PepsiCo’s Persistence on Healthier Products Leads to Profits

By Elizabeth Martinez
Money and Investing Writer

Diet Pepsi, Diet Pepsi Classic Sweetener Blend and Pepsi Zero Sugar are three of PepsiCo’s (NYSE:PEP) latest diet offerings, and were created largely due to consumer demands for healthier versions of the classic sodas they have grown to love.

As a response to consumer needs, the company pledged last October to decrease the amount of sugars, salts, and saturated fats in a number of their products. PepsiCo’s goal is to have over two-thirds of the company’s products with no more than 100 calories from added sugars per serving. This ambitious goal matches that of The American Beverage Associations, which pledged in 2014 to lessen the amount of calories in their drinks by twenty percent by the same year, 2025.

While the American Beverage Association has had a fairly slow start in achieving this goal, only dropping their beverage calories by .2 percent as of 2015, PepsiCo has been making great strides in offering consumers a healthier alternative. So far, PepsiCo has released an organic version of Gatorade, last August, has announced a partnership with BarFresh Food Group Inc. (OTCMKTS:BRFH), in October 2015, and has introduced a new line of healthy vending machines, December 2015, just to name a few.

These vending machines for example, which were designed with the busy consumer in mind, offer the public healthier ‘on the go’ options. This has proven to be highly profitable for the company and even consumers have seemed to recognize the strides they have made in regards to corporate social responsibility.

Although it can often be very expensive for companies to remain profitable while making the switch from unhealthy products, to their healthier counterparts, PepsiCo has proven that companies can not only remain profitable by making this switch, but that this can also help them boost their profits. The company has continued to improve their stock prices in the last 5 years, despite their growth being less steady than they may have liked. As of 4:00 pm on the 16 of this month, PepsiCo’s stock had increased by 1.33 percent.

Also, the company’s primary risk factor as described in their latest 10-K form, is that because they are a “global food and beverage company operating in highly competitive categories and markets” they may be adversely affected if there are any sudden “changes in consumer preferences”.

That said, PepsiCo seems to be adjusting well to consumers demands, as demonstrated by their removal of the artificial sweetener aspartame from Diet Pepsi. Unfortunately for Pepsi, this change was only welcomed by some consumers, so the company was forced to create the before mentioned three different diet versions of the soda, one with the aspartame in it, and two without.

While there will always be a risk that consumers may not like a new product introduced to the market, especially in as highly competitive a market as that of food and beverages, it seems fair to say the healthier, the better. Of course, there will always be a struggle to find the balance between what is healthy, cost effective, and tastes good enough to make consumers turn their backs on the sugary drinks they grew up loving.

A version of this article appeared in the Tuesday, February 21st, 2017 print edition.

Contact Elizabeth at
elizabeth.martinez1@student.shu.edu

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