4 Leach Obesity

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Confronting the Obesity Epidemic: The Power of Unlikely Partnerships Brock H. Leach Member, PepsiCo Blue Ribbon Advisory Board on Health Chief Innovation Officer (Ret) PepsiCo, Inc. October 30, 2007

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Transcript of 4 Leach Obesity

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Confronting the Obesity

Epidemic:The Power of Unlikely

Partnerships

Brock H. LeachMember, PepsiCo Blue Ribbon Advisory Board on Health

Chief Innovation Officer (Ret)PepsiCo, Inc.

October 30, 2007

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What Role Should Food Companies Play in Addressing the Obesity Epidemic?

1) Wellness is Already the Single Largest Growth Driver in Food.

2) Consumers Increasingly Understand it’s About Inherently Healthy Ingredients.

3) They Desperately Want Healthier Eating to be Easier and More Rewarding.

4) The Companies that get There First Will Win.

1. Healthier Product Choices:

Reformulation, Innovation and

Marketing

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What Role Should Food Companies Play in Addressing the Obesity Epidemic?

1) Wellness is Already the Single Largest Growth Driver in Food.

2) Consumers Increasingly Understand it’s About Inherently Healthy Ingredients.

3) They Desperately Want Healthier Eating to be Easier and More Rewarding.

4) The Companies that get There First Will Win.

2. Healthier Lifestyle Habits:

Creative, Collaborative Partnerships

1. Healthier Product Choices:

Reformulation, Innovation and

Marketing 1) Requires Comprehensive Environment Change.

2) Requires Individual Lifestyle Education.

3) Requires the Support of a Whole Social Movement.

4) All of those Require Vision, Positive Energy and Multi-Sector Collaboration.

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We’re Focusing Our Efforts at the Intersection

of Business Interest and Public Interest . . .

Making it Easier and More Enjoyable for Mainstream Consumers

Business Interest:

Public Interest:

Capture Growth Opportunity

Promote Real Solutions

Healthier Product Choices

HealthierLifestyle Habits

++

PepsiCo Strategy: Concerted Action

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PepsiCo Progress Report

Better Nutrition Labeling

— Front of Pack Info— Nutrition Panel

Improvements

Highlight on Pack, Changes in Nutritional Profiles

— Reduction in fat, saturated fat, sugar & calories

Kids Marketing Pledges Being Strengthened around the Globe

— US, Canada, Australia, EU, UK

School Alliances to Promote Health (e.g. Clinton/AHA)

Kids Energy Balance Education and Activation around the world (e.g. Vive Saludable)

Family Activation (e.g. America On The Move ™)

Major New Product Launches in Every Market that meet H&W Criteria

Healthier Product Nutrition Standards Established World-Wide

Healthier Product Innovation Objectives set for all Managers– e.g. 50%+ Europe.

Trans Fat Elimination for savory snacks.

New Oils Programs — Canada, Europe, Australia and US

More Portion-Controlled Offerings

Set “Human Sustainability” Objectives for Reduction in calories, sat fat, sugar, sodium per serving.

1Make it

Easier to Choose

Healthier

3PromoteHealthierLifestyles

4AccelerateHealthierProduct

Development

AccelerateHealthierProduct

Development

ImproveHealthfulness

of ExistingProducts

2Improve

Healthfulness

of ExistingProducts

ImproveHealthfulne

ssof ExistingProducts

Choices Habits

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Reducing Fat Reducing Sugar

Recent New Product Highlights

Adding Positives

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Frito-Lay and Good-For-You Snack Food

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Fruit & Veggie Chips Whole Fruit & Whole Veggie

Flat Earth Snacks: “Impossibly Good”

Fruit & VeggieServings

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Red Tomato RanchFruit and Veggies in Each Serving

Tangy Tomato Ranch

Wild Berry Patch

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Consumer Communication: PepsiCo Smart Spot™ & Kraft Sensible Solution™

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Demonstrable

NutritionBenefits

Good-For-You

Good-For-You

Better-For-YouBetter-For-You

Quaker OatsTropicana PP

AquafinaPropel

Baked LaysDiet PepsiPepsi MaxGatorade

Smart Spot™ Makes It Easier to Identify Healthier Choices

PepsiCo Nutritional Varieties

GFY FFY

HealthPerception

Benefits

Indulgent Products with

Health Improvements

Natural &

Organic

0 TransFats/Low Sat

Fat

Diet-Specific

Offerings

Low-Carb

Smart Spot™Qualified Products

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We Launched with National Advertising and Retail Events

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North American Net Sales*

Fun-For-You

Smart Spot™ /Good-For-You

Smart Spot™ /Better-For-You

(Reduced)

19%25%

56%

Smart Spot™ Products are Driving Revenue Growth

44% of Net Sales*+6 Points from 2003

Q3 2007 Sales Mix 2010 Sales Mix Goal

* Net sales includes all Smart Spot™ eligible products.

Smart Spot™:

50%

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Smart Spot™ “Good-for-You” Growth Continuesat Double Digits

+9%

+13%

+5%

+9%

GFY N.A. Net Sales Growth vs. YA

+12%

2002

2003

2004

2006

2005

2007Q2 YTD

+11%

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We Started Looking Outside-In Early

Gro Brundlandt, M.D.

Antonia Demas, Ph.D.

David Heber, M.D., Ph.D.

James Hill, Ph.D.

Gov. James B. Hunt, Jr.

David Kessler, M.D., J.D.

Brock Leach, MBA

Dean Ornish, M.D.

Janet Taylor, M.D.

Kristy Woods, M.D. MPH

Former Director General, WHO

Director, Food Studies Institute

Professor of Medicine & Public Health, UCLA

Professor of Pediatrics & Medicine, Univ. of CO

Former Governor of North Carolina

Dean, School of Medicine, Univ. of CA-- SF

Former Chief Innovation Officer, PepsiCo

Founder, Preventive Medicine Research Institute

Pediatric Psychiatry, Harlem Hospital

Wake Forest University School of Medicine

Blue Ribbon Advisory Board on Health & Wellness

Forming Critical Partnerships . . .

. . . And Broadening Our Understanding

YMCA

Dr. Kenneth Cooper

Dr. Jim Hill

Dr. Dean Ornish

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Marketing Practices Partnerships– U.S. Examples

Schools:

Clinton Foundation - American Heart Alliance

Kids Marketing:

PepsiCo Pledge

Front-of-Pack Labeling:

Keystone ProjectElementary &

Middle Schools:

Water, milk, 100% juice with portion caps

High Schools:

Water, low or no calorie beverages, 100% juices, light juices, milks, sports beverages

Portion caps

50% water or low/no calorie beverages

Co-Regulation

Self-Regulation

Multi-Sector

Kids Under 8:

No Advertising or Marketing Targeting Children Under 8

Kids 8 to12:

Advertising on Smart Spot™ products only.

No advertising or marketing in schools.

No product placement on kids media.

3rd party licensed characters, interactive games with Smart Spot products only.

Goal: Uniform Front-of-Pack Labeling: Icon or GDA with common nutrition standards.

Participants: Retailers, Food Companies, NGO’s, Universities, Federal Agencies.

Learning To-Date: Label guidance systems work.

Targeted Completion:Mid-2008

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Multi-Sector Example: Oxford Health Alliance

Scientific Intervention Study Building on Learning that Comprehensive Community-Based Intervention can Work.— French EPOD, Australian Multinational Study, Tufts, Arkansas,

Directly Affecting 2 Million People.

Focused on Nutrition, Physical Activity and Reduction in Tobacco Use.

Employing Coalition-Building and Education in Schools, Workplaces, Health Centers and Community Centers.

Include Healthy Food Choices and Promotion.

PepsiCo Foundation Provided $5.2 Million Grant for Implementation and Evaluation.

PepsiCo Foundation Funding 4 Community-Based Interventions: China,

England, India, Mexico

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For What Should Food Companies be “Held to Account”?

2. Healthier Lifestyle Habits:

Creative, Collaborative Partnerships

1. Healthier Product Choices:

Reformulation, Innovation and

Marketing

Leading Food and Beverage Companies are Prepared to be

Held to Account for Being Constructive Partners in the

Solution

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Confronting the Obesity

Epidemic:The Power of Unlikely

Partnerships

Brock H. LeachMember, PepsiCo Blue Ribbon Advisory Board on Health

Chief Innovation Officer (Ret)PepsiCo, Inc.

October 30, 2007