Food & Beverage

PepsiCo takes its vending brand Hello Goodness online to woo consumers who want healthier snacks

Key Points
  • PepsiCo is expanding its Hello Goodness brand of better-for-you snacks online.
  • Hello Goodness curated boxes are available on Amazon.
  • The Hello Goodness umbrella includes products such as Sabra hummus, Sun Chips and Pure Leaf iced tea.
A PepsiCo Inc. employee delivers beverage products to a ShopRite Holdings Ltd. grocery store in Stratford, Connecticut.
Paul Taggart | Bloomberg | Getty Images

PepsiCo is betting a better-for-you brand will attract shoppers online.

The company's Hello Goodness brand has been a big win for PepsiCo's vending business. Since being introduced in 2015, the brand has helped promote PepsiCo's more health-conscious brands, including Sabra hummus, Sun Chips and Pure Leaf iced tea. The vending machines have attracted new customers and boosted revenue.

In one study, Hello Goodness machines lifted revenue in the entire vending bank, which might also include traditional machines, by 59 percent, according to PepsiCo. In another study, the annual revenue growth of adding a Hello Goodness machine to a vending account was 12 percent, and 96 percent of that growth was incremental.

The hope is the Hello Goodness brand will do the same online and with other emerging technologies.

Food and beverage companies are trying to stay relevant as people ditch packaged foods and sugary drinks. They're trying to find new ways to drive impulse purchases, which are increasingly at risk as people spend less time in stores and more time shopping online, where it's harder to introduce someone to a new brand or flavor.

PepsiCo CEO Indra Nooyi has touted the company's e-commerce efforts, which include using big data and predictive analytics to sharpen real-time marketing messages, dynamic merchandising and tailored offers.

"As a result, our e-commerce business is now approximately $1 billion in annualized retail sales, and we are well-positioned to capitalize on what is sure to be a dynamic future in this space," Nooyi told analysts on an earnings call earlier this month.

Hello Goodness is just one small piece of this e-commerce picture. PepsiCo conducted a Hello Goodness store test on Amazon in September that included a curated selection of products within the portfolio. It performed nearly 45 percent better than similar PepsiCo campaigns in terms of sales and return on investment for advertising, the company said.

Consumer engagement with Hello Goodness ads more than doubled PepsiCo's benchmark for bringing in new Amazon Subscribe and Save Members. This service allows Amazon shoppers to schedule automatic deliveries of the products they want.

PepsiCo's latest test is selling boxes filled with 30 products from its Hello Goodness lineup such as Baked Ruffles and Simply Cheetos Puffs. The company plans to use the platform as a lab to see how products are resonating with consumers. They can sample new products and track whether sales of items included in the box increase.

What the consumers get is the knowledge that all the products in the boxes meet PepsiCo's nutritional standards for the Hello Goodness brand, such as the snacks being baked with lower fat content or containing whole grains.

The company's still finalizing its plan to promote the Hello Goodness boxes, but its options include running banner ads on Amazon, as well as targeting keywords related to the box and its products. That way when consumers search certain words, the Hello Goodness-branded box will come up as a suggestion.

If successful, PepsiCo may evolve the Hello Goodness boxes into a subscription model.

Subscription models, like Birchbox for beauty products and Blue Apron for meal kits, are becoming increasingly popular with companies and consumers alike. Even traditional retailers like Target and Walmart are hopping on the trend, which previously had been occupied by start-up brands. One advantage boxes have is the subscription can provide a more predictable stream of revenue.

But for consumers, it's all about convenience.

"The whole ease of today's meal kit delivery services, it allows consumers to sample new products from our food and beverage portfolio and know that they're going to be healthier and better for you and can serve these snacking occasions," said Anne Fink, PepsiCo's president of global foodservice.

A large chunk of beverages and snacks are impulse purchases. PepsiCo, rival Coca-Cola and other consumer goods companies will need to figure out how to convince consumers to buy their products as they shop more online and less in grocery and convenience stores.

Fink sees possibilities for robots to one day deliver products on demand and for self-driving cars to cater to students as requested on college campuses. Of course, those plans may take years to put in place, depending on how quickly the technology develops.

Ford this week announced a limited test it's doing in Miami with Domino's and delivery service Postmates of how consumers interact with autonomous drive delivery services.

"We want to be testing and engaging and adopting new technology and continue to try new things," Fink said.