PepsiCo says it's going to lessen the sugar in its sugary drinks.
PepsiCo chief executive Indra Nooyi said Monday that at least two-thirds of the company's beverages will contain 100 calories or less per 12-ounce serving by 2025. Nooyi said the beverage giant will focus on selling more low- or zero-calorie products. Advances in technology and artificial sweeteners are creating soft drinks that better duplicate the taste of sugary drinks but with fewer calories.
"So we're now faced with [an] interesting opportunity to step the consumer down to lower sweetness levels," Nooyi said in an interview with CNBC.
PepsiCo, based in Purchase, N.Y., still makes a significant amount of its $5.45 billion in annual profit from sugary drinks. The company sold $63 billion in food and beverages across 180 countries in 2015, including its flagship Pepsi brand as well as Diet Pepsi, Gatorade, Mountain Dew, Aquafina, Tropicana and a host of snacks including Lay's, Doritos and Ruffles.
Nooyi's announcement comes as sugary drinks continue to come under fire from nutritionists and from politicians who want to tax the soft drinks as a way to address health problem such as diabetes, obesity and tooth decay, especially among children. Former New York City Mayor Michael R. Bloomberg tried to limit the size of soft-drinks in 2012. The ban was rejected by the New York State Court of Appeals on the grounds that the city's health board did not have the authority to impose such a cap.
San Francisco's Bay Area is trying to slow consumption of sweetened sodas, tea and sports drinks by adopting a tax. San Francisco and Oakland have ballot measures to tax soda that will be voted on in November. Only Berkeley and Philadelphia have imposed similar levies, and the American Beverage Association is suing to prevent the Philadelphia tax from taking effect in January.
Fortune magazine reported earlier this year that overall sales of carbonated soft drinks in the United States have dropped 11 consecutive years.
David Ludwig, a professor of nutrition at Harvard's T.H. Chan School of Public Health, called Nooyi's announcement "a step in the right direction." But he added that "the soft drink industry has a long and sorry history of responding only to quell public outrage and delay government regulation.
"Sugary beverages are the single, most harmful component in the food supply today. Demand for it is driven by a massive marketing campaign, all too often directed at children and vulnerable populations," Ludwig said.
Lawrence A. Soler, president of Partnership for a Healthier America, an advocacy group focused on childhood obesity, lauded PepsiCo's 10-year plan.
"While much work remains for all of us fighting to help children grow up at a healthy weight, we believe today's announcement represents a positive step for PepsiCo and we hope that other industry leaders will take similar steps," Soler said.
The soda industry is trying to retain customers by selling beverages in smaller cans and bottles, which can be more profitable than larger sizes.
Marion Nestle, a professor of nutrition at New York University, said she endorsed the idea of smaller portions.
"They are going to promote small cans, which they can charge more for," said Nestle, adding that PepsiCo's past efforts to "go healthy" displeased investors. "I'm in favor of small cans. That's a step forward if it works. But if their bottom line drops, they will drop this, too."
Nooyi also told CNBC that the company was trying to also reduce sodium in products, including snacks sold by the Frito-Lay division.
"By applying the seasoning differently, we can actually still make it a salty snack, but with lower sodium levels, and that's what we have managed to do with. . . our products in countries like the U.K. and China, where we've reduced salt levels significantly," she told CNBC.