Dr. Mehmood Khan, PepsiCo’s chief scientific officer of global research and development, said in his Tuesday morning keynote speech at the 2015 American Association of Cereal Chemists [AACC] International meeting in Minneapolis that if the industry continues how exactly it stands today, there will soon be 3.5bn hungry people across the world instead of the current 1bn.
The population is growing, he said, and it is the food industry’s job to come together and help solve the problem.
“There’s so much opportunity in our industry,” Khan told the crowd of food industry professionals, adding that self-reflection is an essential step that most of the industry seemingly has not taken yet.
“Are we willing to face it? Are we willing to challenge it and move forward?”
Growth via innovation
Khan said much of PepsiCo’s growth in recent years has come from innovation. The company, which has 22 $1bn brands, must always be looking at where it can go next. PepsiCo’s workhorse, carbonated soft drinks, has seen a steep decline in recent years, Khan said the company’s research and development department stepped back and said “Let’s rethink”.
In doing this, Khan said PepsiCo increased its R&D budget by 30% and “added a lot of new talent”.
“The net result of this was the following: By 2013, we had grown our net revenue from innovation to 8%. In 2014, it was 9%. That means there was $6.5bn coming from innovation,” he said. “Any decline in our signature brands was being made up for by innovation.”
Investing in innovation will need to happen industry-wide, Khan told the crowd.
“You guys are going to solve it,” he said. “We’re going to have to step out. If we can figure out ways of finding [new] varieties and grains, let’s imagine the future in the following way … What if we could create a variety that has higher protein levels that doesn’t require fortification? What if we could grow oats that had flavor notes where we didn’t have to add sugar? Or lower the amount of sugar we add?
“What if we could grow the oats in a manner that the healthy compartment is even more functional or expresses itself in a different way? All of these questions, we’re already working on.”
One area PepsiCo has been focusing on, Khan said, is composition. The company removed nearly a half-billion pounds of sugar from its US beverage business in 2012, he said, and has focused on removing salt from its snack products. Much of this goes unrecognized by the consumer, as the company does not want to make people think the taste of a product is different.
“Today, a single bag of Lay’s Potato Chips has less salt than a single piece of white bread,” Khan said. “That’s how far we’ve come, but we don’t tell it to the consumers …We believe and we’re committed to the fact that the future is different from the past.”
One thing that won’t change at PepsiCo is the use of GMOs and food technology, both of which Khan said are necessity for food to grow into the future.
“Wild corn, without modern technology, is about half the size of my pinky finger,” he said, showing his hand to the crowd. “If there are a billion people hungry today, how would it be if that was the corn we grew?”
Customers have the right to choose what they want to consume, Khan said, but it must be an informed choice. He believes most people will choose to eventually modern food trends in favor of food helped made possible by technology.
“Technology is part of our lives; we have to accept how to include it, not exclude it,” Khan said.
No choice but to grow
Although Khan said science is now less trusted than ever and has been “hijacked by media,” he also emphatically noted that society is depending on the food industry to create a greater volume of food, especially with natural resources diminishing.
“Do we really have a choice?” he asked the crowd. “If we do not change, consumers will leave us. Our brands will lose differentiation and market share. We’ll lose our ability to price, and on top of all of that, we’re losing consumers’ trust. When you put all of that together, there is only one answer: We’re going to have to innovate.”
“The world is depending on our industry to help feed our planet.”