PRESTIGE INSTITUTE OF MANAGEMENT
Indra Nooyi’s decision of
Transforming PepsiCo’s product portfolio from Fun- food to
Top Global Brands
Fun For You
Better For You
Good For You
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.
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 (formulated in 1898),
Diet Pepsi (1964) and
Mountain Dew (introduced by Tip Corporation in 1948).
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'
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
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
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
“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
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
Representing approximately 20 percent of PepsiCo’s sales, the company’s
global nutrition portfolio includes the category leader in key areas such as
oatmeal (Quaker) and
sports nutrition (Gatorade).
Other brands in PepsiCo’s portfolio in the U.S. include
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.
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
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.