It’s no secret that the carbonated soft drink business is struggling. The economy, concerns about health and proliferation of non-carb options have all taken their toll on the business over the past few years. So it was not a big surprise when earlier this week, the Financial Times reported that Indra Nooyi (who has topped the Financial Times’ ranking of the Top 50 Women in World Business for the second year running) is seeking redefine focus for PepsiCo from carbonated soft drinks to non-carbs, changing their playing field and potentially redefining what PepsiCo represents. Clearly this is a huge shift by a company that by its very name defines itself as a soft drink company, but it is also in line with the focus on nutrition-based products that the company has been working to put in place for several years.
The reality is that people love their snacks, and most aren’t going to trade a Cheeto for a carrot stick. And soft drinks and snacks are a big part of what has given PepsiCo over $100 billion in sales over the past year. But make no mistake, healthy products are a $10 billion business for PepsiCo today. They see an opportunity to triple their position in the healthy category through careful marketing and product development.
The challenge for PepsiCo is building their credibility in this space with both consumers and the nutrition community, and they are beginning to take steps in that direction. I don’t foresee them dropping their iconic soft drink and snack brands (and I think there would be howls of outrage from consumers if they did), but they are making moves to reinforce their health-focused position.
– Since the company knows that consumers love the delicious taste of their snacks, they are looking for better, more nutritious alternatives to current ingredients so consumers have options for indulging with less guilt.
– PepsiCo is conducting greater research efforts for Quaker products, giving the brand that symbolizes health more leverage and greater visibility.
– The company is putting greater emphasis on the fact that healthier non-carbs, while still caloric, provide better nutrition than sodas, often with Stevia-based products with lower calories.
– PepsiCo is establishing nutrition programs in developing countries that not only include the distribution of nutrient-dense foods, but also the beginnings of sustainable businesses that grow local economies.
PepsiCo may not be the nutritional leader today, but Indra Nooyi’s mandate to be a more nutritionally focused company is taking hold, and the company is investing in ways that demonstrate a commitment to that mandate and a groundbreaking vision for the company’s future.