A new report from Credit Suisse projects the market for obesity fighting consumer staples could hit a massive $1.4 trillion by 2012 as the world's population continues to gain weight. The World Health Organization (WHO) estimates that, in addition to the 400 million adults who are obese, more than 1.6 billion adults are now overweight, with the total cost associated with overweight and obese individuals in the United States alone hovering around $117 billion. And inherently nutritious food companies stand to gain the most from this flourishing market by offering a healthier mix of options to better serve consumers. In a comprehensive report that investigates obesity and parallel investment implications, analysts hone in on opportunities for snack players, taking a closer look at US beverage and snack firm PepsiCo and its vision to create a healthier mix. In the 1990s PepsiCo's portfolio was indulgent; but the report cites PepsiCo's chairman Indra Nooyi who, speaking recently at an industry event, "argued for how innovation and acquisitions have transformed the portfolio to nearly 45 per cent "Good for You" or "Better for You." According to the report, the PepsiCo chairman spoke of the need for the food and beverage industry to "deal more proactively with the fact that in some parts of the country, more than half of its consumers are overweight or obese." In terms of the North American arm of PepsiCo's snack business, Frito Lay North America, the analysts suggest that its size and scale have given the firm "tremendous scale for R&D that no other snack company can match". The firm has further benefited from "a research staff whose objective is to continually pursue healthier profiles for its snacks." They claim that the firm has been the trailblazer for the industry as a whole, citing its moves to cut trans fats, its shift to healthier oils, and slicing the sugar and salt content from snack products. "It has also used its great snack brand platforms for creating healthier baked versions of its snacks, such as Baked Lays. And its scale has permitted it to invest in cooking technologies for producing healthier snacks that smaller and underscaled competitors cannot match," they add. The firm recently rolled-out to market a concept called "Smart Spot." According to the report, this designation is given to PepsiCo's food and beverage products "that meet a set nutrition criteria based on statements from the Food and Drug Administration and the National Academy of Sciences." Currently, approximately 45 per cent of all PepsiCo products meet these criteria, state the analysts. Further, they assert that PepsiCo management is funding an innovation pipeline that aims for more than 50 per cent of all new products to qualify for a 'smart spot'. Specifically, the 'smart spot' is found on products that: contain at least 10 per cent of the daily value (DV) of a targeted nutrient (for example, protein, fibre, calcium, iron, vitamin A, vitamin C) and meet limits for fat, saturated fat, trans fat, cholesterol, sodium, and added sugar; or are formulated to have specific health or wellness benefits; or are reduced in calories or nutrients such as fat, saturated fat, sodium, or sugar. Highlighting a further facet of the PepsiCo vision to advance health and wellness issues, several years ago, writes Credit Suisse, Dr. Dean Ornish, head of the Preventive Medicine Research Institute, spoke to investors about a Blue Ribbon Advisory Panel of experts in the wellness field that he had helped establish for PepsiCo. Tapped into regulatory and scientific issues, the panel had direct access to the then-chairman Steve Rainemund. Apparently, Ornish spoke of recommendations made by the panel to PepsiCo's chairman "that ranged from establishing targets for improving the health attributes of its products, increasing disclosure of nutritional information, and advancing education on exercise and nutrition for consumers." According to the report, it appears that "the panel remains active and influential."
Only a true health and wellness vision can enable global snack players to tap into the booming market for obesity solutions, claim experts.