One goal, many motives... There was major movement from Big Food over the weekend, when Pepsico CEO Indra Nooyi and Walmart CEO Mike Duke separately announced plans that will help to meet some of First Lady Michelle Obama's goals for her child obesity campaign, Let's Move!.
On Sunday, PepsiCo announced that it will make significant reductions in sodium, fat, and sugar content across its huge portfolio of food brands, and Walmart is dropping food prices.
White House CEO dinner...
Both Nooyi and Duke dined with President Obama at the White House on February 23rd, for a private bread-breaking, with other corporate CEOS, about which the White House released no details...except for the guest list. Is it a coincidence that they're now moving rapidly to meet Mrs. Obama's challenges? It is for Walmart, which has other reasons for reducing food prices (a fourth-quarter drop in customers), but Nooyi's efforts are a direct response to Mrs. Obama's campaign. Nooyi has much interest in White House initiatives to make corporate foods healthier; she led the creation of the Healthy Weight Commitment Foundation last Fall, a coalition of food makers that seeks to boost nutrition awareness. Nooyi also serves on a Treasury advisory board for trade with India and East Asia. (Above: Mrs. Obama speaking at the Grocery manufacturers Association meeting)
Nooyi's PepsiCo push...
Last Tuesday, when Mrs. Obama gave the keynote address at the Grocery Manufacturers Association Science Forum, this was part of her challenge to corporate food makers:
"We need you not just to tweak around the edges, but to entirely rethink the products that you’re offering," Mrs. Obama said. "That starts with revamping or ramping up your efforts to reformulate your products, particularly those aimed at kids, so that they have less fat, salt, and sugar, and more of the nutrients that our kids need."
The next day, Kraft Foods announced an average ten percent reduction in salt for its brands over two years. PepsiCo has trumped those efforts with a far more ambitious plan. According to Nooyi, PepsiCo will reduce average sodium by 25 per cent per serving in major global food brands, which include Quaker Oats, and Frito-Lay, in key markets by 2015. The corporation will also reduce the average saturated fat per serving by 15 percent by 2020, and cut the average added sugar per serving in key global beverage brands by 25 percent by 2020. Nooyi also announced that PepsiCo will increase whole grains, fruits and vegetables, nuts, seeds and low-fat dairy in its product portfolio. There will also be an effort to reduce sugar levels in more beverages.Wall Street Journal is also reporting that PepsiCo is investing millions of dollars in creating "designer salt," a kind of salt that replicates the taste of high sodium content--without having actual high sodium content. This is important for brands that rely on salt for much of their taste appeal, such as Lay's potato chips, which has just three ingredients: Potatoes, oil, and salt. The re-formulated salt is about two years in the future, however. And is guaranteed to cause controversy. (Above: During campaign season, there was much made of the fact that President Obama's campaign logo and PepsiCo's re-designed soda logo were very similar. Photo is the two logos...)
Walmart's efforts will stretch federal food dollars...but possibly destabilize the grocery sector
Walmart's price slashing for food groceries has nothing to do with Mrs. Obama's efforts to make healthy food more affordable, and yet...it is meeting her goal of affordability and accessibility. The company carries organic foods and other fresh foods, and has outlets across the US. But it has also suffered a market downturn, and the current price trimming is aimed at getting customers back. Profits fell in Walmart's fourth quarter, even though it was the holiday season. Starting April 1, the company will be running a new ad campaign, advising shoppers about price rollbacks on 10,000 products. And even if the grocery giant's efforts have nothing to do with Mrs. Obama's campaign, it is one of the largest authorized retailers for federal SNAP (food stamp) and WIC benefits, two branches of the government nutrition program run by USDA. The price cuts will boost the purchasing power of these federal benefits.
At the same time, however, some financial analysts are worried that Walmart's actions could destabilize the grocery sector of the stock market.
"While this helps address Walmart's traffic woes, we view this as a major setback for the grocery stocks, which have been rallying on hopes of a return to more rational pricing," Morgan Stanley analyst Mark Wiltamuth told ABC news on Friday.
No one from the White House or the Treasury has yet addressed how Mrs. Obama's goal of making healthy foods both more affordable and accessible will impact the grocery sector profit margin.
Nooyi's latest initiative to reformulate products is part of an ongoing health campaign PepsiCo has engaged in across its brand portfolio, for the last three years. Last week, the corporation also announced a new global policy to remove full-sugar beverages from primary and secondary schools by 2012. And Walmart has been so successful in its relationship with the government in the SNAP and WIC program that its Compliance Director, Jennifer Smith, testified at the Nov. 17, 2009 Senate Agriculture Committee hearing on the Child Nutrition Act reauthorization. Improved school lunches are one of the four pillars of Let's Move!
*Learn more about Let's Move! at www.letsmove.gov/.
*PepsiCo/Obama logo from Baekdel.com. Photo of Mrs. Obama by Obama Foodorama.
