PepsiCo., Inc., whose flagship brand Pepsi-Cola became one of the world's top carbonated soft drink brands by bragging about its sweetness, has now decided to wash its hands of the global obesity epidemic it helped create by announcing "significant" cuts in the calorie count of its beverages.
PepsiCo Chairman and CEO Indra Nooyi claims at least two-thirds of the company's beverages will contain 100 calories or less per 12-ounce serving by 2025. Also as part of this plan, PepsiCo will increase the focus on zero or lower-calorie products.
PepsiCo has also been promoting low-calorie offerings. These include a relaunched Diet Pepsi with aspartame and a new brand Pepsi Zero Sugar replacing Pepsi Max.
Analysts said Pepsi's move towards products containing less sugar isn't totally driven by a concern for the health of its consumers. That sugar downsizing is being driven by the market reality that negative health perceptions about fructose and artificial sugars are badly hurting its soda and diet soda businesses, as is competition from low-calorie or no-calorie beverages.
"Technology breakthroughs right now are resulting in better-tasting colas, almost as good as the full-sugar colas, but with lower calories," said Nooyi.
"So we're now faced with (an) interesting opportunity to step the consumer down to lower sweetness levels."
She also said the move to lower calorie drinks is part of a new sustainability initiative to counter health concerns about sugar-sweetened beverages, and respond to changing consumer preferences. She claims PepsiCo has made progress in reducing sugar over the past decade.
"We have to make sure that our products meet the changing consumer needs," she said.
PepsiCo sells beverages in some 180 countries worldwide and still makes well over $1 billion annually from the sale of its flagship sugar-based Pepsi drink. Soda represents less than 25 percent of the company's global revenue, however.
PepsiCo also makes unsweetened ready-to-drink coffee and iced tea products under the Starbucks and Pure Leaf brands. It also markets sparkling water, juices and the Gatorade sports drink brand.
Industrywide, carbonated soft drinks still account for the majority of the category's sales, according to Mintel. It estimates the diet carbonated soft drink segment accounts for about 74 percent market share while the diet category is just 26 percent.
A new United Nations report released on World Obesity Day last Oct. 11 said taxing sugary drinks can yield major health benefits such as reducing obesity and Type 2 diabetes.
The new report, "Fiscal policies for Diet and Prevention of Noncommunicable Diseases," argues that fiscal policies leading to at least a 20 percent increase in the retail price of sugary drinks will result in proportional reductions in consumption of such products.
"Consumption of free sugars, including products like sugary drinks, is a major factor in the global increase of people suffering from obesity and diabetes," said Dr. Douglas Bettcher, Director of World Health Organization's Department for the Prevention of Noncommunicable Diseases.
Free sugars, which are monosaccharides (glucose or fructose) and disaccharides (sucrose or table sugar), are added to food and drinks by manufacturers.
Between 1980 and 2014, obesity worldwide more than doubled with greater than half a billion adults -- 11 per cent of men and 15 per cent of women -- being classified as obese. In 2014, more than one in three, or 39 percent of adults worldwide aged 18 and older, were overweight.
Dr. Francesco Branca, Director of WHO's Department of Nutrition for Health and Development, described obesity, overweight and diabetes as major global heath challenges.