PepsiCo's views on sustainably feeding the world

The CEO of PepsiCo's Global Nutrition Group speaks with Nutrition Business Journal about how to sustainably feed the world. Where does the natural industry fit in?

Dr. Mehmood Khan is Chief Scientific Officer and CEO of the Global Nutrition Group at PepsiCo. His team is tasked with scaling the company’s healthy food portfolio to $30 billion in sales by 2020.

Nutrition Business Journal (NBJ) spoke with Khan from his offices in Chicago about feeding the world's growing population and the role of functional foods and the natural industry in that process.

NBJ: How can we feed a planet of eight billion people? Will we feed them well?

Mehmood Khan: I’m a clinician, so when I think about feeding people, I think about feeding them well in the same context. If we look at where we are going as a society, we will have to use our land and resources—water in particular—far more efficiently and far more effectively.

Eighty percent of the world’s water is used by agriculture, and therefore by the food industry and consumers in our food supply. How do we sustain that at a time when water supplies are shrinking? With no more land available for agriculture?

For one, we produce food more efficiently. Forty percent of our world food supply is wasted. If you could harness even half of that, you could feed an incremental two billion people without having to produce more food. From a strategic point of view, the food industry is going to have to figure out how to better harness the food we already produce.

NBJ: What are your thoughts on the market for functional foods?

MK: I think the marketplace’s definition—or maybe our industry definition, or even the consumer perception of functional—seems to be food that does something more than provide me with nourishment. Whether that’s because there’s a bioactive in it, or some probiotic, or some super ingredient to help my metabolism, that’s what people think about as functional food.

My definition is much simpler—functional food is something that gives me balanced nutrition and meets my body’s nutrient needs.

If you provide the body with a balance of nutrients, nature has already evolved to take care of its needs. The concept of a functional food—I don’t know what that really is. The industry for these functional foods has proved challenging at times because we’ve tried to get food to do more than provide nourishment.

There’s a gray zone between a functional food and a drug, food as a pharmacological agent. Take omega-3 fatty acids, an essential nutrient. At an intake of four grams, you can now change your triglycerides and that ingredient becomes a drug. This is a very narrow definition of functionality, in my opinion.

I would give you a very simple example. If you are dehydrated, drinking electrolytes with some carbohydrate is functional. Is that a functional food?

The market is there. The products are there. The possibilities are there. I think it’s a matter of terminology and what we set up as expectations.

Maybe we need to help the consumer rethink this. The perfect functional food for a newborn baby is mother’s milk. That’s pretty functional. It allows that baby to grow in a completely balanced, healthy manner with nothing else. Can you think of a more perfect food?

NBJ: This sounds like a more holistic, less engineered approach to nutrition.

MK: Look. We are organisms that evolved in nature and I am a fi rm believer that, wherever we can, we have to find ways of getting our food supply closer to nature in a sustainable manner. The issue really is sustainability and cost.

NBJ: How does urbanization complicate the equation?

MK: The challenge of an urbanized world is not just the absolute growth in population, but the concentration and density of people in a small geographic area. For most of our existence on this planet, we’ve lived near our food. Sometime in the 1800s, we started urbanizing, and in the 1900s this began to accelerate.

In the 20th century, we can now look at the developing world and see that 70 percent of humans will be living in cities by the year 2050, most of them in mega-cities. All of a sudden, we have increased the distance between where the food is produced and harvested, and where the majority of people live.

This creates a significant challenge in the future of matching production with distribution and consumption. As you increase the distance, you are going to have to transport food farther, it’s going to take longer, and we’re going to have to find ways to allow that food to be produced with stable nutrients and a balanced nutritional composition that won’t degrade.

The pressures on supply chain, transportation, distribution—we have to find ways to absorb these costs in order to keep products affordable. If we don’t start thinking about this today, we will find mega-cities full of people who can’t afford to buy the food shipped in to them from great distances.

NBJ: How dire is this prospect?

MK: Again, I’m a clinician, so by nature I stay optimistic. You never help a patient by telling them there’s nothing to be done. I look at this and say, ‘If I accept this as a challenge, then what can we do collectively to address it?’ The Green Revolution has done what it can. Food production per hectare is no longer growing, it is actually declining. What is the next phase of this?

We need to find ways of processing food even more effectively, of retaining nutrients, of allowing the cost of food to stay manageable. Most importantly—and this is why we began to process food in the first place—how can we better stabilize food so that it doesn’t deteriorate?

If you go to the Horn of Africa—Somalia, Ethiopia, some of the poorest people on the planet live in that part of the world—you’ll see that one of their primary fruit harvests is the mango. It’s very rich in nutrients, phytonutrients, vitamin E, fiber, etc. About 50 percent of that fruit crop rots after it has been picked off the trees. It never gets to the people who are starving.

That’s a problem not of food production but of food processing and distribution. What can we do to change that? How can we help? You don’t have to send a shipload of food relief halfway around the world. They have a local food supply right there.

Solving food waste issues takes a world

NBJ: So how can we help?

MK: I think there’s good news here. We have started to recognize that there is a problem, and we have started to recognize what the key contributors to that problem are. Now we can start to bring the right minds and resources to bear and find some solutions.

In the developing world, these might be cost-effective ways to refrigerate fresh fruits and vegetables, or processing food at lower capital cost and better retaining the nutrients that nature already provides in the harvests that already exist.

This is one ecosystem, and remember that 40 percent of the food supply in the United States also goes to waste. This is after ingredients are converted to food and after that food has been delivered to the consumer. It’s thrown out of our kitchens, thrown off our plates, thrown out of our restaurants.

This is more about serving size. It’s about matching what you need to eat with what you are served. All of these things can be changed. Imagine if food waste in the U.S. and Western Europe went from 40 percent to 20 percent. That reduction would bring the cost of imports down, it would bring the cost of food down, and it would preserve that food for other societies and communities. This would also increase our ability to buy healthier food, because we could afford to do it. We wouldn’t be throwing money away on wasted food.

I really think there are solutions here, but what are we going to do together? This is bigger than any one industry or company. Can we bring all stakeholders to the table in an open and trusting manner? If we sit there and say, ‘I’m an academic and I’m going to point fingers,’ ‘I’m from industry and I’m going to point fingers,’ ‘I’m a regulator and I’m going to point fingers,’ then no lasting solutions will be found.

NBJ: Is there a subversive nature to this argument—let’s not make more food, but use this food we have more wisely?

MK: I think there are two sides to this equation. If we look at the U.S. population, do we need more food on average? I am saying no. On the other hand, do I want more of Pepsi’s products meeting the consumer’s needs? Absolutely.

We want to be the market leader and the business leader in every area where we play. That’s why we are in business, but we want to do this in the most balanced way possible. I don’t see this as contradictory. You can have businesses striving to grow but still meeting the needs of the communities they serve.

Now, this is very different for our business in Sub-Saharan Africa or South Asia. There is an absolute need for more food in those regions. We are a global company, and we have to think globally. It’s not ‘one solution fits all’ here. Different markets, different communities, different nutrient needs. I have a team looking at just that, the nutritional needs in different parts of the world.

NBJ: What are they finding?

MK: Let me give you an example. More than half of the women of childbearing age in India are deficient in iron. There are lots of reasons for it—quality of food, culture, vegetarianism—and some we cannot change. They are vegetarian. That’s the culture, and of course we don’t want to change that, but how can we better meet their nutrient needs?

We developed a product—Lehar Iron Chusti—which has at least 20 percent of the daily iron needs for young adolescent girls, and 40-50 percent of the blood-related vitamins, such as B vitamins. We put this in a savory snack and a sweet snack, but that was the easy part. The real challenge was to do this at a price point that is locally affordable. Based on our consumer work, that’s 3 rupees, or 5 cents. It’s now developed, produced, packaged, distributed, and put on the shelf with a profit margin for the retailer. Five cents. You cannot do that with the usual way of thinking.

Food is not a global entity. Nutrition is global. Food is cultural and nutrient needs can vary by geography. When I used to teach, I would think about this difference between nutrition—which is a biological need, and food—which has significant overlay in culture.

We as humans are pretty uniform in our nutrient needs. Our biology does not change that much, but our food does. Even from the North of the U.S. to the South, it clearly changes, so we really shouldn’t expect people to radically modify their culture to meet diet. How do we deliver within the cultural norms? That’s the key. Price is part of it. Affordability is part of it.

NBJ: Sustainability too. Do you have any opinion about the aggressive sustainability messaging coming out of Unilever?

MK: Unilever has done an excellent job around sustainability, particular on cleanliness. I applaud them for their leadership in Asia and Africa, for their impact on human health there. This is relevant to them since they have a large, growing business based on detergents and soaps.

Our equivalent would be efforts to provide affordable, clean water in a country like India, at a cost that local populations can afford. This is why we did our joint venture with Tata and launched a product like Gluco Plus, in the same market where Paul Polman is talking about hand washing. The example he gives is this—‘More people wash their hands, fewer infections.’

At the same time, you can wash your hands all you want, but if you drink contaminated water, you have a problem. I look at this as a great opportunity for cooperation. We live in the same ecosystem. We’re solving two different components of the same problem. Unilever is providing hygiene, we are thinking of the clean water supply. Let’s put the two together.

This is an example of industry playing synergistic and complementary roles. We called it Performance with Purpose five years ago. It’s a vision that Indra Nooyi [CEO of PepsiCo] laid out before I even joined the company. Now we have a great company like Unilever saying, ‘Hey, we can also play in this space and also be a leader.’ I look at the sutainability front as a collective. This is the ‘and.’ This is not ‘either-or,’ this is the ‘and.’

NBJ: It does seem like we are coming out of a period of history driven by profit and competition. Collaboration is a much more popular word these days.

MK: There is collaboration on many levels. There is collaboration between large industry players and universities. We’ve signed 40-plus academic partnerships with universities in my time as head of R&D. That’s almost one a month, and it’s still going on. Similarly, we have a long track record of partnering with small companies that might be able to find and discover solutions for us. Some we announce publicly and some we don’t.

We can also think of partnerships that might be possible between the larger players. Look at our ability to develop sustainable packaging in plastic. The applications there could fall in the detergent industry, or in garments.

Anything we are packaging comes into play, but how do we bring the different industry players together so that we can leverage the same technology and bring its cost down? How do we create opportunities? We are also seeing governments and companies partner more.

At the end of the day, 99 percent of the world’s population buys its food from the private sector. Governments do not produce their own food supply. We have to partner to get this right. No business can grow without a healthy society within which to do business.

NBJ: Is there collaboration to be had with the natural products industry?

MK: The trend toward natural is there because consumers are asking for it. I would translate the natural trend in the same way that consumers are looking for clean labels—ingredients they can recognize, simpler ingredient lists. I am a strong proponent for it, so long as it does not increase the cost of products for consumers to a point where the majority can no longer afford them.

The challenge I’ve always had with organic and with natural is that, if you serve these products at a price point where only 2 percent to 5 percent of the population can afford it, then what about the rest? Are we going to create a population of those who have access and those who don’t? What are we going to do for the mothers of the 50 million children who can’t buy their lunch?

Natural and organic are great, but I am very focused on how we can serve all our consumers, not just some of them.

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