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PepsiCo Inc., seller of sugared sodas and high-calorie snacks, is spending millions of dollars this year to test a program meant to encourage inner-city African-Americans and Latinos to eat healthier and exercise more, according to a report in The Wall Street Journal.
With net income of $4.1 billion last year on revenue of $32.6 billion, PepsiCo's is looking to keep sales up, while pushing sales of Baked Doritos, Baked Lay's and other snacks in selected Chicago markets.
Whether a giant snack and soda maker should proselytize for healthier diets -- or can pull off so contrarian a message -- remains a question within the company's Purchase, N.Y., headquarters and among critics. Beyond selling the idea to consumers, Pepsi must persuade skeptical salesmen, whose pay is driven by sales. Winning over store managers, accustomed to selling huge volumes of colas and salty treats, is even harder.
About 32 percent of all U.S. adults are obese, according to the federal Centers for Disease Control and Prevention. Obesity afflicts 45 percent of blacks and 37 percent of Mexican-Americans. In some of the neighborhoods Pepsi is targeting, more than 40 percent of children are overweight, according to the nonprofit Consortium to Lower Obesity in Chicago Children, the newspaper reported.
"We want to use Chicago as a lab to understand where should we play, as it relates to health and wellness. What can we do? What do we have a responsibility to do?" Steve Reinemund, PepsiCo's chairman, said. "This is also a key growth area at the intersection of business and the public interest."
Critics contend Pepsi's latest efforts are merely aimed at fattening its bottom line. For instance, they say baked snacks might be lower in fat and calories, but are still junk food. "Pepsi is shameless," Marion Nestle, professor of nutrition, food studies and public health at New York University, told The Wall Street Journal.
She says it stands out among food companies for touting marginal health claims to gain a business edge. "Are Baked Lay's really an improvement? Why not eat fewer potato chips?"
Pepsi's marketing machine, critics said, is a big reason Latinos and blacks are among the biggest consumers of sodas and snacks. African-Americans drink a disproportionately higher amount of Pepsi-Cola -- and less Aquafina bottled water and Diet Pepsi -- compared to other ethnic groups, according to research firm Information Resources Inc.
It says the average Hispanic is 27 percent more likely to buy Doritos and 64 percent more likely to buy Cheetos than a white consumer.
Matt Longjohn, executive director of the Consortium to Lower Obesity in Chicago Children, said Pepsi is moving in the right direction. "Is Pepsi contradicting itself on some level? Absolutely," he told the newspaper. "But that doesn't mean what they are doing is completely malicious." Pepsi's foundation recently gave the consortium $1.7 million for an obesity-prevention program.
Other food companies are also reaching out to minorities on health issues. This summer, Coke sponsored MegaFest, an Atlanta conference geared to African-Americans, during which it offered 100,000 attendees nutritional advice and aerobics set to gospel music, the newspaper reported. Kraft Foods Inc. has worked with the National Latino Children's Institute to develop a curriculum on healthy eating and exercise.
General Mills Inc. has collaborated with Black Entertainment Television Foundation to offer health information to African-American women.
Pepsi kicked off its Chicago test in January, at a meeting with 120 local managers at the House of Blues restaurant. Alongside the sales push, Pepsi said it planned to build playgrounds, hold seminars on nutrition and exercise and organize walks outside grocery stores.
Mike Zaidan, owner of the Sammy G convenience store, says his older customers are buying the baked chips. "Anything from Frito sells," he told the newspaper.
Pepsi declined to discuss sales performance in the Chicago test program, which will continue through next year. The company is encouraged that Smart Spot products are more available in chain stores. But cracking into smaller, independent stores has proven difficult, according to company executives.