BRICs and beyond: PepsiCo's health drive in Mexico
PepsiCo plans to launch healthier snacks in Mexico to meet laws targeting obesity - and use its investment there as a base to sell the products further afield.
The US company, which accounts for 20% of Mexico's cookies and crisps sales, has lined up US$300m of investment in its local business this year. A reshuffle of its snacks business in the country means PepsiCo is developing new functional products and is building a new "baking innovation centre". The company hopes the facility will help it to develop functional snacks for sale in Mexico and export to Latin America and Asia, according to Francisco Merino, vice president of legal and corporate affairs for PepsiCo Mexico.
The centre has cost $20m to build and is scheduled to open in the fourth quarter. It will develop healthier snacks under PepsiCo brands Quaker (the company sells Quaker snack bars in Mexico) and under Gamesa, which is the country's leading cookie brand.
"It will be a research center of new healthier product prototypes for Gamesa and Quaker products that will have lower sugar and fats and a longer shelf life," a spokesperson for PepsiCo Mexico says.
PepsiCo also wants the facility to be a "center of excellence" for the production of new healthier cookies globally. "PepsiCo doesn't have a strong cookie brand so Gamesa in Mexico is ideal," the spokesperson adds.
The centre will test and produce new Quaker cereal-bar product formulas, such as those containing as much as eight grams of oatmeal and under 100 calories. It will also develop Gamesa cookies fortified with calcium and iron, added whole grain, fruit and other functional ingredients.
"There is going to be a big investment to change ingredients," Merino says. One such effort will be using high oleic oils like sunflower seed instead of palm oil to make the new snacks. "They will have significantly less sodium, fat and sugars," he explains.
As part of its functional-foods drive, PepsiCo recently launched a baked, "healthier" Quaker snack bar in Mexico called Stila, which contains under 90 calories. It also introduced a chewy granola bar with eight grams of oatmeal, fewer calories and lower fat and sugar.
Merino says PepsiCo will continue to roll out healthier products to meet obesity guidelines and growing demand for good-for-you products in Mexico. "We hope to introduce more of these products for our Gamesa and Quaker portfolio that will have new and more functional ingredients in the coming months." He says products will contain significantly less sodium, fat and sugars than PepsiCo's existing portfolio.
PepsiCo was one of the first food firms in Mexico to withdraw high-sugar and calorie snacks and soft drinks from schools last year to comply with phase one of an aggressive government campaign to keep such products away from children. Mexico has the highest number of obese kids in the world and the second-largest population of obese adults.
According to Merino, PepsiCo also exceeded product guidelines that formed part of the second phase of the Mexican government's campaign and is on track to do the same with phase three, which starts in the August 2012 back-to-school season. "Our new school portfolio has 44 products and 40 already meet Phase 3 so we are already ahead of our competitors in this regard," he says.
School products include 130-calorie baked extensions of its Sabritas potato chips, Doritos and Ruffles snack brands that have 30-35% less fat than traditional varieties, PepsiCo says. The reduced-calorie Sabritas are made in the company's facility in Mexico City, where it hopes to continue churning out new, healthier lines of salted snacks.
PepsiCo's Mexican unit exports Gamesa and Quaker products to the US, to South America and to countries further afield including Spain, Russia and the Philippines. When the Monterrey plant opens, PepsiCo hopes to increase sales of new and healthier products to Latin America and Asia, particularly south-west Asia, Merino says.
He is quick to point out, however, that PepsiCo Mexico will continue to produce its traditional products. "We want to give consumers the option to choose any product they want depending on their lifestyle choice so we will continue investing in our traditional portfolio," he says.
And that "lifestyle choice" in Mexico increasingly means healthier and functional food products, where the market is taking off, thanks in part to the country's anti-obesity campaigns and efforts to promote healthier lifestyles.
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