By the end of 2012, innovation from products launched in the past three years accounted for about 8% of PepsiCo’s net revenue.
Going forward, Indra Nooyi, PepsiCo’s chairman and CEO, intends to continue to leverage R&D to help the company develop more breakthrough innovation that delivers true incremental growth and is sustainable.
One way the company is doing this is by shifting its portfolio to growth areas. It has invested behind its brands to build on its strength and connect with consumers in ways that drive sales, said Nooyi.
“We’ve built a pipeline of product, packaging and equipment innovation that’s as strong as I’ve ever seen and is already delivering incremental revenue,” Nooyi told SN. “And everything we do is underpinned by an unwavering focus on in-store execution.”
PepsiCo is particularly focused on good-tasting nutrition products. It created a Global Nutrition Group to drive innovation and brand development. Among the recent results: PepsiCo has built on the strong positions of brands such as Quaker, Tropicana, Gatorade and Naked Juice to expand its global nutrition business.
For instance, it drove its growth in the hot-cereal category with the launch of Quaker Real Medleys, which pairs oatmeal with other whole grains, fruits and nuts in a portable cup and portion-controlled serving.
It also launched Pepsi NEXT, a cola with 60% less sugar.
Likewise, the company introduced Tropicana Farmstand juice, which provides a serving of both fruit and vegetables in an 8-ounce glass, and Gatorade Prime Energy Chews.
“We’ve seized the growth opportunity in nutrition by further expanding our portfolio into attractive new categories,” Nooyi told SN.
Take the Muller Quaker Dairy, a just-opened Batavia, N.Y., yogurt manufacturing plant that’s the result of a joint venture between PepsiCo and German dairy company Theo Muller Group.
While Muller yogurt has been available in certain geographies in the U.S., the new plant will enable national distribution across the country.
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Another example is PepsiCo’s partnership with Israeli food and beverage Strauss Group. Since 2008, PepsiCo and Strauss have operated a joint venture in North America called Sabra Dipping Co. to market Sabra-brand hummus, dips and spreads in the U.S.
The companies expanded their relationship in 2011 by focusing on markets outside North America.
In April, Sabra opened an R&D facility in Virginia that includes a culinary center, research laboratory and ideation space.
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