Currently browsing posts about: PepsiCo

Apr 23 2012

Gatorade: the new health food?

On April 20, I received a letter from a Gatorade PR person commenting on one of my posts reposted at the Atlantic Health/Food section.

After reading the letter, I searched my posts for references to Gatorade but can’t find anything specific other than my reporting the more than $100 million a year Pepsi spends to advertise this product.

So I’m guessing the letter must be referring to my comments about sports drinks in general:

Hi Marion –

I recently read your article in The Atlantic and would like to make sure you have the most current information. Your article criticizes sports drinks, advising against them because the sugars and carbs will make you fat. It also discusses the main sweetener in most sports drinks is high fructose corn syrup.

I would like to point out the carbohydrates and calories are functional in Gatorade, a sports drink, and are meant to provide fuel specifically for athletes.

The ingredients in Gatorade are backed by years of scientific research that support the need for carbohydrate sugars for fuel during training or competition and we only recommend Gatorade during the active occasion.

Also, high fructose corn syrup is not an ingredient in any Gatorade products.

For those looking for a lower-calorie sports beverage, Gatorade offers G2, which delivers the same amount of electrolytes as original Gatorade but with half the calories. Gatorade also recently introduced G Series FIT 02 Perform, which is designed for a fitness athlete and has 10 calories per 8oz serving.

Please let me know if you have any questions or need any additional information.

Best,

Katie Montiel, Gatorade Communications

I’m always happy to hear from interested readers.

And aren’t you glad to know that sugar is a functional (translation: “good-for-you”) ingredient in Gatorade?

Feb 10 2012

Pepsi cuts 8,700 jobs; 4th quarter profits rise

Pepsi is about to put 8,700 of its worldwide employees out of work.   This might make you think the company is in trouble.

Let’s have some fun with the numbers reported by Reuters in today’s New York Times

Pepsi reports increases in:

  • Annual dividends: 4%
  • Expenditures on advertising: an additional $500 million
  • Expenditures on display racks: an additional $100 million
  • Fourth quarter profits: from $1.37 billion a year ago to $1.42 billion
  • Earnings per share: from 85 cents a year ago to 89 cents
  • Revenues: up 11% to $20.2 billion

Let’s get the logic straight here:

  • PepsiCo made $1.42 billion in profits last quarter.
  • The company’s revenues, profits, and returns to investors are increasing.
  • QED: it is adding 8,700 out-of-work people to an already depressed job economy.

Only Wall Street would view Pepsi’s bottom line as problematic and its CEO, Indra Nooyi, as in trouble:

Ms. Nooyi has come under pressure from Wall Street for a stagnant stock price and a lagging North American beverage business. She has been criticized for taking her eye off the core business of sodas to expand into healthier products, such as hummus and drinkable oatmeal.

When it comes to Wall Street, forget about jobs and health.  Only one thing counts: meeting those quarterly growth targets.

Advocates for a healthier food system should not expect much help from food corporations.

They will only be able to help if forced to by public pressure and regulation.

Jan 23 2012

Catching up with items about beverage marketing

I’ve been saving up items about beverages, mostly having to do with marketing:

Soda companies vs. civic public health campaigns: In strategies reminiscent of those used by tobacco companies, soda companies are filing suit to obtain documents from public agencies all over the country.  Digging them up takes staff time and effort and slows down the real work of these agencies—the point of this approach.

Sonic’s marketing campaign, Limeades for Learning (“when you sip, kids learn”) encourages purchasers of its high-calorie drinks (620 for a medium, 950 for a large) to vote for school projects.

Dr Pepper Snapple’s diet—oops, low-calorie—10-calorie Dr Pepper Ten is aimed at men.  Men, it seems, like low-calorie sodas but squirm at the notion of diet sodas.

Coke covers both bases.  Diet Coke targets women and Coke Zero targets men in an “it’s not for women” campaign.   Is this ad offensive?  It not only excludes half the market, says Food Navigator’s Carolyn Scott-Thomas, but is

patronizing to both men and women in its reinforcement of what I had (perhaps naively) hoped were outdated stereotypes….It deliberately picks at the edges of our comfort zones.  Is it OK to be sexist if it’s done with irony?…Provocation is a blunt instrument.  It may prove effective for sales—perhaps as effective as sexually explicit marketing—but it is still crude and obtuse.”

She asks: “Would this ad be offensive if it involved a bunch of redneck clichés and proclaimed ‘it’s not for blacks’?  You bet it would.”

Coca-Cola has launched a global music effort to connect with teens.  Coke CEO Muhtar Kent says:

Our success in growing our sparkling category today depends on our ability to grow and connect with teens, the generation of tomorrow.

Pepsi, not to be outdone, has invented a social marketing vending machine for the digital age.  Buy a drink and you now have the opportunity to send one as a gift to a friend or a random stranger.

The Committee on Nutrition, American Academy of Pediatrics weighs in on sports and energy drinks.  Its tough report begins with the statement that “Sports and energy drinks are being marketed to children and adolescents for a variety of inappropriate uses.”

Sports drinks…may contain carbohydrates, minerals, electrolytes, and flavoring and are intended to replenish water and electrolytes lost through sweating during exercise.

In contrast…energy drinks also contain substances that act as nonnutritive stimulants, such as caffeine, guarana, taurine, ginseng, l-carnitine, creatine, and/or glucuronolactone, with purported ergogenic or performance-enhancing effects.

The report ends with this unambiguous conclusion:

the use of sports drinks in place of water on the sports field or in the school lunchroom is generally unnecessary. Stimulant containing energy drinks have no place in the diets of children or adolescents.

In response, Red Bull says it is not marketing to children.  Instead, it says, the company totally follows the “agreed codes of practice for the marketing and labelling of energy drinks.”

Just for fun I looked up some advertising budgets reported in Advertising Age. For 2010, Coca-Cola spent $267 million just to advertise Coke, Pepsi spent $154 million just to advertise Pepsi and another $113 million for Gatorade, and Dr. Pepper spent a mere $22 million for Snapple.

These expenses are just for those individual products and just for campaigns run through advertising agencies.  Pepsi’s total advertising budget that year was $1.01 billion.

Water, anyone?

 

 

 

Dec 26 2011

Lobbying in action: PepsiCo vs. kids’ marketing guidelines

Lobbyists are supposed to report what they do and how much money they spend doing it, but this information is not easily available to the public.

CBS News reports that PepsiCo spent $750,000 to lobby government last quarter.  This comes to roughly $3 million annually, a drop in PepsiCo’s annual $30.6 billion sales in the U.S.—$57.8 billion worldwide.

What is Pepsi lobbying about?  Open Secrets publishes the filing information on its website.

PepsiCo lobbied the House, Senate, Executive Office of the President, FTC, FDA, and USDA, focusing on these issues, among others:

  • Childhood Obesity (generally, no specific legislation)
  • Food and beverage labeling (generally, no specific legislation)
  • Marketing and advertising issues in response to Interagency Working Group on Food Marketed to Children (IWG) (see previous posts)
  • Restrictions on use of supplemental nutrition assistance program (no specific legislation)
  • Implementation of S. 3307-healthy, Hunger-Free Kids Act of 2010
  • Biofuels policy generally

I’m especially interested in lobbying against the IWG guidelines.  Pepsi, of course, was not alone in opposing them.  As I noted in a previous post, the the Sunlight Foundation reported on food companies lobbying against them.

Media companies also opposed the IWG guidelines, as shown by Viacom’s annual filing with the Security and Exchange Commission, a document forwarded to me by Jeffrey Chester of the Center for Digital Democracy:

…some U.S. policymakers have sought limitations on food and beverage marketing in media popular with children and teens. In April 2011, the Interagency Working Group on Food Marketed to Children (the “IWG”)…requested comment on proposed nutritional restrictions for food and beverage marketing directed to children and teens aged 17 years and under.

Although the guidelines are nominally voluntary, if implemented by food and beverage marketers, they could have a negative impact on our Media Networks advertising revenues, particularly for our networks with programming targeted to children and teens.

Congress asked the FTC to set up the Interagency Working Group to propose guidelines on marketing foods to kids.  Did it really think food companies would accept such guidelines, voluntarily at that?

As I keep pointing out, food companies have to market to kids to sell products and grow sales every quarter.

If they don’t sell products to kids in the U.S., they will intensify efforts to sell products to kids in developing countries, thereby outsourcing childhood obesity.

Surely it’s time for mandatory rules about marketing junk foods to kids?  If not now, how about soon?

Dec 19 2011

Today’s oxymoron: a greener soda bottle

On the plastic bottle front, much is happening.

BPA plastics are banned from the European market, only to be replaced by other plastics that seem to have their own problems.  These are detailed in three articles in Food Additives and Contaminants dealing with the migration of chemicals from baby bottles.

  • Santillana et al.,  Migration of bisphenol A from polycarbonate baby bottles purchased in the Spanish market by liquid chromatography and fluorescence detection (2011); doi: 10.1080/19440049.2011.589036.
  • Simoneau, et al., Comparison of migration from polyethersulphone and polycarbonate baby bottles (2011) doi:10.1080/19440049.2011.604644.
  • Simoneau, et al.,  Identification and quantification of migration of chemicals from plastics baby bottles used as substitutes for polycarbonate, ( 2011); doi 10.1080/19440049.2011.644588.

In response to such concerns, soft drink companies are engaging in the latest form of “cola wars,” this time the race to greener bottles.  As the New York Times puts it,

Over their decades of competition, the battle between Coca-Cola and PepsiCo has taken on many colors — brown (cola), orange (juice), blue (sport drinks) and clear (water).

Now, they are fighting over green: The beverage rivals are racing to become the first to produce a plastic soda bottle made entirely from plants.

Coca-Cola has signed up with three biotechnology companies to produce materials for 100% plant-based bottles.  It already has some recyclable PlantBottles, but these are only 30% plant-based (mono-ethylene glycol, MEG).  The other 70% is purified terephthalic acid, PTA.  Coke says it will go to 100% plant-based by 2020.

PepsiCo says it is doing the same thing, only faster.

OK, plant-based.  But from what?

Coke says it is experimenting with Brazilian sugarcane, molasses, and other plant residue materials but might also use crops grown specifically for plastic production.  Pepsi says it will use agricultural waste products, such as corn husks, pine bark or orange peels.

What about corn?  Corn has already been used to produce plastics, but doing this is just like growing food crops for biofuels, causing land conversion, higher food prices, and heavy fertilizer use.

It will be good to get the harmful chemicals out of drink bottles.

But soft drinks are inherently wasteful of natural resources.  All the greenwashing in the world can’t hide that.

Oct 19 2011

Consumer groups complain to FTC about PepsiCo’s digital marketing to kids

This morning, the Center for Digital Democracy announced that consumer groups have filed a complaint (and see the appendices) with the Federal Trade Commission against PepsiCo.

Why?  Because of the ways PepsiCo uses digital marketing techniques to push its products to children and adolescents.

These include:

  • Disguising marketing as video games, concerts, and other “immersive” experiences
  • Claiming to protect teen privacy while collecting a wide range of personal information
  • Using viral techniques that violate FTC guidelines

The report points to Pepsi’s Hotel 626 video game as a particularly egregious example.

Also this morning, Public Health Law & Policy released a comprehensive report on the kinds of digital marketing tactics that are now used routinely by fast food, snack food, and soft drink companies. The report identifies specific marketing campaigns from PepsiCo, McDonald’s, and others that exploit kids’ use of digital media.

I can’t wait to see what the FTC does with this.

In the meantime, here’s Michele Simon’s enlightening report on what it’s like to play Hotel 626.

And Lori Dorfman of the Berkeley Media Studies Group sends these case studies on digital marketing to kids:

 

Jul 26 2011

Thanks to emerging markets, U.S. food companies grow profits

The second quarter financial results are in and food companies are doing great, thanks to sales in developing countries. For example:

McDonald’s: Meatandpoultry.com reports (July 22) a 15% increase in income “boosted by strong sales throughout the world.”  Total revenue for the quarter was $6.9 billion, up 16% from $5.9 billion during the same quarter last year.

PepsiCo: Food Navigator reports an increase in net income to $1.88 billion up 18% from $1.6 billion last year. Despite “challenging conditions in the North American beverage market”… worldwide beverage and snacks businesses accounted for growth along with the acquisition of Russian dairy and juice company Wimm-Bill-Dann.  Sales in emerging markets increased 4% in beverages and 9% in snacks:  “We continue to enjoy robust top-line growth in key emerging markets,” said PepsiCo chairman and CEO Indra Nooyi.

Coca-Cola: Although its North American sales were sluggish, sales increased ”due to growth in emerging markets such as China, Russia and Mexico.”  Income rose 18% to $2.8 billion from $2.4 billion last year.  Sales rose 6% in Latin America, 5% in Europe, 7% in Eurasia and Africa, and 7 in the Pacific region.   Growth in China ws 24%, in Russia 17%, and in Mexico 7%.  In contrast, North American volume recorded a growth of a measly 1%.

Americans are turning away from these products.  We already have plenty of obesity.  Now it’s time to export it.

Jun 30 2011

Pepsi’s “health food” initiatives in trouble?

As I keep saying, public concerns about obesity put food companies in an impossible dilemma.  Even if companies want to produce healthier products and stop marketing to kids, they can’t.  If they do, they lose sales.

Case in point: PepsiCo.  Its investors are unhappy that the company  is pushing its “healthier-for-you” foods instead of doing what it is supposed to: pushing the far more profitable “fun-for-you” products like PepsiCola, Gatorade, and Cheetos.

According to the Wall Street Journal, investors are worried that Pepsi sales have fallen to #3 in rank after Coke and Diet Coke.  They blame the company’s CEO, Indra Nooyi:

Hailed as a strategic visionary since taking PepsiCo’s reins nearly five years ago, Mrs. Nooyi is facing doubts from investors and industry insiders concerned that her push into healthier brands has distracted the company from some core products.

They ask: “Is she ashamed of selling carbonated sugar water?”

Products that PepsiCo calls “good for you” still make up only about 20% of revenue. The bulk still comes from drinks and snacks the company dubs “fun for you,” including Lay’s potato chips, Doritos corn chips and Pepsi-Cola, by far the company’s single biggest seller with about $20 billion in annual retail sales globally.

Advertising Age, of course, thinks the reason PepsiCo has a problem is because it’s not spending more on marketing:

Analysts and investors blamed the decline on PepsiCo chairman and CEO Indra Nooyi, who took the reins five years ago….Back in 2005, PepsiCo spent $348 million on soda ads in the U.S.; by last year, the company was spending just $153 million.

Advertising Age (June 20) reports PepsiCo’s sales in 2010 at $58 billion.  It’s profits on this? $6.3 billion.

Along the way, PepsiCo spent $1.01 billion to advertise its products, just in “direct media” (TV, radio, print, and Internet ads that go through advertising agencies).  It probably spent just as much or more on indirect methods such as trade show, point-of-purchase campaigns, and other such things.

Advertising Age gives 2010 marketing figures for specific products (numbers rounded off to the nearest million):

  • Pepsi:  $154
  • Gatorade: $113
  • Quaker:  $56
  • Tostitos: $35
  • Tropicana: $31
  • Lay’s: $25
  • Cheetos:  $11

Wall Street analysts say the company better do something to boost sales of its core products, or else.  Expect to see a lot more advertising dollars spent on “fun-for-you.”  And maybe fewer on “good-for-you?”

The food industry spent billions to convince people that eating tons of junk food is normal, expected, and what adults and kids are supposed to do.  Now, it faces a backlash driven by obesity and its health consequences.

Wall Street insists that companies not only make profits, but grow.  Companies must hit their quarterly growth targets.

Maybe it’s time to take a good hard look at the way Wall Street operates.  We want to bring agricultural policy in line with health policy, right?  How about also bringing investment policy in line with health policy?

Hey, I can dream.

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