PepsiCo on healthy vending and 2016 launch of organic Gatorade
Al Carey, CEO of PepsiCo North America Beverages, said the company’s Hello Goodness vending initiative will offer consumers a greater variety of 'better for you' products. He was speaking at the Beverage Digest Future Smarts conference in New York yesterday, where PepsiCo debuted the initiative.
These machines will suggest food and beverage pairings, feature digital nutritional information and be climate controlled so perishable and non-perishable items can be sold together.
In addition, Carey announced during the event that the company will be launching an organic Gatorade product in 2016.
While he didn’t give a depth of information on the new Gatorade product, he said the company will look to drive for even more healthy, single-serve products in 2016 and beyond.
“I feel like we’re making good progress,” Carey said, adding that while PepsiCo still has a long way to go, it is in a better place than a few years ago.
More focus on healthy products
With Hello Goodness, the healthy vending initiative, he said the company will combine products from across food service and fountain business within the PepsiCo organization, including Frito-Lay, Quaker, Tropicana and others. The company plans to roll out thousands of units throughout the US in 2016, he said.
“We began testing these products very successfully,” Carey said of the vending machines. “This is really going to do something … Almost every one of [the items] in the machine is a healthy product.”
PepsiCo has moved a greater level of focus to better-for-you products, Carey said. As an example, in 1997, the company’s portfolio featured 24% products that were considered healthier or better-for-you. Now, that number is up to 49%, which he said has given them “generally speaking, a healthier portfolio”.
In the New Year, he said the company will launch zero to low-calorie black coffee drinks under its Starbucks brand, flavored unsweetened tea with zero calories and will be able to label Tropicana drinks as non-GMO after a rigorous process.
In association with the American Beverage Association and other big beverage businesses, Carey said there is a goal to reduce 20% of the beverage calories consumed per person by 2025.
He believes progress is being made on this initiative, especially since they have started campaigning for healthier eating in Little Rock, Arkansas, as well as Los Angeles and New York, reminding customers on vending machines and packaging that “calories count”.
“I’m very encouraged with what we’ve been seeing, maybe even a little surprised by what we’ve seen [in Little Rock],” he said.
Single serve movement
Across the industry, Carey said there is a vast movement toward single-serve products, rising from 39% in Q3 2011 to 44% in Q3 2015. For PepsiCo over the same period, the numbers rose from 46% to 52%.
“This is working well for us,” he said. “Customers like seeing this trend. There’s a fairly low margin on take home products.”
Take home packages have declined by 2.6% over the last four years, he said. Two liters and 12-packs will still be needed to help run the volume, but most growth in the industry will continue to come from single serve packaging.
“Young people today … it’s almost like craft beer business; they like trying different thing,” he said. “I think single-serve has a long way to go. We’re just hitting the tip of the iceberg on this.”