This is counterculture from the underground. (lafinjack) wrote in ontd_political,
This is counterculture from the underground.

PepsiCo Inc. is betting that consumers want to "snackify" drinks.

As part of its strategy to tap into the market for more nutritious convenience foods, the company is hoping people will pay a premium for a new pureed fruit product that it considers thick enough to be a snack rather than a beverage.

Tropolis, an 80-calorie fruit puree, which comes in brightly colored pouches, will be marketed to moms and kids. PepsiCo's Tropicana unit is rolling out apple, grape and cherry Tropolis pouches in test markets in the Midwest next month, at $2.49 to $3.49 for a four-pack.

It's not clear how profitable a niche product that is more complicated to produce and distribute than juice will be for the food and beverage giant, whose shares have been underperforming U.S. rivals Coca-Cola Co. and Dr Pepper Snapple Group Inc.

Coke and Dr Pepper have no significant food business and have made bigger bets on soda, which is by far the industry's most profitable product.

PepsiCo is best known for its namesake cola and Lay's potato chips, part of its "fun-for-you" (Doritos, Mountain Dew) and "better-for-you" (Baked Lay's, Diet Pepsi) portfolios, which make up $50 billion of the company's $60 billion in revenue.

But Chairman and Chief Executive Indra Nooyi is staking her reputation on building out the company's "good-for-you" portfolio, uniting the Tropicana, Quaker and Gatorade units under one umbrella and expanding their product lines. Ms. Nooyi has said she wants to build the nutrition business to $30 billion from $10 billion by 2020.

To that end, PepsiCo announced earlier this month it would buy Russian dairy and juice-maker OAO Wimm-Bill-Dann in a deal valuing the company at $5.4 billion. "We see the emerging opportunity to 'snackify' beverages and 'drinkify' snacks as the next frontier in food and beverage convenience," Ms. Nooyi said. She cited examples such as kefir, a sour, yogurt-like drink that is popular in Russia and that some say aids in digestion. She said she expects to see dairy products mixed with juice, grains, fruits and nuts, all of which PepsiCo markets.

Mehmood Khan, a former Mayo Clinic endocrinologist who heads PepsiCo's nutrition group, said in an interview that it's outdated to think that snacks are dry and beverages are wet.

"Consumers don't wake up in the morning and say, 'I'm going to have a whole grain; I want a dairy product,'" Dr. Khan said. "They're looking for combinations of those things." Dr. Khan wouldn't specify what combinations might come next.

The researchers who developed Tropolis said they worked closely with moms and kids to tweak the texture so that it would flow through the tear-off opening. They also played with the mix of juice and puree to achieve the desired thickness without adding gums or starches. Ingredients include apple puree, filtered water, banana puree concentrate and three other kinds of fruit concentrate.

Marion Nestle, a professor of nutrition at New York University, said that the fruit concentrates are simply sugar. "They start out with real food, so let's give them credit for applesauce and mashed-up bananas," but "the rest of it is sugar," she said. "Kids would be better off eating an apple or a banana."

PepsiCo said Tropolis should get kids to eat more fruit, which is what's most important.

PepsiCo already sells a refrigerated smoothie under its Naked Juice line, as does Coke under its Odwalla line. Coke sells a squeezable fruit in Russia called Multon Rich Fruit Mix pouches, marketed to adults as meals on the go. Coke wouldn't comment on any expansion plans.

France's Groupe Danone SA has sold drinkable yogurt in the U.S. for more than six years. The U.S. market for yogurt has doubled in the past 10 years, largely because of the interest in products such as portable yogurt in a tube, according to General Mills Inc., makers of Yoplait and Go-Gurt.

In the U.S., a big maker of so-called squeezable fruit is Peter Rabbit Organics, a closely held British firm with products in more than 8,000 outlets, including 6,000 Starbucks Corp. coffee shops. "They're portable, they're squeezable so they're fun for children, but you can chuck them in bags or your purse," said Peter Rabbit managing director, Ben Ford, in an interview. "It's been very easy to have drinks in the past but now you get the fiber as well." Peter Rabbit's fruit pouches don't contain fruit concentrate or water. They are purees of mangos, strawberries and other exotic fruits. "It's more than your standard applesauce," Mr. Ford said.

Dr Pepper Snapple, makers of Mott's juices and applesauce, said it has considered making a squeezable fruit product but has no immediate plans to launch one.

Wall Street Journal
Tags: corporations, food, science, technology / computers

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