Naked Sells

“We plan to triple our sales of what we call Good for You products, including fruit and vegetable juices, oatmeal, nuts, seeds, low-fat dairy, sports drinks for athletes over the next decade,” explained Dr. Derek Yach, Senior Vice President, Global Health Policy, PepsiCo in a private interview with me today at the Clinton Global Initiative (CGI).  Naked is one of PepsiCo’s nutritious juice brands and they tell me that Naked is definitely Good for You.

“The growth rate of healthy foods will exceed that of our other product areas – the ones we call Better for You, and Fun for You.” Additionally, reported Yach, PepsiCo seeks to make the Better and Fun products healthier; provide better labeling so that consumers can make informed choices; conduct more responsible marketing; and promote physical fitness.

Health, nutrition…this sounds like pretty suspicious stuff for a for-profit company, right? Some question if companies can really focus on their true commitment to build shareholder value if they are involved in such well meaning activities that fall under “corporate social responsibility” (CSR). Well, Yach made it clear that Pepsico’s buildup of nutritional foods is not a philanthropic activity. In fact, said Yach, “We’re attuned to trend barometers showing the growth in consumer demand for nutritious foods throughout the world.” So, this is merely smart business.

"This is straight from the top," said Yach. Llisten to Indra Nooyi, Chairman and CEO, PepsiCo, and you’ll hear that she believes that companies “can do better by doing good.” Describing PepsiCo’s philosophy “Performance with Purpose,” Nooyi explains that “every company operates with a license from society. As a company, we owe society a duty of care. Therefore we have to make sure that a healthy society exists so business can be healthy in turn, because we both work together.” According to Nooyi, “Pepsi wants to be an example of how business should be done in the 21st century.”

PepsiCo is also committed to water conservation, “through innovation and more efficient use of land, energy, water and packaging in our operations.” If you think about it, this is simply good business, as water is a vital natural input for the company’s manufacturing processes. When you put this all together, Yach explained that PepsiCo’s approach is to “deliver sustainable growth by investing in a healthier future for people and our planet.”

Yach, with his past leadership experience from the Rockefeller Foundation and the World Health Organization, elaborated on Pepsi’s attention to nutrition and the environment, and consumer expectations. “In the long term, there will be a confluence between profitability and health concerns and the quality of the environment. Consumers differentiate where they buy their products depending on their health and commitment to the environment. In order for people to buy from you, they have to trust the brand and the company, not just like the taste and the flavor. People care how your ingredients are sourced and your ethical use of resources, and the quality and nutrition of your food.” (That made me think of Aveda and how they source natural ingredients.)

 

Having seen the extraordinary growth in interest in CSR in the past 20 years in my work consulting with global corporations, I asked Yach what he observed to be the driving forces. Yach remarked that three trends are converging to advance public-private partnerships: corporations are responding to demand from the public for transparency and accountability, and so they must act more responsibly about how they source and use natural resources; NGOs are trusting companies more than before because companies are not just paying lip service to doing good but they are demonstrating and quantifying what they will accomplish for the benefit of society and the environment (“metrics get people’s attention”); and governments are being pressured to deliver results while realizing the limits of their assets and capabilities.

Companies are able to help country governments in distributing food in the remotest parts of their countries; market health and environmental messages in appealing ways; and establish and track performance metrics.

A few of PepsiCo’s NGO partners are the Global Alliance for Improved Nutrition, Save the Children, the World Heart Federation, and the World Food Program. In addition, PepsiCo is involved with the World Health Organization in a consortium of ten companies.

As we see at the CGI meeting, we see with the world: companies, NGOs, and governments need each other in order for each to achieve the best results.

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