PepsiCo pulls away from Coke on school vending

PepsiCo pulls away from Coke on school vending

Both PepsiCo and Coca-Cola Co have been forced by campaigners to make international commitments on school vending. PepsiCo has gone further than its rival while, Ben Cooper writes, its statements on selling drinks in schools can also be seen in the context of other recent commitments it has made on nutritional goals and the marketing of better-for-you products.

PepsiCo's announcement last week that it would cease selling full-sugar soft drinks in both primary and secondary schools all over the world by 2012 can be seen not only as a victory for campaigners but a further statement of PepsiCo's resolve to put corporate responsibility, particularly as it relates to diet and health, higher up its corporate agenda.

The company followed up the announcement yesterday (22 March) by unveiling new global goals in nutrition, the environment and workplace practices. This activity can also be seen in the context of recent pronouncements by CEO Indra Nooyi that the company intends to place a greater commercial focus on the development of healthier products.

Even viewed in isolation from PepsiCo's overall agenda, the schools move is highly significant. A campaign, led by US consumer advocacy group the Center for Science in the Public Interest (CSPI) and backed by the World Heart Federation (WHF), has been pressuring the major soft drinks firms to bring their international policy on schools vending in line with how they operate in the US, Canada and some other markets.

It has been a long process. The Global Dump Soft Drinks campaign was launched in 2007. The WHF became involved the following year, and in October 2008 direct discussions began with Coca-Cola and PepsiCo. Both were scheduled to make statements by the end of 2009 and the campaigners began ramping up the pressure at the end of last year when no statements had been forthcoming.

PepsiCo's inclusion of secondary schools in its pledge on full-sugar drinks is significant as Coca-Cola has confined its global commitment only to primary schools, leaving it more exposed than PepsiCo to continued pressure from campaigners.

Furthermore, Coca-Cola's policy does not go into effect until 2013 when it says its existing beverage contracts with schools will expire, whereas PepsiCo expects to put its new policy in place from 1 January, 2011, with full compliance to be achieved by January 2012.  

A further distinction, however, is that Coca-Cola has undertaken to sell no products whatsoever in primary schools, whereas PepsiCo says its commitments apply to full-sugar drinks only, which could be seen to be in line with its general commitment to place greater emphasis on better-for-you products.

PepsiCo said it "will work with its bottlers, vending companies and third-party distributors - in collaboration with parents, community leaders and schools officials around the world - to offer low-calorie beverages for primary and secondary schools".

That commitment to some form of commercial contact with primary schools may attract continued adverse criticism from campaigners who object fundamentally to companies marketing to children. But it would appear that Coca-Cola's complete withdrawal from marketing in primary schools has not compensated for its choice not to address secondary schools in its global commitment.

Indeed, CSPI's Bruce Silverglade believes Coke will eventually have to follow PepsiCo's lead. "We anticipate that Coca-Cola will eventually have to follow suit and remove full-sugar carbonated soft drinks from high schools as well as primary schools," Silverglade says. While he says Coke's decision to withdraw all commercial contact with primary schools was "laudable", he says PepsiCo's is the "preferable" approach.

Justin Macmullan, head of campaigns at Consumers International, welcomed PepsiCo's move, saying that "any reduction in the marketing of high-sugar, energy-dense food to children is a good thing". He too regretted that Coke had not included secondary schools.

"We would urge all food and drink companies to make commitments that include teenagers as well as younger children because from our point of view teenagers are still very susceptible to marketing, they are still developing their own ideas as to what constitutes a healthy diet and these commitments should be taken up to 16 in our view," Macmullan told just-drinks.

Crucially, Coca-Cola's global policy remains at odds with how it operates in the US and Canada. It is that inconsistency which has been a key element in the campaign, and will continue to provide grist for the campaign's mill.

In fact, Silverglade suggests it is the global consistency of PepsiCo's policy on schools that really marks it out in corporate responsibility terms. "This is the first time a multinational company has established global nutritional guidelines for a product category," he says. "Most of the companies say they have a global nutrition policy but Pepsi is the first one to actually spell it out and they should be really praised for that, and hopefully have set an example for the rest of the industry."

While PepsiCo can in one sense be seen to be taking the initiative with the marketing of healthier products, school vending and the nutritional goals unveiled yesterday, Macmullan believes food and drinks companies in general are responding to increased public and political pressure.

In particular, with regard to school vending and marketing to children, he believes "the tide is turning", adding that Consumers International is pushing "for an international code on the marketing of food to children which would cover all foods and soft drinks companies".

The World Health Organization (WHO) has recently released a set of recommendations for its member states on the marketing of food to children, and Macmullan says the timing of PepsiCo's announcement is "interesting" given that one of the specific recommendations being made by the WHO relates to the marketing of foods in places where children gather. Those recommendations are to be debated at the forthcoming World Health Assembly in May.

How the shaping of policy on marketing food and drink to children within the WHO, the EU and in the US, where the Obama administration is taking a far more hands-on approach than the previous regime, continues to influence corporate actions will certainly be interesting to watch. But for observers of the long-running battle of the soda giants, PepsiCo's recent initiative is particularly fascinating, and underlines how this fierce rivalry now extends to the area of corporate responsibility where there appear to be as many points to be gained, or lost, as there are in the mainstream nip and tuck of brand competition.