More Than Just Profits

May 9, 2014

By: Aakash Kumar Dang

How common is it to spot someone with Pepsi in one hand and a bag of Frito Lay in another? Highly Probable! But how often do you see someone with oats in one hand and a bottle of naked juice in another? Not quite often. PepsiCo started in 1965 when Fun-For-You products, such as Pepsi, Walkers crisps, and Frito Lay chips were in high demand. In order to capitalize on the exponentially growing market, more such products were manufactured and newer flavors were introduced. Although it was possible to have continued launching different versions of its fun-for-you products and achieved significant revenues, more than just profits PepsiCo was concerned about the health of its consumers. Thus began the business journey to introduce different genres of products in to the economy that do not pose health hazards such as obesity. Popularly known as Better-For-You products, such as Tropicana, and the Good-For-You product line from merger with Quaker, came into existence.

Surge in the commodity prices of 2008 strongly impacted PepsiCo’s operating plan while interrupted supplies of oil and plastic made the situation worse. During these hard times, it usually gets tough to always be walking on a thin line; but instead, PepsiCo took a step ahead and launched initiatives on reducing sugar content and cutting down on fats from its products without charging an extra buck. The firm never markets to kids under 12 and is in fact looking to launch nutritious and processed food aimed squarely at children. “A bag of crisps in the UK has less salt than a slice of white bread“, Ms Nooyi says proudly.

One of the most powerful women in the retail world, Ms Nooyi agrees that companies cannot simply be driven by the needs of shareholders. “That is what we have been saying for several years. Companies have to think of themselves as serving stakeholders, they have to worry a lot about their cost to the society. How do you make sure that as a company everything you do serves the next generation, serves communities, serves your employees better?” With a 50 year rich legacy under its belt, the company has seen many competitors enter, exit, or even thrive in the game. Thinking differently and strategizing effectively including all the meaningful acquisitions made to achieve its business goal has always been a differentiating factor for such a large corporation. Having worked during my Co-op in Supply Chain at PepsiCo, I can’t stress enough on the fact that it is tougher to sustain and maintain that brand value and perception than to start one from scratch and the firm has always worked hard to keep up that reputation.

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