The just-drinks Interview – PepsiCo’s Global Health Policy Senior VP
By Michelle Russell | 10 September 2010
Click again for an image of Derek Yach
The debate raging around obesity, its victims and villains, causes and consequences, is shaping the policies of some of the world's most powerful multinational companies in a way few can have predicted only a few years ago. As pressure has mounted from governments, NGOs and the media, the food and drink industry has transformed its approach to the crisis. Derek Yach, senior vice president of global health policy for PepsiCo, talks to just-drinks.
As a former representative of the director general at the World Health Organisation (WHO), and previous to that director for global health at the Rockefeller Foundation, the appointment as PepsiCo's director of global health policy in November 2007 of Derek Yach was far more than window-dressing, designed to appeal to an increasingly vociferous health lobby.
But as a scientist with a medical background rather than a businessman, his passion for the issues of nutrition and childhood 'globesity', critics would argue, sits at odds with the commercial goals of a company named after a sugary soft drink, which has grown to become the largest snack food business in the world.
"[Indra Nooyi, PepsiCo's CEO] invited me and a group of others to join her and really help achieve a new vision for transforming the company into the healthiest food and beverage company in the world," Yach tells just-drinks. "And when we first heard this, of course it was difficult to understand given PepsiCo's portfolio emphasis.
"But over the last three years I think we have seen progress, both in terms of investing in innovation, starting to set very clear goals and commitments that actually are very much in line with the kind that I had hoped I'd see at WHO, and in some ways, go beyond them in terms of the global pace we are setting."
In March, PepsiCo published a set of guidelines for its core brands that it hoped would address both human and environmental aspects. These included reducing the average amount of added sugar per serving in key global beverage brands by 25% by 2020, displaying calorie count and key nutrients on food and beverage packaging, advertising to children under 12 only products that meet the company's global science-based nutrition standards, and eliminating the direct sale of full-sugar soft drinks in primary and secondary schools around the globe, also by 2012.
However, Yach says that the "really tough issue" is setting goals that require a stretch, both in business and innovation, and in consumer demand.
"Remember, we have grown up in areas over the last decade where consumer demand has really savoured a lifestyle of diet and foods that have started leading us into the problems we are in," Yach says. "Even if we changed our product portfolio tomorrow, if we didn't have the response from consumers, of course it would all come to nought."
Despite the challenges, Yach insists PepsiCo will continue to work on "multiple levels" in order to achieve its targets.
"Inside the company we have a global team working on these goals. For sugar reduction, which obviously touches with the core of our beverages, there are a range of options that we are looking at, as the entire industry is, particularly related to providing lower calorie options, calorie labelling, changing our portion size, looking at natural sweeteners and trying to see how new vegetable and fruit-based juice products also come in at lower calorie content with higher health value," Yach says.
In particular the use of Stevia sweeteners have burst onto the soft drinks scene in the last 18 months following regulatory clearance of several ranges from the US Food and Drug Administration (FDA).
Already popular in the UK, the product is natural, contains zero calories and is up to 300 times sweeter than sucrose. No surprise then that PepsiCo has already taken advantage of this development with the launch of a stevia-sweetened extension to its Tropicana orange juice portfolio in the US last March.
However, Yach says the slow uptake of stevia by many large multinationals may be down to the complexity of achieving the right taste.
"We have got a market that contains things called consumers and they tend to be rather fussy about taste," Yach says. "Each of these natural sweeteners have got upsides and downsides, some tend to work well in, say, a juice ... but that same stevia in a cola product doesn't do as well. So there won't be one magic sweetener that will be introduced, either in food or in beverages, but I suspect you will see an increasing diversity of sweetener options, probably each adapted for the particular product."
Yach says that PepsiCo is already looking at a "fuller" range of natural sweeteners. A further sign that drinks producers are responding to consumers continuing to seek out more natural beverages.
"Stevia isn't the only thing we are looking at. We're looking at a fuller range of natural sweeteners and I suspect over the next few years you'll see a lot more options coming to market," he tells just-drinks.
"Over the course of the next 5 or ten years, the entire beverage industry, not just ourselves, will become relatively transformed and you will see sugar levels going down across all major brands with a greater use of new science and sweetener research. We have teams scouring the world looking at natural colours coming from plants particularly, and natural flavours and spices drawn from ancient cultures and so on. That is increasingly going to become the norm," Yach insists.
And as the consumption of carbonated soft drinks (CSD's), particularly in the US continues to slide, there must be hopes an increase in the use of alternative sweeteners may help boost sales.
"It's entirely possible," Yach says. "There is no reason why you couldn't anticipate an entirely natural product with natural ingredients which gives you the fizziness of bubbles. There is a reason people like the flavour of small bubbles in their mouth, it's fun, it's enjoyable. Think about the Champagne category, which has remained pretty solid over many years and has been at the upper end, premiumising the best drinks in the world. Why can't we be doing the same and reinventing it using all natural, lower sugar options. I'm sure that that is going to be an option in the future," he adds.
And, as governments around the globe seek to tighten restrictions on the marketing of 'junk foods and beverages' to children, Yach says the pressure on multinationals to produce healthier products is only going to become more intense. However, the issue is far more complex than the Western media reports, and, Yach argues, the solution will be too. And here his views fall into sync with the defence put up by the industry for sometime, that is unfairly singled out for blame.
"Here in the US, junk food is equated with fast food and beverages," he says. "But the reality is that on the streets of somewhere like South Africa, when you talk about junk food, you're not talking about McDonalds or soda or chips, you're talking about something sold in the informal sector that is very low quality, normally has low food safety implications at an incredibly low cost and is basically calorie, trans fat and colourant laden. That is what junk food means for the majority of the developing world and that message we are not getting through," Yach says.
"There is a lot of effort needed to actually show that in many parts of the world, the predominant issue and changes needed are not necessarily going to come from multinationals but they need to also come from small and medium enterprises and from the informal sector if we are really going to make a significant dent in chronic diseases. [The pressure] will definitely become more intense globally," he insists.
In the form of a possible 'fat-tax' on soft drinks and ‘junk food', the industry faces an even blunter threat to its future.
"The question is, will a soda tax on CSD's have the desired effect on obesity?" Yach asks. "Others will answer the question on whether it will generate revenues dramatically and there are many that see the soft drinks tax issue purely as a revenue generator. But will it have the desired effect on obesity? The answer is mixed to doubtful.
"We are in deficit reduction mode and any thoughts of revenue, people are going to look at to try and lower the deficit. But they need to separate that need from the need to have a responsible approach to healthy eating and obesity reduction," Yach says.
For now however, Yach insists the soft drinks giant is firmly focused on its own current commitments, although he concedes that the pace of change behind this issue may alter the boundaries within which he is operating even in the medium term.
"I have no doubt that five years from now we will find that there is a need to review these (targets) and maybe change, alter and add in things that we hadn't even thought of," Yach admits.
"In the last decade we have seen a growth of interest in Omega 3 fatty acids for both brain development and heart disease," he adds. "I am sure that all of these advances in science will lead to changes in our goals and commitments and I think this is a critical point that our CEO has made, that even our goals will evolve as science improves and as we make progress."
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