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PepsiCo announces plans to stop sales of sugary drinks in schools worldwide

March 16, 2010 |  2:15 pm

PepsiCo Inc. plans to halt the sale of sugary drinks in schools worldwide by 2012, a move seen by some as a victory in the fight to curtail childhood obesity.

The Purchase, N.Y.-based soda giant, the world's second-largest soft-drink firm behind Coca-Cola Co., said in a statement Tuesday that it will pull sweetened, full-calorie drink from elementary and secondary schools -- and instead expand offerings of low-calorie beverages.

The news follows the company’s existing domestic policy, which was adopted in 2006. At the time, both PepsiCo and Coca-Cola agreed to replace sugary drinks in U.S. schools with healthier options such as water, low-fat or fat-free milk, juice without added sugar and low-calorie soft drinks.

Nooyi That shift came as academic researchers and consumer groups pointed to beverage companies and their sweetened products as being key contributors to the nation’s youth obesity problem.

More recently, the industry established a partnership with First Lady Michelle Obama -- who has pushed for U.S. kids to establish healthier eating habits -- to make labels more clear about a product’s calorie count.

So far, the self-enforced policy has been effective at keeping sugary drinks off the elementary and secondary school grounds, according to the industry’s American Beverage Assn.; the group’s research found that the number of full-calorie soft drinks heading into schools has plummeted 95% from 2004 to the first half of the 2009-2010 school year.

“We have long advocated for school settings to be made as conducive as possible to promoting the health of students, and we have programs under way with school authorities in several countries to do that,” PepsiCo Chairman and CEO Indra Nooyi said in the company's statement.

But the shift away from sugary sodas in schools is more of a public relations move for PepsiCo, and less a factor of losing market share with younger consumers, said Philip Gorham, an equity analyst with the research firm Morningstar. In some ways, he said, it could help bolster brand loyalty in the future.

Schools are “a small-market for them,” said Gorham, who covers PepsiCo. “But they know that consumer tastes are changing: if they can keep kids interested in their healthier forms of soft drinks, then that’s going to be profitable for the company down the line.”

PepsiCo said the plan was developed after company officials met with the World Heart Federation in Geneva to discuss concerns over youth health. The organization, described as a nongovernmental group that promotes the prevention and control of cardiovascular disease, said in a statement that it was pleased by the news and hoped other beverage companies would soon follow suit.

Company officials at Coca-Cola could not be reached for comment Tuesday about its future plans in this arena. But the Associated Press reported that the company said school authorities “should have the right to choose what is best for their schools.”

-- P.J. Huffstutter

Photo: PepsiCo CEO Indra Nooyi. Credit: Andrew Harrer / Bloomberg News