How One Man Tried To Slim Down Big Soda From The Inside

By Dan Charles

Published January 28, 2013 at 2:31 AM CST

PepsiCo's product line ranges from salty chips and its sugary namesake drink to more healthful fare like hummus and yogurt. In 2010, the company announced plans to cut sugar, fat and sodium in its products to address health and nutrition concerns.

Many big food companies are caught in a dilemma these days. They want to rebrand themselves as merchants of health — Coca-Cola's new anti-obesity ads are just the latest example — but many of their profits still come from products that make nutritionists scowl.

If there's one person who symbolizes this tension, it's Derek Yach.

A decade ago, Yach, a soft-spoken doctor from South Africa, was building a reputation as a thorn in the side of the global food industry.

He was working at the World Health Organization in Switzerland, leading the WHO's new effort to take on health problems that come from smoking or from unhealthful diets.

Among the academic experts who got to know Yach during those years was Marion Nestle, a nutrition professor from New York University. "He was putting enormous pressure on food companies to stop marketing junk foods to kids," she recalls. "I saw him as someone who saw the food industry as an enormously destructive force in public health."

But Nestle may have misunderstood Yach. Yach himself says that food companies were never the enemy.

The strategy for dealing with the food industry, he says, was very different from his tactics for fighting tobacco. The anti-tobacco formula was simple: "Demonize the industry. Tax it through the roof. Ban all forms of marketing."

But you can't get the same results with sugary soft drinks, he says. If you tax them heavily enough, you can drive consumers away from those products, "but that doesn't mean you solve the obesity problem. It all depends on what they choose as that alternative."

With food, there's always an alternative — another sugary product on the shelf.

Food companies create this universe of options, which is why Yach felt that he needed to talk to those companies, draw them in, persuade them to offer consumers better alternatives.

But he says he never, ever, thought he'd actually go work for one of those companies until one day in 2006. He'd left the WHO and was working at the Rockefeller Foundation in New York. He got a call from Indra Nooyi, who had just been named CEO of PepsiCo.

"She had the most powerful vision of how she wanted to transform the company," he recalls.

PepsiCo sells Pepsi, of course. And Mountain Dew, Frito-Lay chips, Doritos, Cheetos, and Cap'n Crunch. But PepsiCo had also picked up Tropicana orange juice and Quaker Oats. In fact, Nooyi wanted to transform the company's entire product line. "Her vision was very clear. There was an opportunity to turn this into the healthiest food and beverage company in the world."

She wanted Yach inside the company, pushing everybody toward that goal.

He took the job. He felt like he had to.

Nestle — and a lot of other former allies in the public health community — were stunned.

"I couldn't believe it," she says. "I was really astounded. I mean, it's not like he went to work for a company that's selling carrots! He went to work for a company that's selling sugar water!"

With that choice, Yach became the symbol of a very controversial idea: that companies like Pepsi can be part of the effort to get people to eat better.

Yach stayed at Pepsi for almost six years. He left a few months ago.

While he was there, he says, he pushed for changes in some of the company's products to make them more healthful, like potato chips with less salt and fat, and beverages with little or no sugar in them.

He got very different reactions to this idea in different parts of the company. Some took it almost as a personal attack.

"People very much loved and believed in their brands. They couldn't believe that there could be anything wrong [with them] or that they should be reducing the way that they market or sell these delightful, tasty brands," he says. But Yach stuck to his guns. "I said, 'We've got to change our marketing strategies. We've got to lower salt, sugar, fat,' repeatedly, over and over."

The food technologists, on the other hand, became Yach's allies. They took on the challenge of making a low-sodium snack that still tastes salty or a soda that's sweet without the calories. This is true throughout the food industry, Yach says. "There are pockets of people who are spending their entire lives trying to reformulate as fast as possible."

PepsiCo has, in fact, adopted some ambitious long-term goals for cutting salt, sugar and fat from its products.

But when it came to making changes right now — launching new products, putting marketing muscle behind them, changing recipes — Yach's goals ran into the limits of what the company was prepared to do.

Executives often got cold feet, because all of those things cost money. And pulling full-calorie Pepsi off the shelves certainly wasn't an option.

"You can't just withdraw from markets. That would simply be giving up market share to a competitor. That wouldn't be permitted by a shareholder," Yach says.

Despite all that, and even though he's no longer a PepsiCo employee, Yach remains convinced that companies like PepsiCo can, in fact, help people change their diets for the better.

He points out that PepsiCo is cutting salt from its products. It's selling a lot more reduced-calorie beverages. And it's now in the hummus and yogurt business.

The change isn't happening as fast as Yach would like, but it is happening, because it's good business in the long run, he says. People's expectations are changing. The arc of history, as he puts it, is pointing food companies toward more concern for health.

Nestle, though, thinks Yach is well-meaning but naive. PepsiCo hasn't changed that much, she says. The company's sugary soft drinks are still adding to obesity worldwide.

In fact, she says, Yach actually has hurt the cause of public health by giving the company more credibility. "He was a much greater asset to Pepsi-Cola than Pepsi was to him, or to public health."

Yach has moved on now, to a company called the Vitality Group. It's part of a health insurer in South Africa.

The Vitality Group finds ways to pay people to do healthful things like eat more fruit and vegetables or exercise. It makes money doing this, because it then has to pay fewer medical bills.

This is an industry, apparently, that really can capture profits by promoting better health.