Apr 16 2010

Can PepsiCo help alleviate world hunger?

In the latest issue of the American Journal of Public Health, Derek Yach and his colleagues at PepsiCo in Purchase, NY, say yes, it can, in answer to the question they pose in their article, “Can the food industry help tackle the growing global burden of undernutrition?”

If we are to successfully combat global undernutrition, efforts must be sustained by multiple stakeholders from various sectors. We believe that trust is built through industry’s demonstration of practical actions that improve health, and recognition of these actions by governments and nongovernmental organizations. Only through new and innovative public–private sector partnerships can we truly make a difference.

Three international public health leaders counter with no, it can’t, in an article entitled “The snack attack.”  They point to irreconcilable differences between the the goals of private industry and public health:

The problem lies with food, drink, and associated companies whose profits depend on products that damage public health and that also have damaging social, economic, and environmental impacts. These most of all include transnational companies, of which PepsiCo is one. To succeed, big business must sustain and increase annual turnover, profit, and share price…We suggest that public health professionals see papers such as those of Yach et al. as part of the marketing strategies of transnational food and drink companies…The privatization of public health does not work.

This argument reminds me of the editorial that David Ludwig and I wrote for JAMA late in 2008: “Can the food industry play a constructive role in the obesity epidemic?”  We concluded:

With respect to obesity, the food industry has acted at times constructively, at times outrageously. But inferences from any one action miss a fundamental point: in a market-driven economy, industry tends to act opportunistically in the interests of maximizing profit. Problems arise when society fails to perceive this situation accurately.

While visionary CEOs and enlightened food company cultures may exist, society cannot depend on them to address obesity voluntarily, any more than it can base national strategies to reduce highway fatalities and global warming solely on the goodwill of the automobile industry. Rather, appropriate checks and balances are needed to align the financial interests of the food industry with the goals of public health.

PepsiCo owns Pepsi Cola, of course, but also Gatorade, Frito-Lay snacks, and Aquafina water, among many other brands.  According to Advertising Age (June 22, 2009), PepsiCo earned $43 billion in worldwide sales in 2008. Its product-specific advertising expenditures in 2008, just for “measured media” (meaning run through advertising agencies) were, for example:

  • $162 million for Gatorade
  • $145 million for Pepsi Cola
  • $27 million for Tostitos
  • $14 million for Doritos
  • $11 million for Fritos.

These figures, staggering as they may be, do not include the amounts Pepsi spends on lobbying, supporting the American Beverage Association’s efforts to fight soda taxes, funding medical research at Yale, or marketing to children and adults in India and other developing countries, as previously discussed on this site.

Is corporate “social responsibility” really responsible?  Or is it just marketing?  And what should be the checks and balances?  You decide.

Added April 17: This comes from a former employee of PepsiCo who asks that I post this anonymously:

I think you probably know that the “marketing dollars,” the share (ads/direct marketing), of companies like Pepsico are only a fraction of what are their actually marketing/promotions budgets.  Many years ago, PepsiCo made a conscious effort to redefine/shift budgets to what is called promotional spending from traditional marketing spending.  In doing so though, they keep the control and allocation of the funds in the hands of the marketing teams.

For Pepsi I know that the $145 million you mention is probably only 25% of what Pepsi “internally” considers consumer marketing spending.  For example, direct to retails “incentive” bonus funds are given for moving volume — those funds are almost entirely funneled into the retails increasing consumer marketing to their direct customers.  There are even examples where they can hide 10′s of millions of dollars at a time by linking event sponsorships (stadiums, etc.) to retailer agreements, thus moving those dollars to long-term “capital expenditures.”  I would guess that for Pepsi alone that that $145 million could be as much as a billion a year for direct and indirect consumer marketing spending.

It is not just obscene how much gets spent to increase volume… since, for companies like PepsiCo, Coke, etc.  Volume is the only way they generate higher profit to their shareholders.  As you say, to expect a corporation to do things for the good of the consumer just shows a misunderstanding of their primary function when they are a for-profit entity.

  • Anthro

    While my writing may not be as succinct as yours or the others you cite, I think I have posted these ideas at one time or another. So, yes, I heartily agree–it’s just marketing. I wrote as much to the people at Yale and received only the slimmest and evasive response.

    All I would add is that there are shareholders at the end of the profit quest who avert their gaze and cash their dividend checks. I am intentionally not one of them.

  • Mark

    The amazing thing is that those marketing spend numbers of PepsiCo most likely exclude the indirect/promotional dollars spent to sell product. These typically are 3-4x the traditional marketing budgets. Makes you wonder.

  • Neil

    Pepsico is making Nutriwash Nutrasweet lately.

  • ET Addison

    Marion:

    So what SPECIFICALLY would you have food marketers do?

    It’s easy to sit on the sidelines and snipe at the ‘evil corporations’ with their huge marketing budgets.

    But what would you have them do SPECIFICALLY to address the issue? And would you take responsibility for having it actually WORK?

    I’m no apologist for big corporations. But what would you really have them do? Market little bags of steamed broccoli? Sell boiled quinoa without salt? If people would actually buy such things, corporations would sell them in a minute.

    Name something specific that would meet your requirements? Like stop selling cookies, because some people eat too many?

    The do-gooders and tsk-tskers are quick to bitch, but are very short on actual answers.

    What do YOU suggest nabisco sell? And don’t be vague. Be specific. What would be better? What would people buy?

    And the complainers are very very reluctant to propose solutions that actually have to pass real word tests.

    You’re so smart. Propose a school lunch menu that meets all the ‘policitally correct nutrition’. Then take responsibility for actually implementing it, actually insuring that kids eat it, and actually measuring whether it actually reduces obesity.

    Go ahead. Put up. Don’t just gripe from the sidelines. Suggest something that actually works. And you’re willing to back up with results.

    And be held accountable, for what actually WORKS, not what sounds good in a blog or interview.

    Propose something. Go ahead.

    SPECIFIC.

  • GR Boston

    I’m missing something.

    How is your statement…

    “Rather, appropriate checks and balances are needed to align the financial interests of the food industry with the goals of public health”

    ….any different from what Derek wrote in his paper? ….

    “Only through new and innovative public–private sector partnerships can we truly make a difference.”

    In the case of the auto industry, corporations were not locked-out of discussions to determine how CAFE and EPA standards could be improved without jeapordizing an important segment of the economy.

    I agree with ET Addison, we all have to get over who leads and find ways to work together: experts, farmers, distributors, marketers, governments, figure heads and consumers included.

    Let’s be specific and smart about the rules, ideas and actions that will drive equitable production, distribution, and consumption of nutritious foods.

  • Renee

    @GR Boston: I see a big difference between Marion’s comment and the comment from Derek. We only have to look to Europe to see how government can be used to maintain checks on corporations that would sell the public anything in order to make a profit. In the cosmetics industry there are many products that are illegal to sell in Europe, but in America it’s okay for corporations to sell products with cancer-causing chemicals. Somehow those corporations are still making a profit in Europe.

    In fact, to me Derek’s comment is completely empty –it says nothing. Marion’s comment makes a specific recommendation.

    And @ET Eddison, I wouldn’t suggest the food industry be a partner at all in the fight for American’s health. They could never be a true partner because it runs counter to their financial interests. Let’s be honest about that, instead of trying to pretend that their marketing ploys are actually in the public interest.

  • GR Boston

    I may be naive, but I would think Derek Yach believes he’s working at a progressive food company and he still believes what he espoused earlier in his career…

    ‘Progressive food companies support regulations that raise the floor for all companies provided they do not stifle innovation.’

    I think it may be naive to think we can distribute and market nutritious foods on the scale required without the participation and adherence of our national and transnational food companies.

    Respectfully,
    GR

  • Subvert

    The commentary was nothing more than a call-out that mega food corporations BS PR campaigns are nothing more than just that, BS PR. The biggest excuse for the ills that rampant globalization of the food industry has brought is the old “but, we’re feeding the world” plea.

    It is impossible for an industry to feed the world and give back to the people when that same industry is a major reason many people in some cases are pushed off their native lands; denied free access to clean water; family farms are penny-pinched into bankruptcy by ever-increasing market control of prices; and a large part of the US population is fat and unhealthy and convinced that a diet of empty calories and commodity-driven chemical additives and ‘convenience food nutraceuticals’ is going to save them…

    It is amazing that people still fall for this PR stuff. I applaud Marion for her efforts to expose transparent crap like this in so-called public health journals. They should publish garbage like this in the “Journal of Corporate Poopoopery”!

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  • http://www.deanbreaker.com/ Amy

    While my writing may not be as succinct as yours or the others you cite, I think I have posted these ideas at one time or another. So, yes, I heartily agree–it’s just marketing. I wrote as much to the people at Yale and received only the slimmest and evasive response.

    All I would add is that there are shareholders at the end of the profit quest who avert their gaze and cash their dividend checks. I am intentionally not one of them.

  • a.

    et addison says – “It’s easy to sit on the sidelines and snipe at the ‘evil corporations’ with their huge marketing budgets.

    But what would you have them do SPECIFICALLY to address the issue? And would you take responsibility for having it actually WORK?

    I’m no apologist for big corporations. But what would you really have them do? Market little bags of steamed broccoli? Sell boiled quinoa without salt? If people would actually buy such things, corporations would sell them in a minute.”

    ET, i believe the point is that this is

  • ocdgirl2000

    Pepsico and all junk food companies need to be banned from lining the pockets of our Congressmen & Senators as well as the President! Forget them donating to the elections & campaigns! Forget them getting involved with lobbying & bills that affect junk food grocery food manufacturer’s income! Since they have been an integral part of the COSTS of our failing healthcare system, and NOW our Government has taken over the role of nanny to health insurance companies, they have no right to accept money from these folks who are poisoning the population!!ban them from the government affairs of our representatives! If our reps don’t have the bribery money in their pockets any more, let’s see how well they do for us, health-care wise?huh??

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