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Pepsi pushes health with brands, acquisitions

PepsiCo continues to demonstrate its commitment to the health agenda it first expounded ten years ago with a slew of US launches and acquisitions that confirm it as the world's biggest functional-foods and beverages company.

In addition to the traditional route taken by many big food companies — acquiring promising start-ups and refiguring existing lines — PepsiCo has introduced three major new brands in the health area: a fortified fruit-smoothie range called Fuelosophy, a fortified sparkling beverage called Tava, and a range of baked fruit and vegetable crisps named Flat Earth via its Frito-Lay division.

Some market purists balk at the idea of multinationals launching or buying brands and doing little to reveal their ownership in the brand's marketing, promotion and labelling, but PepsiCo — like all food companies — knows healthier food products are the future and, increasingly, the present.

So while an interested consumer may be hard-pressed to determine PepsiCo is the owner of Fuelosophy — launched in October and so far available only in Whole Foods stores — the brand, along with Tava (to be launched in the second quarter), has a key role in what is an increasingly busy sector of the PepsiCo portfolio. If PepsiCo doesn't flag its ownership, it may be more due to its irrelevance than its potential detriment to the brand's success, given the company's growing health positioning.

"The healthy-beverage trend is going to accelerate wildly," said John Sicher, editor at New York-based trade journal, Beverage Digest. "Companies like Coke and Pepsi know they need to be ahead of the curve. They are taking a lot more risks."

Acquisitions have also featured prominently with PepsiCo buying Colorado-based sparkling juice company, Izze, for about $75 million in September, followed by the $450 million purchase of the 23-year-old Naked Juice in November, a move many see as a direct attempt to compete with the Odwalla juice brand Coca-Cola snapped up for $183 million in 2001.

"I'm looking forward to PepsiCo growing this business, and to extending the availability and awareness of Naked Juice's exceptional line-up of beverages," said Naked Juice's CEO Monty Sharma.

"Naked Juice's consumers and customers are passionate about this brand. We value that level of loyalty and look forward to building on it to help Naked Juice continue to grow," said Greg Shearson, president of the PepsiCo unit, Tropicana Products North America.

According to market analyst, IRI, Naked Juice sales jumped 70 per cent in the past year in all outlets except Wal-Mart and some health food stores.

Pepsi is similarly ambitious for Flat Earth, which is due to hit shelves in February.

"We're looking forward to Flat Earth chips making a significant contribution to Frito-Lay's growth in healthy snacking," Frito-Lay CEO Al Carey said. "We're committed to taking every single SKU and improving the health-and-wellness aspects of each product; to developing low- or no-salt alternatives; and offering portion control with 100-calorie packs."

PepsiCo projects Flat Earth sales of $75 million in a year with marketing revolving around sampling.

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