Weathering the sugar storm: PepsiCo has faith in its portfolio
Russia recently proposed tight advertising restrictions on sugary drinks and fast food. Elsewhere, some countries have soda taxes on high-sugar drinks and other governments are under pressure to introduce similar legislation.
But PepsiCo CEO Indra Nooyi says the company boasts a diverse portfolio, adding it is taking action to ensure there aren’t any discriminatory taxes.
PepsiCo seeks constructive conversations
Russia is considering an advertising ban on sugar drinks and fatty foods, in an effort to encourage healthy eating. Products exceeding certain levels of sugar, salt and saturated fat could face restrictions in when and where they can be promoted.
Looking at the sector more broadly, Mexico and France are among those who have introduced a soda tax, while other governments are considering the idea.
Putting this into a global context – does PepsiCo see an increased regulatory risk to its business?
“We were among the first people to recognize this risk, and we have been retooling our portfolio to make sure that - first of all - we have a diverse portfolio that can weather any sort of action on any part of our portfolio,” said CEO Indra Nooyi, speaking in yesterday’s Q2 earnings call. “But we are also in constructive conversations with governments, to make sure there aren't any discriminatory taxes or discriminatory action on any of our categories.
“On Russia in particular, it is perhaps the most diverse portfolio of any part of our company - between dairy and juices and snacks ranging from ‘fun-for-you’ to ‘good-for-you’, and beverages,” she said, referring to the ‘good-for-you’, ‘better-for-you’ and ‘fun-for-you’ categories PepsiCo groups its products into (the categories broadly refer to nutrition, low calorie/low fat and traditional products respectively).
“So if you want to use an example of the most diverse portfolio of doing fun-for-you, better-for-you and good-for-you, skewing towards good-for-you, I think it's our Russia portfolio.”
Aspartame update
Pepsi is removing aspartame from Diet Pepsi, in response to a consumer backlash against the artificial sweetener. Nooyi said the new formulation, which was announced in April, will hit the US next month.
Aspartame will be replaced with a blend of sucralose and acesulfame potassium in Diet Pepsi, Caffeine Free Diet Pepsi, and Wild Cherry Diet Pepsi.
However, PepsiCo wants to continue availability of the aspartame version as well, Nooyi said.
“Aspartame fell out of favour with some consumers. We just want to make sure we have an offering for all of the consumers who want to switch out of aspartame. We formulated a very, very good product, which is aspartame free, and will be available in the market starting in late August.
“So for all of those consumers who are looking for an alternative to an aspartame sweetened diet product, we will have a product.
“And for those consumers who still love Diet Pepsi with aspartame, we will figure out how to make it available online.”
