PepsiCo is the largest food-and-beverage company in the United States, and the second-largest in the world, after Nestlé. If PepsiCo were a country, the size of its economy—sixty billion dollars in revenues in 2010—would put it sixty-sixth in gross national product, between Ecuador and Croatia. Although the flagship brand, Pepsi-Cola, has always been second to Coca-Cola, the Frito-Lay division is ten times larger than its largest competitor, Diamond Foods, Inc., of San Francisco. Its products take up whole aisles at Walmart. They are the first thing you see when you enter a deli or a convenience store, and they’re in pharmacies, office-supply stores, schools, libraries, and the vending machines at work. PepsiCo’s snacks are also deeply embedded in our social rituals and national institutions. (At the climactic moment of the national college-football championship game, in January, when Auburn was about to kick the winning field goal, the sportscaster Brent Musberger yelped, “This is for all the Tostitos!”) If grazing on snacks throughout the day eventually comes to replace eating regular meals—a situation that already exists in some households—we’ll have PepsiCo to thank.
PepsiCo is also an empire of mind share. Pepsi is the second-most-recognized beverage brand in the world, after Coke, and eighteen of PepsiCo’s other brands, which include Tropicana, Gatorade, and Quaker Oats, are billion-dollar businesses in their own right. In 2010, the company spent $3.4 billion marketing and advertising its brands. They represent a kind of promise to its customers—a guarantee that the drinks and snacks are safe, and that the taste of them, that irresistible combination of flavors, will be the same every time. But in another sense the brands are abstractions. The taste is the rootstock onto which PepsiCo grafts desires (“aspirations,” as they say in the branding business) that have nothing to do with the products themselves. This duality in PepsiCo’s products—part sensory, part aspirational—extends throughout the company’s culture and its mission, as defined by Indra Nooyi, who has been its C.E.O. since October, 2006. It is not enough to make things that taste good, she says. PepsiCo must also be “the good company.” It must aspire to higher values than the day-to-day business of making and selling soft drinks and snacks. Nooyi calls this “performance with purpose.” The phrase is on the screen savers that pop up on idle computers around headquarters.
And yet, for all its riches, its vast reach, and its sense of high purpose, the PepsiCo empire is built on shifting sands. Over the course of the past half century, during which PepsiCo’s revenues have increased more than a hundredfold, a public-health crisis has been steadily growing along with it. People are getting fatter. In the nineteen-eighties, rates of obesity started to rise sharply in the U.S. and around the world. By the nineteen-nineties, obesity reached epidemic proportions. One study cited by federal health officials estimates that, in 2008, obesity cost the U.S. a hundred and forty-seven billion dollars in health-care charges and resulted in about three hundred thousand deaths.
Many studies point to the ubiquity of high-calorie, low-cost processed foods and drinks as one of the major drivers of this condition. Snacks, in particular, play a role in childhood obesity, which is growing even faster than obesity in adults. Americans consume about fifty gallons of soda a year, more than four times the average per-capita consumption sixty years ago. Americans also ingest about thirty-four hundred milligrams of sodium per day, twice the recommended amount; sodium has long been linked to high blood pressure. And the oils and fats used in some fried potato and corn chips elevate cholesterol and can cause heart disease. In other words, that great taste promised by PepsiCo’s brands, which relies heavily on sugar, salt, and fat, appears to be making some people sick, and its most devoted fans, the “heavy users,” as they’re known in the food industry, could be among the worst afflicted. Cutting short the lives of your best customers isn’t much of a strategy for long-term success.
by John Seabrook, The New Yorker (May, 2011) | Read more:
Illustration by Robert Risko
