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Salt Crystals, Stevia, and the SunChips Bag: An Interview with PepsiCo's Derek Yach Salt Crystals, Stevia, and the SunChips Bag: An Interview with PepsiCo's Derek Yach

Salt Crystals, Stevia, and the SunChips Bag: An Interview with PepsiCo's Derek Yach

by Nicola Twilley
December 27, 2010

As the debate on the pros and cons of public investment in food design R&D draws to a close over at the Glass House Conversation website, I have been continuing to ask experts and eaters from a range of backgrounds to share their opinions about what food design can and should do.

As a result, you can read a Q&A with Paola Antonelli, the Senior Curator of Architecture and Design at the Museum of Modern Art, in which she talks about the impossibility of designing new pasta shapes, as well as the need for partnerships between artists and scientists; watch Marije Vogelzang explain her concept of "eating design;" and hear what PepsiCo's Senior Vice President of Global Health and Agriculture Policy, Derek Yach, has to say about agricultural subsidies, corporate R&D, and the infamous SunChips bag, before speaking your own mind about what sort of food R&D we should be doing in future, and who we want to be doing it.

FULL DISCLOSURE: GOOD partners with PepsiCo on the Refresh Project. Given the recent kerfuffle over ScienceBlogs' decision to host a corporate blog that was funded and written by PepsiCo, and in spite of the fact that editorial decisions at GOOD are made independently from the sales and special projects side of the business, I think it's important to explain upfront why I would want to talk with a PepsiCo representative about food design.

So here's why: Earlier this year, PepsiCo committed itself to reducing the salt in some of its biggest brands by 25 percent by 2015, and reducing the amount of sugar added to its drinks by a similar amount by 2020. This is a fundamental redesign of foods and beverages that are a daily part of most Americans' diets (for better or for worse), and it requires a significant corporate investment into food design R&D.

I wanted to hear from the horse's mouth, as it were, how PepsiCo thinks about food design as a way to achieve corporate and social goals, as well as what it thinks about the different responsibilities of governments and corporations in funding food design R&D.

Many of you will think that investing millions to make sodas and chips "less bad" is not the way to go, and that the money would be better spent subsidizing fruit and vegetable production, building urban farms, fixing school lunches, or any one of a number of possible options for improving the food system.

There's also a strong argument to be made that if PepsiCo cared more about public health than profit, they would not spend so much money opposing the taxation of soft drinks (Kelly Brownell of Yale University's Rudd Centre for Food Policy and Obesity has estimated that a penny-per-ounce excise tax would reduce consumption by ten percent; PepsiCo's CEO says such a tax would "hurt the relationship between business and government" and hinted it might move its headquarters out of New York when a soda tax made it onto the state's electoral ballot earlier this year). 

For myself, I wholeheartedly support soft drink taxation (although making such decisions at the state level, as tends to happen in the U.S., leads to all sorts of stupid inefficiencies). I also believe that food system reform is not a zero-sum game, and that grassroots activism, education efforts, policy changes, social justice initiatives, and corporate R&D all have a part to play in making our food healthy and environmentally sustainable. And even in my wildest dreams, I cannot imagine a scenario in which everyone has abandoned chips in favor of home-cooked whole grains by 2015, which means that PepsiCo's innovations have the potential to help millions of Americans improve their diet and lower their chances of heart disease.

Read what Derek Yach has to say, below, and decide for yourself.

GOOD: How is PepsiCo thinking about using food design to achieve its goals in the U.S., and also globally?

Derek Yach: There are design features all the way along the line, from the science-based issues around plant breeding or transgenic modification to achieve specific nutrient changes, all the way up to packaging and processing.

At the level of agriculture-environment interactions, we have to ask the tough questions about how we are going to source the commodities that are going to go into any food product in the coming decades.

We have actually designed a food system that may not be providing the best nutritional impact.

When you start looking at that level, you realize that we have actually designed a food system that may not be providing the best nutritional impact.



The U.S. system has been good at ensuring that there's no hunger in America, by and large, and it's been good at providing basic nutrients in a safe, secure way, by and large, for many decades. But now people feel that it isn't providing the diversity in the diet that's needed, that the limits of environmental resources are coming up very rapidly, and that we're going to have to rethink a lot of this at the systems and process level. That means a complete shift to the way we've been approaching landscape design, recognizing that by far the biggest impact on the landscape comes from agriculture.



You might say: What is a food company doing, worrying about that? The reason is that we know that water scarcity will mean that increasingly we will all be required to think very carefully about the nutrient value as well as the financial value of the crops we grow. Are we using scarce resources in the best possible way?

On the other end of the design spectrum, I think that food design, when applied to altering particular nutrients, has been going on forever. I would say that food design in that context is more akin to cooking.



Every aspect of these processes are now coming under greater scrutiny, to see whether they can be redesigned to provide environmental or human health benefits. We're finding that we can produce a healthier product by changing from saturated fats to a healthier sunflower oil. We've come up with ways that we can give people a perception of saltiness without them consuming sodium at levels that they wouldn't want to have in their bodies. 



PepsiCo was the first big multinational to have very clear nutrition criteria for just about every product line, and they translate into an enormous effort in redesigning our food processes.

Getting hold of healthy oils often means partnering with development agencies to start growing programs.

When you take sodium out, it's not just a question of just dropping it and keeping everything else the same—you've got to balance the seasoning, the flavorings, and everything else, to make sure the product comes out tasting as desirable as it was in the first place.

When you change oils and fats, you have to actually change your whole agricultural procurement program. Getting hold of healthy oils often means partnering with development agencies to start growing programs, which is something we're doing in Northern Mexico with sunflowers.

On the sugar side, which is obviously a big issue in our beverages, we're having to develop new technologies to detect natural sweeteners. Then when we find them, as in the case of stevia, we have to ensure that enough is being grown to provide us with a product line.



The point in the process where people are probably most conscious of design is in the final product, in terms of its packaging and marketing. That's an area where we've made great progress and we've made a few mistakes. You probably saw the SunChips story, where we designed for sustainability by creating a package that would decompose within twelve weeks in the ground. The only problem was that it made an almighty noise when you opened it!

GOOD: What is it that you think a transnational corporation is better positioned to do, in terms of redesigning food, than a government or individuals, and what should it be responsible for doing?

Yach: It starts with asking: What is the underlying value of companies and what's their responsibility in society? The reason that I'm happy to be at PepsiCo is that our CEO and our chief legal officer have concluded that, because as a corporation, we're given our license to operate forever, we have a legal responsibility to make sure that we are stewards of the environment from which we source our products from, and to do the best we can do in terms of the health of our future consumers, since they are the future consumer base of the company.



Once we've said that, it immediately translates into our roadmap for what we should be doing as a company.

In terms of government's role, what struck me coming into business from public health is that the incentive systems for us to do the right thing are often not aligned the way they should be. So, for example, governments and consumers want us to do a lot more to lower sodium consumption and increase consumption of fruit and vegetables. If government was a good partner, what would it be doing to make it easier for companies to do the right thing for business and society? On the sodium side you'd expect that there would be a large investment in the noncompetitive research required to lower sodium across the board, whereas in fact there is virtually no funding in that area.



On the fruit and vegetable side, you've probably seen Michelle Obama and many others calling for increased fruit and vegetable consumption across the U.S.. The reality is if people were to consume at the level that she wants, the U.S. would have to double its acreage of agricultural land and government would also have to think very carefully about how it places agricultural subsidies to shape what farmers grow.

The incentive systems for us to do the right thing are often not aligned the way they should be.

That's in sharp contrast to the way government and the pharmaceutical industry interact. The National Institutes of Health, which funnels $30 billion dollars of public money into basic research, is doing the non-competitive research that allows pharmaceutical companies to then innovate off a base of solid, basic science. That doesn't exist for the food industry.  

GOOD: What do you think is stopping government from incentivizing non-competitive research and from realigning the subsidy program?

Yach: It's very easy to point blame at any one or two people or institutions, but I think the real problem is the general underinvestment in agricultural research that we've seen since the seventies.

What has happened over these last few decades has been the growth of dependency on a subsidy structure that was created to ensure that nobody starved in America, as opposed to our current focus on how you can enhance nutrient quality and diversity in America.

I don't think it's farmers who are resisting change. I think they would support a realignment of incentives that moved them toward diversified crops and a stronger focus on nutritional quality, provided it was sold to them in an incremental way. The thing about farming is that it's a very long-term endeavor, often intergenerational, and you can't change people from one crop to another and expect that you're not going to have serious dislocation.

GOOD: If you were in charge of reshaping government spending and policy, at least in the U.S., how would you go about investing in non-competitive research?

Yach: I'd probably recommend taking a narrow perspective and focusing on the big challenges that we face on the food side—not the agriculture and plant side, because I think there's a broader set of issues there. On the food side, I think the two priorities are lowering sugar in beverages and lowering sodium across the food supply. Of course, alongside them, a lot of the marketing things need to happen—consumer education, smaller portion sizes, and so on. But sodium and sugar specifically lend themselves to an NIH-type of investment in a wide range of approaches that bring together the cutting-edge knowledge we now have on taste, flavor, and texture.



GOOD: What is the benefit of having that research happen in a publicly-funded environment, as opposed to individual corporations simply pursuing it in-house.

Yach: First of all, I think it speeds up the process. A mixture of private investors and public investment generates a sort of healthy competition. Look at the race for the human genome, for example.

The second big benefit is that what comes out of basic research funded by the public sector is licensed in the public domain.

Why can't we have the same consortia approach of corporations partnering with the public sector to accelerate progress on sugar and sodium issues?

We now have examples of consortia in the pharmaceutical industry, linking together the private and the public sector to try and tackle Alzheimer's together, to accelerate the progress. Why can't we have the same consortia approach of corporations partnering with the public sector to accelerate progress on sugar and sodium issues? I think that what it takes is the recognition that a food-based approach to health is a more desirable route for the long term than a medication-based approach.

GOOD: Finally, could you give two specific examples of food-design initiatives that have happened while you've been at Pepsi—one that has been a success and one where perhaps you've hit roadblocks?



Yach: One of the successes we've seen in the last eighteen months is Trop 50—Tropicana with 50 percent of the sugar. It went from not existing at all, through enormous internal resistance initially to idea of fiddling with the natural structure of orange juice, to now being a major multi-million dollar brand that meets the needs of people who want to have a good quality juice without the calories.

On the less successful side, we launched True North, which is a fantastic range of nut and seed clusters that really has not grown as fast as one wants. I think that the problem was to do with the match between our distribution system, and what is a relatively small new product in this giant portfolio of ours. As we start seeing the integration of our bottlers into the business, there will be much greater flexibility that will allow us to take a wider range of smaller start-ups onto the shelves much faster than has been possible in the past. That's where I think the future will probably lie.

IMAGES: (1) Satellite agricultural imagery via Satellite Imaging Corporation; (2) salt crystals; (3) sunflowers; (4) stevia; (5) compostable SunChips bag via Brand Sundae; (6) photo (cc) by Flickr user Erica Hampton; (7) "Don't Drink Yourself Fat" advertising campaign by the NYC Department of Health and Mental Hygiene; (8) advertising for Trop 50.

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