PRESTIGE INSTITUTE OF MANAGEMENT AND RESEARCH,INDORE

A presentation

on

Indra Nooyi’s decision of

Transforming PepsiCo’s product portfolio from Fun- food to

Health-Food

Submitted By:

Ashwini Singh

Top Global Brands

Fun For You

Better For You

Good For You

About PepsiCo

PepsiCo,  an American multinational food and beverage corporation  Inc. was established through the merger of Pepsi-Cola and Frito-Lay.

Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, N.C. pharmacist.

Frito-Lay, Inc. was formed by the 1961 merger of the Frito Company, founded by Elmer Doolin in 1932, and the H. W. Lay Company, founded by Herman W. Lay, also in 1932.

Major products of the new companies are: Pepsi-Cola Company: Pepsi-Cola (formulated in 1898), Diet Pepsi (1964) and Mountain Dew (introduced by Tip Corporation in 1948). Frito-Lay, Inc.: Fritos brand corn chips (created by Elmer Doolin in 1932), Lay's brand potato chips (created by Herman W. Lay in 1938), Cheetos brand cheese flavored snacks (1948), Ruffles brand potato chips (1958) and Rold Gold brand pretzels (acquired 1961).

About the decision

With consumers going the healthy way, PepsiCo decided to transform its portfolio from 'fun-filled' to 'good-filled' products.

Statement of Indra Nooyi about the decision: Speaking about the transformation that PepsiCo has gone

through, she said it was a portfolio of fun-filled products earlier but when "we looked at eating and drinking habits of the people, we realised there was a need to have healthier products and good-for-you products".

"Then we realised we cannot tell the customers that healthier products would cost more and may be tasteless. So, we adopted a strategy and that transformation worked well," she added.

Indra nooyi’s journey in PepsiCo

Joined PepsiCo in 1994. Headed company’s global stratergy for more than a decade as senior Vice

President of corporate stratergy & development between 1996&1991. After remaining on the designation of president and CFO she succeed Steve

Reinemund in 2006,by becoming the first woman CEO of PepsiCo.

Some of the major changes in the business foreseen by her are: Acquisition of Tropicana(1998). Merger with Quaker oats(2001). Divesture of the restaurant company later known as YUM! Brand Inc.(1997) The acquisition of Wimm-Bill-Dann foods in 2011 was the company’s

largest ever international takeover, making PepsiCo no. 1 Food and Beverage provider in Russia.

USP of the company

Health and wellness is not new territory for PepsiCo, which acquired Tropicana in 1998 and Quaker Oats in 2001, several billion-dollar brands in the healthier foods category.

“In the past 15 years, PepsiCo has lowered the average number of calories per serving in beverages by nearly 20 percent,

In 2003, PepsiCo became the first major U.S. food company to eliminate trans fats from snack food products. 

Strategy adopted

 In 2006,  corporate strategist Nooyi took the helm and PepsiCo introduces Performance with Purpose, making it one of the first contemporary companies to recognize the important interdependence between corporations and society.

One plank of Performance with Purpose is to expand PepsiCo’s product portfolio to meet increasing consumer demand for more nutritious options.

Representing approximately 20 percent of PepsiCo’s sales, the company’s global nutrition portfolio includes the category leader in key areas such as

juice (Tropicana), oatmeal (Quaker) and sports nutrition (Gatorade). Other brands in PepsiCo’s portfolio in the U.S. include Naked Juice,  Muller yogurt,  Sabra hummus and Stacy’s pita chips.

Initiatives taken in the direction.

As the main health concern these days is obesity and hypertension. So to help consumers make healthier decisions, PepsiCo is participating in several U.S. campaigns, like:

 Clear On Calories initiative  And Healthy Weight Commitment Foundation, which aims to reduce

obesity, especially among children, by 2015. This initiative has dramatically reduced calories in beverages shipped

to schools, "And the company can thus now display calorie counts on the fronts of many of their packages, something they are working to expand around the world.”

And on the contrary, where malnutrition poses a tremendous health challenge, PepsiCo wants to offer consumers in the developing world more nutritious protein-based snacks and beverages. Project Asha, for example, concentrates on low-income communities in India to provide iron nourishment through snacks that are equivalent to five bundles of spinach apiece.

 Planet-healthier, too

 PepsiCo uses solar energy, all electric or hybrid trucks as well as LEED certify buildings when possible. The company is also aggressively pursuing recycling programs, achieving a 15.5 percent reduction in 2010 on the amount of waste sent to landfills and another 11 percent in 2011.

PepsiCo continues to think about new ways to package and deliver products that will reduce operating costs and environmental impact. It has reduced packaging weight by more than 300 million pounds since 2007.

PepsiCo is also investing heavily in R&D initiatives to make bottles and caps with less plastic but the same durability. To reduce emissions and fuel costs in transportation, for example, PepsiCo has figured out how to use small pre-forms and blow out bottles in production, instead of purchasing bottles from other companies and ship to production facilities.

Effect of the decision

So far, PepsiCo’s numbers over the past five years show that taking a healthier direction can also be profitable.

From 2007 to 2011, PepsiCo outperformed the S&P 500or the Standard &

Poor's 500, is a stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.,

Achieved double-digit compound annual growth, And returned more than $30 billion to shareholders.

References

http://articles.economictimes.indiatimes.com/2014-01-24/news/46562700_1_indra-nooyi-good-for-you-products-india-born-nooyi

http://www.greenbiz.com/blog/2013/02/20/pepsico-challenge-growth-through-nutrition?page=0%2C1

http://www.pepsico.com/Company/Our-History/

http://www.worldofceos.com/dossiers/indra-nooyi