Opinion: PepsiCo’s Investment Does More Harm Than Good
by Amit Srivastava
India Resource Center
December 2, 2013

*An edited version of this opinion was published by The Economic Times on November 30, 2013.

PepsiCo’s announcement that the company will invest another $5.5 billion in India by 2020 – to manufacture and sell more junk food to Indians – does not bode well for the long term public health of the country.

India is a developing country with many genuine development needs, and meeting some of these needs requires investment. However, the manufacture and consumption of more junk food such as potato chips and high sugar beverages – PepsiCo’s portfolio – does not bring development.

In fact, quite the opposite.

The large scale consumption of junk foods has created a public health crisis in a number of countries as more and more people globally become obese and are affected by obesity related diseases such as diabetes, high blood pressure and heart disease.

The financial and social costs of an obesity epidemic and the resulting health problems are enormous.

For India, a growing obesity problem is sure to further burden an already overstressed and under-funded public health system in India, as well as adversely impact the quality of life of millions.

More junk food is not something India can afford, nor should it encourage.

Although India lags behind many other countries when it comes to the consumption of junk food, policy makers must learn from the experiences of others when it comes to junk food so that decisions regarding investments can be made judiciously.

The United States, one of the largest consumers of junk food, is also one of the most obese countries in the world. Ten years ago, the US Surgeon General characterized childhood obesity in the US as an epidemic and squarely laid the blame on unhealthy eating habits and lack of physical activity.

Things have undoubtedly gotten worse. In a remarkable opinion in 2010, two top retired US Army generals labeled childhood obesity as a threat to national security because “27 percent of all Americans ages 17 to 24 – were too overweight to serve in the military.” The generals called upon Congress to pass legislation that would, “Get the junk food and remaining high-calorie beverages out of our schools.”

And in recent findings that must give us pause, for the first time in modern history, children born today in the US are likely to live shorter than their parents – because of obesity.

Surely this is not progress. India must take heed and commit to not going down the same path.

In the US, and generally in the industrialized countries, the consumption of soft drinks are on the decline as consumers become more aware of the negative health impacts of junk food such as those sold by the likes of PepsiCo, Coca-Cola, Nestle and others.

City after city in the US is trying to introduce higher taxes on high sugar beverages in order to pay for the increased health costs and deter consumption. School districts across the US have removed junk food and high sugar beverages from the reach of children. Such initiatives, including a recent one in New York city to restrict “supersized” drinks, are being met with a well-funded beverage industry lobby.

However, it is only a matter of time before high sugar beverages and other junk foods are regulated and taxed – both to pay for the public health costs associated with their consumption as well as to curb their consumption, particularly by children. This is similar to the manner in which the tobacco industry has been regulated in the US and other countries, with significant success.

Attempts to regulate and rein in junk food are not isolated to the industrialized world alone.

Mexico is arguably the most obese country in the world. Not coincidentally, Mexicans are the largest consumers of Coca-Cola in the world.

Mexico just passed a sugar tax just last month, a one peso per litre tax, to curb the consumption of sugar beverages. Mexico also passed an 8% junk food tax on products such as candies, chips and high-calorie foods.

The US Food and Drug Administration, also last month, has taken action to completely remove trans fat from food products in the US because of health reasons.

So while there is a growing movement globally to regulate, tax and generally limit the intake of junk food, including in the US where PepsiCo is based, the Indian government’s move to welcome such a substantial investment by PepsiCo in junk food is indeed perplexing.

The Indian government’s consent to PepsiCo’s investment seems to be driven by a blind faith that any and all foreign investment is the panacea to the challenges being faced by the nation.

In this instance, unfortunately, the policy makers are also blind to the massive repercussions of allowing such an investment. PepsiCo’s investment in India will cost the nation more than it is worth.

Amit Srivastava is a California-based activist with the India Resource Center, a group working on corporate accountability.




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