When PepsiCo’s Indian-born chief financial officer Indra Nooyi was elevated to CEO in 2006, sugar-filled drinks and fast/junk foods were her company’s bread and butter.
But, Nooyi hadn’t just been watching the company’s books. She’d been closely watching the habits of her executives, her staff, consumers and her own family, and noticed early on the trend towards healthier snacks, iced teas, smoothies and sports drinks.
Health-conscious brands gaining market share
Looking back, it seems obvious. But, her ensuing strategy was then such a departure from the norm, it set off one of the corporate world’s most talked-about fights with shareholders, and changed the course of PepsiCo forever.
Nooyi had already convinced the company to split off its fast food chains, spend A$19 million on Quaker Oats (which owned Gatorade), dairy and juice brands; and now pushed to add water, and hummus brands. Nooyi wanted PepsiCo to be seen as the sustainable, responsible, health-conscious corporate citizen.
Changing and repositioning a food and beverage giant
But, how do you reposition yourself from being a company that profited from sugary drinks and junk food to being seen to be at all interested in your customers’ good health?
Indra took on board something she said in an interview with Fortune magazine; the best advice she’d ever received was embrace tough assignments.
She treated it like a tough assignment and did her homework, doing what earned her a degree in maths, chemistry and physics.
Strategy advice for Indra Nooyi from Steve Jobs
She read voraciously, and sought out other transformational leaders, including tech titan Steve Jobs, who met with her for two hours on topics including strong leadership, and elevating the importance of design.
The resulting plan? Nooyi restructured the company to create and invest behind three classifications of PepsiCo products; Fun for You (Pepsi, other soft drinks, chips etc); Better for You (diet and low fat versions); Good for You (porridge oats, hummus etc).
Long term strategy threatened short term profits
But, as Fortune magazine pointed out in an article in 2012, healthy products aren’t as profitable as branded soft drink concentrate, and the stock price reflected that. Some investors weren’t happy, one inferring Indra Nooyi was trying to be Mother Theresa.
“If we want to own a company that makes nutritious beverages and snacks, we’ll go and buy (another company’s) stock,” Indra said the investor told her.
Nooyi’s decision made PepsiCo wobble for a time
Jobs had, in their meeting years before, schooled her to show anger when she was truly passionate about a decision, and so Nooyi dug in her heels, with the support of her board; nevertheless investor dissent caused media speculation about her future at PepsiCo.
In 2012, irate investors called for PepsiCo to sell off its snack food business or for Nooyi to step down, or at least announce a likely successor, Fortune magazine reported.
CEO Indra Nooyi’s potential replacement focussed on “five Cs mantra”.
Fortune said she faced an extremely demanding test, “the kind that no CEO enjoys but that most CEOs have to confront.”
Former marketing executive Brian Cornell was one PepsiCo leader tipped to replace her, quoted in the Independent as “having a mantra of focusing on "five Cs" (consumers, customers, competitors, costs, colleagues).”
Nooyi persisted, and increased PepsiCo’s spend on, and quality of, marketing on the high profit “fun for you” lines, and innovated within each category and each product line.
How can we serve the demands of consumers?
Reporting fourth quarter earnings in 2015, Nooyi said the old strategy of grow the core and add more was what they were doing. “We're looking at the demand of consumers and wondering how we can serve that demand,” she told shareholders.
Nooyi held on to her job, and slowly but surely, investor confidence returned, and then soared.
Food and beverage’s business success case study
When Nooyi stepped down in 2018, she’d nearly doubled revenues to $US63.5 billion in revenue, and had increased share price by 78%. As she predicted, PepsiCo now enjoys a feel-good reputation as a global good citizen, enervating those who work for it, and those who invest in it.
After her tumultuous but ultimately successful 24 years at PepsiCo, Indra Nooyi is thoroughly versed on FMCG strategy, execution, marketing, technology, design, HR, finance, global expansion, product innovation, market positioning and branding.
Indra Nooyi, at 62, is one of the most successful women in the world
She literally has been through it all, and is one of the most successful women in the world, earning US$31 million in 2017. She is also PepsiCo’s largest shareholder, with 1.45 million shares in the food and beverage giant.
Amazon board appoints Indra Nooyi
This year, she will probably sleep in past her usual 4 a.m. alarm, but she’s in demand. Amazon has snapped her up for its board, and she’s involved in many more world bodies, from cricket and classical music, to the World Economic Forum.
More agility needed in today’s business world
She told Harvard Business Review in 2015: "Every morning you've got to wake up with a healthy fear that the world is changing, and a conviction that, to win, you have to change faster and be more agile than anyone else."
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