PepsiCo: Leading the Fight Against Malnutrition?

Is asking industry to solve food issues like putting auto companies in charge of preventing global warming?



In the latest issue of the American Journal of Public Health, Derek Yach and his colleagues at PepsiCo in Purchase, New York, pose the question, "Can the food industry help tackle the growing global burden of undernutrition?" Their answer? Yes, it can:

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. (Click here for a PDF.)

In an article entitled "The Snack Attack" (PDF), three international public health leaders counter with the answer "No, it can't." They point to irreconcilable differences between 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 (PDF) that David Ludwig and I wrote for the Journal of the American Medical Association late in 2008, asking: "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 I've previously discussed on my website Food Politics.

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

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

I think you probably know that the "marketing dollars" (ads and direct marketing) of companies like Pepsico are only a fraction of what their actual marketing and promotions budgets are. Many years ago, PepsiCo made a conscious effort to redefine 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 percent 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 tens 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. They are for-profit entities.