Transforming our business
Our future business profit and growth will be driven by healthier products. We aim to be a positive agent for change in the UK food and drink industry.
- We will use our influence in the marketplace to change, for the better, what people are eating and drinking
- We will change the products we're making, renovate our core, and transform our portfolio towards healthier products providing genuine nutritional benefit
- We will reduce the calorie count of our portions so they fit within a healthy lifestyle
- We will make our healthier options available to all
- We will act transparently, engage widely and promote best practice and accountability in the UK and globally.
By 2020 our business will be based on delivering fruit, vegetables, wholegrain and fibre.
A business in transition
Fifteen years ago our UK business model was built around a relatively narrow line of products: principally regular (full-sugar) soft drinks and traditional crisps and snacks. At that time we also owned several major quick-serve restaurant brands. It was a profitable, growing business but the environment was changing. The public were becoming less physically active and there was rising concern about public health, poor nutrition and diet-related diseases. At the same time, consumers were becoming increasingly interested in finding easy ways to improve their diets and pursue healthier lifestyles.
(Figure 5) PepsiCo UK portfolio (2008) - retail sales by brand Total PUK sales: £1.5 bn+
As those trends became clear, we began shifting our business strategies to capture emerging opportunities. Considerations such as health, nutrition and wellness began to figure much more prominently.
Today, we continue to be a company in transition. Globally we divested the restaurants more than a decade ago to focus on a much broader array of packaged foods and drinks. Our portfolio includes brands like Quaker porridge and Tropicana fruit juice. In fact Tropicana has become our second-largest brand, after Walkers, and it is nearly three-times as large as our regular Pepsi business. Our crisps and other savoury snacks have been reformulated to significantly reduce salt and saturated fat - and expanded to include new healthier products like Walkers Baked and Sunbites. More than 61% of our carbonated soft drink sales come from products containing no sugar. And we are changing the way we engage with stakeholders and government.
We have come a long way, but we know we have a long way to go.
Our future approach
Ten years from now our business needs to be radically different. We want the majority of our products to be delivering meaningful amounts of fruit, vegetables, wholegrain, fibre, and other positive nutrients and food groups. We will still be providing great tasting products, delivering powerful marketing and strong, appealing brands. But we will be responding to changing consumer needs, listening to and acting on the latest science, promoting positive nutrition, and shifting per capita consumption towards renovated and new, healthier products. We will lead a positive shift in the market, not simply follow the trend.
We also need to have a viable and profitable business which maintains the brands that consumers love. We, and others, need to bring the consumer with us on the health and nutrition journey. We need support from others too, particularly from Government on research into food-based solutions, and retailers to ensure new healthier products are available to the consumer.
This report sets out a clear future direction for our business, and a strategy to:
- Deliver a new wave of reformulation and innovation - move to next-generation technology
- Redirect our marketing expertise and power behind healthier products - help shift the market, not just respond to it
- Fund community programmes that tackle real public health challenges - for example, tackling child hunger
- Influence health policy positively
- Use feedback from stakeholders, including the scientific community, and consumer input - to drive our strategy and decision-making
- Make further acquisitions and mergers of healthier brands - to complement our Quaker, Tropicana, V Water and Copella brands.
Our business in context
Our current brands are major players in several UK food and drink categories including chilled juice, savoury snacks and hot cereals (porridge). We are a medium-sized contributor to the carbonated soft drinks market. Savoury snacks, excluding nuts, make only a comparatively small contribution to UK dietary intake of both saturated fat (1%) and sodium (2%). This should reduce over time as we, and others, reformulate products. Carbonated soft drinks contribute 16 % of overall UK dietary intake of added sugars.
(Figure 6) UK dietary sources of saturated fat
(Figure 7) UK dietary sources of sodium
(Figure 8) UK dietary sources of added sugar*
Capability and governance
Health and nutrition is a board-level responsibility through our Vice President for R&D, who sits on the UK Executive Committee and also reports to our Global Chief Scientific Officer. We have a team of experienced Nutritionists, Legal and Regulatory teams ensuring compliance, and a Corporate Affairs team with objectives to drive stakeholder engagement across the business. The UK plays a key role in global PepsiCo R&D as well as the Nutrition, Regulatory and Corporate Affairs teams.
All proposed health claims and marketing materials undergo a robust internal approval process including legal approval, and checking and sign off against UK and EU regulations and PepsiCo voluntary commitments in the UK and globally. For a number of years all new product development has been guided by clear nutrition benchmarks (see Basis of reporting). We have implemented a nutrition training programme for all staff.
Stakeholder engagement
We engage stakeholders extensively, and their input regularly informs our decision-making and strategy. Whatever your background, whoever you are, inside the company or outside, we hope you will read this report, and help us on the journey ahead.
(Figure 9) PepsiCo UK total portfolio: by FSA Nutrient Profile model
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