PepsiCo’s chief executive officer, Indra Nooyi, is often cited as one of the most influential women in business. But her impact stretches far beyond Wall Street.
In addition to beefing up PepsiCo’s bottom line with acquisitions of natural, organic and better-for-you brands, Nooyi is transforming the “junk food” reputation of soft drink and snack categories while helping to shrink consumers’ waistlines.
“We’ve accomplished this transformation by reformulating our existing products to make them healthier — for example, by eliminating trans fats altogether, and switching to healthier ingredients like heart-healthy oils,” said Nooyi during a speech delivered during the Food Marketing Institute’s Midwinter Executive Conference in January. “We’ve also focused on growing new products, such as baked snacks and diet drinks; and Flat Earth, which contain a half serving of fruits or vegetables in every ounce of crisps; or G2 is a half-calorie Gatorade.”
Today, about 45% of PepsiCo’s product portfolio is “good for you” or “better for you,” and it’s well on its way to achieving 50% or more by 2010, according to Nooyi.
The company recently positioned its portfolios for growth by partnering with the Pepsi Bottling Group to acquire Lebedyansky, the largest juice company in Russia. Earlier this year it acquired V Water in the U.K., and introduced True North nuts in North America and Tropicana juice drinks in China, India and the U.K.
John Sicher, editor and publisher of Beverage Digest, Bedford Hills, N.Y., has known Nooyi for years.
“She is a truly brilliant strategist,” he told SN. “I think her vision for PepsiCo is to make it into the leading global consumer products company in the world over the next five or 10 years. She’s got very strong businesses as a foundation for that.”
Nooyi’s first full year as CEO (2007) was marked by a 12% increase in revenue to $39.5 billion, driven in part by double-digit growth in Dorito and SunChip snacks. Despite higher commodity costs, PepsiCo was also able to deliver 13% revenue growth during the first quarter of 2008. It was spurred by PepsiCo’s billiondollar brands, including Lay’s, Mountain Dew and Pepsi.
“Each of our operating divisions had positive results, and we’re pleased with the performance of the total portfolio,” said Nooyi.
In order to maintain the momentum, Nooyi will have to address the impact of higher energy costs on PepsiCo’s bottlers, as well as fight private- label encroachment in salty snacks, said Bill Bishop, president of Willard Bishop, Barrington, Ill.
“So much of the company depends on Frito-Lay’s performance,” he said of the division responsible for 29% of the company’s revenue in 2007. “Historically, there wasn’t much private label [in salty snacks]. Target and Costco — particularly Target — have innovated and driven privatelabel share in the salty snack category that’s way above the norm.”
Sicher noted that Nooyi’s appetite for growth through acquisition will serve the company well.
“She’s very good at understanding businesses and how they fit together, and where synergies are, and how to leverage assets on assets, and where vectors for growth might be.”
— GEORGE ELLIS