.11 billion, or 65 cents per share, compared with $985 million, or 58 cents per share, the year before, the paper said.

Meanwhile, Purchase, N.Y.-based PepsiCo and YMCA of the USA have announced a five-year alliance totaling $11.6 million in support to America's YMCAs through 2010. This new agreement supports YMCA Activate America, the YMCA movement's innovative public health initiative that seeks to make healthy living a reality for millions of Americans. The alliance includes program development and marketing initiatives designed to strengthen and promote YMCAs as a powerful national resource for healthy living.

"With more than 20 million registered members and program participants, and through our national leadership of childcare and after school programs, YMCAs can play a significant role in encouraging Americans to live healthier lives. The YMCA and PepsiCo have had a longstanding alliance and with PepsiCo's evolving and expanding pro-health corporate strategy, it was natural for the YMCA and PepsiCo to deepen their alliance around healthy living through YMCA Activate America, said Sam Evans, acting chief of staff for YMCA of the USA.

"The YMCA and PepsiCo have a common goal in helping people find easy solutions for leading healthier lifestyles, said Brock Leach, PepsiCo senior vice president of new growth platforms and chief innovation officer.

PepsiCo's commitment to offering consumers healthier products is reflected in the 2004 launch of its Smart Spot symbol, a designation that makes it easier for consumers to identify products that contribute to healthier lifestyles. Products that feature the Smart Spot symbol meet established nutrition criteria based on authoritative statements from the U.S. Food & Drug Administration (FDA) and the National Academy of Sciences. Last year, total Smart Spot growth was 13%, reflecting consumers' demand for healthier products. Beginning this year, the company said it expects to achieve 50% percent of its new product revenues from Smart Spot products.

As a part of its national sponsorship of YMCA Activate America, PepsiCo will support several activities. Tropicana, a division of PepsiCo, will continue its support as a national sponsor of YMCA Healthy Kids Day, April 8. To recognize YMCAs as a valuable resource and support for individuals and families wanting to live healthier, PepsiCo will launch healthy living promotions involving Tropicana Pure Premium, Aquafina, Quaker Oatmeal, and other Smart Spot brands. PepsiCo will fund $1 million annually in competitive grants for local YMCAs launching or expanding health and wellness initiatives in their communities. In addition to supporting YMCA Activate America, PepsiCo will support YMCA of the USA's national diversity initiative that advances the vision of YMCAs as models of inclusion and acceptance.

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