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PepsiCo Health & Wellness Capturing Growth at the Intersection. Brock Leach Foundation for American Health Care Leadership December 7, 2004. 1. Big Demographic Shifts Both older and younger Increasing ethnicity Income level bifurcation. Major New Growth Opportunities.

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Brock leach foundation for american health care leadership december 7 2004

PepsiCo Health & WellnessCapturing Growth at the Intersection

Brock Leach

Foundation for American Health Care Leadership

December 7, 2004


Wellness will be the next big consumer driver

1. Big Demographic Shifts

Both older and younger

Increasing ethnicity

Income level bifurcation

Major New

Growth Opportunities

  • Life-stage Tailored Products

  • More Taste / Experience Variety

+

  • Improved Convenience

  • Re-Defined Meals: “Snack Meals”

+

  • Growing Demand for Wellness

    • Better-For-You choices

    • Good-For-You nutrition

Wellness will be the Next Big Consumer Driver

Major Trends

2. Increasing Time Pressure

  • Dual income families

  • Increasing work time

3. Increasing Health Concerns

  • Emerging obesity epidemic

  • Increasing age-related

  • Behavioral shift to prevention


Big idea in wellness energy balance

Big Idea in Wellness: Energy Balance

Low Fat

Meats

Refined Sugars

Fats

Endurance

Living

Simple Carbs

Low Fat

Dairy

Veggies

Beans

Strength

Whole

Grains

Fruits

Flexibility

Percentages of Calories In

Percentages of Calories Out

Calories In

Calories Out

The

Energy

Balance


The big idea in nutrition making it easier and more enjoyable

Biggest

Consumer Opportunities

  • Easier ways to manage energy balance

  • Easier ways to replace simple carbs with complex carbs, low fat proteins and healthier fats.

  • Easier ways to get micro-nutrients through a mix of whole foods & appropriate fortification

The Big Idea In Nutrition: Making it Easier and More Enjoyable

Consumer Knowledge Needs

  • Calories In

  • Calories Out

Energy Balance

  • Simple carbs

  • Complex carbs

  • Proteins

  • Fats

Macro-Nutrient

Balance

  • Vitamins & Minerals

  • Phytochemicals

  • Fiber

Micro-Nutrient

Needs

Specific

Functional

Benefits

  • e.g. Glucosamine & Joint Health


The big idea in lifestyle change individual motivation

Creating an Appropriate Environment

Motivating Individual Action

Implementing

Better

Marketing Practices

Providing

Healthy Product

Choices

Promoting Healthy Lifestyle Habits

Restricting,

Taxing

Food

WELLNESS

The Big Idea in Lifestyle Change: Individual Motivation

Proposed Solutions


Wellness is driving our north american growth

2004 YTD Q2 Net Sales

Growth vs. YAG

10.3%

9.5%

4.5%

Fun-For-

You

Better-

For-You

Good-

For-You

38%

+1.2 Pts. vs. YA

+10% vs. YA

56% of Total Growth

Wellness is Driving Our North American Growth

2004 YTD Revenue — PepsiCo North America

“Smart Choices” Standards

Fun-For-You

62%

30%

8%

Good-

For-You

Better-

For-You


And it s accelerating

Fun-

For-You

Better-

For-You

Good-

For-You

13%

11%

11%

10%

9%

5%

4.5%

4%

3%

2002

2003

2004

YTD

2002

2003

2004

YTD

2002

2003

2004

YTD

. . . And It’s Accelerating


We re starting from a very strong position

We're Starting From A Very Strong Position

+

The Leading Brands

in all Healthy Segments

Most Respected Brands in Health

% Consumers Consider Brand Very or Extremely Healthy

76%

Quaker

72%

Dole

71%

Tropicana

68%

Dannon

57%

Minute Maid

54%

Kellogg's

44%

Gatorade

34%

Powerade

34%

Snackwell's

32%

Kraft

32%

Nabisco

17%

Nestle

9%

Frito-Lay

6%

Coca-Cola

5%

Pepsi-Cola

Source: Morgan Stanley Consumer Research


Pepsico strategy real action

  • Healthy Product Choices

+

  • HealthyLifestyle Habits

Making it Easier and More Enjoyable for Mainstream Consumers

PepsiCo Strategy: Real Action

Focus Our Efforts at the Intersection of Business Interest and Public Interest . . .

Business Interest:

Public Interest:

Capture Growth Opportunity

Promote Real Solutions


U s health wellness progress report

Choices

Habits

1

2

3

4

Accelerate

BFY / GFY

Product

Development

Improve

Healthfulness

of Existing

Products

Deliver

Healthy Food

& Bev Solutions

to Schools

Improve

Healthfulness

of Existing

Products

Accelerate

BFY / GFY

Product

Development

Promote

Healthy Kids

Lifestyles

U.S. Health & Wellness Progress Report

  • 70%+ of 3-Year New Product Revenues

  • Major New Product Launches in Every Division

  • New Platform Teams Operational

    • Value-added Proteins

    • Fruits and Vegetables

    • Whole Grains

  • Eliminated Trans Fats at Frito-Lay

  • Establishing “smart choices” Standards

  • Successful New Portion-Controlled Offerings

    • 12/24 Sacks

    • 8 oz. cans/12 oz. bottles

  • Total Calorie Labeling on Single Serve

  • Introducing New BFY / GFY Choices

    • 30+ new SKUs

    • New school-specific products

  • Promoting Them in Schools

    • Bevs: 17,000 Aquafina & Gatorade vending

    • Foods: BFY / GFY bids +36%

  • New Schools Marketing Policies

  • Promoting Youth Sport

  • Supporting Behavioral R&D

  • Motivating Lifestyle Change: America On The Move™

    • Curriculum for 2.5 Million Kids

  • Supporting School Decision-Makers: “Health Is Power™”


2004 new product highlights

2004 New Product Highlights

Reducing Fat

Reducing Sugar

Bevs:

Adding Positives

Foods:


Tropicana fruit integrity nothing but fruit

Tropicana Fruit Integrity —Nothing but Fruit

Latest Estimates of Fruit Servings

Strips

Bars

Nibblers

Squeezers

Drinkable Fruit

=

=

=

=

=

1 serving

3 servings

3 servings

1 serving

2 servings


Key lifestyle programs making it easier

Key Lifestyle Programs: Making It Easier

Supporting School Decision-Makers

Promoting Healthy Lifestyles

  • National movement to help people get started

  • Private / public partnership

  • Our Partnership Includes:

    • “Power of One” Marketing Property for Smart Spot™ at Point-of-Purchase

    • Development of Healthy Kids Lifestyle Programs in Schools

  • American School Food Service Association Partnership

  • Health Is Power™School Resource Guide

  • Interactive Wellness System


Energy balance education for 2 5mm elementary school children

Energy Balance Education for 2.5mm Elementary School Children

Lesson Plans

1-2 Grades

3-5 Grades


Enlisting the best support

Dr. Kenneth Cooper

Blue Ribbon Advisory Board

on Health & Wellness

Dr. Jim Hill

Dr. Dean Ornish

Gatorade

Partnership

YMCA

American School Food

Service Assoc.

Enlisting the Best Support

Forming Enabling Partnerships . . .

. . . And Broadening Our View

Gro Brundtland, M.D.

W. Casscells, III, M.D.

Ken Cooper, M.D., M.P.H.

Antonia Demas, Ph.D.

Amb. Thomas Foley

Kenneth Gladish, Ph.D.

George Graham, Ph.D.

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

James Hill, Ph.D.

Gov. James B. Hunt, Jr.

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

Susan Love, M.D.

Mario Maranhao, M.D.

Dean Ornish, M.D.

Pamela Peeke, M.D.

Janet Taylor, M.D.

Fernando Trevino, Ph.D.

Former Director General, WHO

Professor of Cardiology, University of Texas

Founder, The Cooper Aerobics Center

Director, Food Studies Institute

Partner, Akin Gump

National Executive Director, YMCA of the U.S.A.

Professor of Kinesiology, PA Univ.

Professor of Medicine & Public Health, UCLA

Professor of Pediatrics & Medicine, Univ. of CO

Former Governor of North Carolina

Dean, School of Medicine, U.C. - San Francisco

Co-Founder & Senior Partner, Lluminari

Former president, World Heart Federation

Founder, Preventive Medicine Research Institute

Assistant Professor of Medicine, Univ. of MD

Pediatric Psychiatrist, Harlem Columbia Hospital

Dean, School of Public Health, Univ. of N. Texas


Helping consumers make smarter choices communication objectives

An Integrated Consumer Identity that . . .

. . . delivers a compelling benefit: making it easier

. . . unifies the BFY / GFY products and links them to programs and to retail

. . . derives credibility from real PepsiCo products, programs and actions, secondarily from endorsements

Helping Consumers Make Smarter Choices — Communication Objectives

Key Objective:

Build Consumer Loyalty

to PepsiCo’s Portfolio of BFY / GFY Products

by Making It Easier for Consumers.


Consumer communication smart spot

Consumer Communication: Smart Spot™


Our consumer learning has been clear and consistent

The green dot symbol.

“Smart choices made easy” language.

Our Consumer Learning Has Been Clear and Consistent

Keep it . . .

Simple:

  • Encouraging, “positive choices” message.

Optimistic:

  • Mandatory product benefit linkage on-package: e.g. “Tropicana Light & Healthy is a smart choice because it has half the sugar of regular orange juice.”

  • Line-breadth: One of over 100 smart choices from PepsiCo.

Real:

  • Referral to SmartSpot.com for:

    • more nutrition information

    • healthy lifestyle programs I can use

    • more information about PepsiCo and the SmartSpot™ Program.

Transparent:


We ll advertise it in the context of our brands

We’ll Advertise It In the Context of Our Brands


Smart spot will make it easier at retail national fast start event

Smart Spot™ will make it Easier at Retail. . . National Fast Start Event


And unify our products programs in schools

. . . And Unify Our Products & Programs in Schools


Smart spot impact on purchase intent

Smart Spot™ Impact on Purchase Intent

Gatorade

Users

Baked Lay’s

Users

Diet Pepsi

Users

Oatmeal

Users

OJ

Users

(450)

(280)

(512)

(450)

(450)

%

%

%

%

%

Much more likely

24

23

28

30

27

A little more likely

26

35

22

29

32

50

58

50

59

59

Neither more nor

less likely

48

41

50

40

38

A little less likely

1

1

0

1

1

Much less likely

1

1

0

0

1

2

2

0

1

2


We will limit smart spot to demonstrable gfy bfy benefits

Health

Perception

Benefits

Indulgent Products with Health Improvements

Diet-Specific

Offerings

Demonstrable

Nutrition Benefits

Natural

& Organic

Trans

Fats

Good-

For-You

Better-

For-You

Low-Carb

Quaker Oats

Tropicana PP

Gatorade

Aquafina

Baked Lays

Diet Pepsi

Pepsi Edge

A Credible Consumer Identity Requires Demonstrable Nutrition Benefits.

  • Consumers want a short-cut to better nutrition they can trust

  • GFY / BFY are scientifically supportable

  • Build lasting consumer identity that transcends diet fads

  • Focus ourselves on providing real benefits

We Will Limit Smart Spot™ to Demonstrable GFY/BFY Benefits

FFY

GFY

PepsiCo Nutritional Varieties


Nutrition standards are based upon authoritative statements from fda and nas

Smart Spot™ Criteria

Nutrition Standards Are Based Upon Authoritative Statements from FDA and NAS

FDA

Criteria

NAS Dietary

Recommendations

Beverages

Foods

Snacks

20- 35% of kcal

low

low

<25% of kcal

30% of kcal

<1 g

0

60 mg

480 mg

10%

< 25% of kcal

or 10% fiber

35% of kcal

< 7% of kcal

0

60 mg

270 mg

Not applicable

< 25% of kcal

or 10% fiber

Fat

Saturated Fat

Trans Fat

Cholesterol

Sodium

Vitamin A, C, Fe,

Fiber or protein

Add sugar

< 3g

< 1g

No Std

60 mg

480 mg

10%

No std

3 g

<1 g

0

60 mg

480 mg

10%

< 25% of kcal

or 10% fiber

OR

A Functional Benefit having Significant Scientific Agreement

OR

Reduced: Calories,

Sugar, Fat, Sodium

< 25%

Not defined

< 25%

< 25%

< 25%

Source: LiveWire Mom’s Internet Screen, April 2004, N=300


Smartspot com will be a consumer lifestyle portal

The Smart Spot™

Healthy Lifestyles

Healthy Kids

Commitment to Health

Tools for Professionals

Energy Balance Tool

Product Page

SmartSpot.comWill Be A Consumer Lifestyle Portal


Consumer advertising starts 10 1

September

October

November

December

January

February

Consumer Advertising Starts 10/1

Influencer Print

National Dailies

Consumer

Spreads

Spreads

Print - Weeklies

NOV Issues

FEB Issues

Print - Monthlies

Spreads

Spreads

Online

Trade Print

On-Line

88% Reach

9.2 Frequency

75% 3+

Mom’s:


Smart spot media partnership with discovery communications

Smart Spot™ Media Partnership with Discovery Communications

+ FitTV

  • Health Eating PSA’s in “Roadblocks” across all six channels

    • Healthy Snacking Reminders at 3:00PM

    • Prime time Healthy Breakfast reminders with Sharon Mann of FitTV.

  • Sponsorships of the National Body Challenge– on Discovery Health and at Discovery Stores

  • Sponsorship of FitTV’s “Fit Family Week”– March 21-26, ’05

  • Delivery of Balance First curriculum to all middle schools through Discovery Schools

  • Quaker Sponsorship of Animal Planet’s Family Showcase


The smart spot unifies our health wellness efforts

The Smart Spot™ Unifies Our Health & Wellness Efforts

Health Professionals

Consumers

  • Shortcut to “smart choices made easy.”

  • SmartSpot.com provides portal to:

    • Nutrition information

    • Lifestyle programming like America On The Move™

  • American Dietetic Association

  • American Academy of Family Physicians

  • American Academy of Pediatrics

www.SmartSpot.com

Employees

Customers

  • Accelerated Growth Opportunity

  • Fresh Merchandising Ideas

  • Link to Lifestyle Programming

  • Health Roads™ Program

    • Healthy Lifestyle Incentives.

    • Wellness Website Powered by WebMD.


Making healthy living easier a wish for scale

Making Healthy Living Easier: A Wish for Scale

  • Make the communication consistent, simple, encouraging and UNAVOIDABLE

    • Smart Spot-type labeling program industry-wide (e.g. ADA, AHA, ACS)

    • Common energy balance messaging re: getting started with simple steps.

  • Make simple “Get Started” interventions available everywhere

    • Example: America on the Move

  • Build consensus around implementation of a comprehensive Healthy Schools Policy everywhere, consistently.

    • Example: Convene a national summit with school constituencies on implementing IOM recommendations in schools.

  • Pilot comprehensive healthy lifestyle solutions for African American and Latino Consumers in urban environments– interventions and food marketing.


Brock leach foundation for american health care leadership december 7 2004

PepsiCo Health & WellnessCapturing Growth at the Intersection

Brock Leach

Foundation for American Health Care Leadership

December 7, 2004


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