SCOTTSDALE, Ariz. -- PepsiCo's recently stated effort to transform its portfolio of beverages and snack products will be done with a keen eye on the convenience-store industry, according to PepsiCo's Al Carey at CSP's Outlook Conference in one of his first major addresses to the industry since being named the company's North America CEO in March.
"I think the convenience and gas channel has a lot of upside," he said, "because of your appeal to millennials and your focus on food on the go. ... It bodes really well for you." He projected single-digital growth for food and beverage sales in the channel.
During his talk, Carey, above, focused on five specific initiatives for PepsiCo ...
1. Nutrition pledge
In October, PepsiCo chairman and CEO Indra Nooyi, above, pledged as part of a new sustainability initiative to significantly reduce the calorie count of the company's beverages as it looks to counter health concerns about sugar-sweetened beverages.
Carey echoed that promise and highlighted four areas the company is focused on:
- At least two-thirds of PepsiCo's global beverage portfolio volume will have 100 calories or fewer from added sugars per 12-ounce serving.
- At least three-quarters of the global foods portfolio volume will not exceed 1.1 grams of saturated fat per 100 calories and 1.3 milligrams of sodium per calorie.
- Sales growth of "everyday nutrition" products (whole foods, fruits and vegetables, dairy, protein and hydration) will outpace the sales growth of the rest of PepsiCo's portfolio.
- The company will provide access to at least 3 billion servings of nutritious foods and beverages to underserved communities and consumers.
2. C-store reality
In convenience stores, these pledges will add up to advancements in both healthy products and beyond.
"We have to figure out how to make our products taste good but be better for you," Carey said. "But you cannot forget about the core; it's not just health and wellness."
To that end, PepsiCo has recently expanded its Mtn Dew line with new flavors and added Pepsi line extensions, notably the reintroduction of Crystal Pepsi and new variations on craft-soda brand 1893.
In snacks, Frito-Lay's Doritos and Lays introduced new flavors and packaging variations during the NACS Show in October.
3. Acting as one
With retailers in mind, Carey said one of his goals is to be more consistent in its approach.
Rather than have PepsiCo's beverage, snacks and foodservice units operate independently, Carey is anxious to bring these areas together to offer across-the-board retail opportunities that can benefit both the supplier and retailers through simpler bundles and promotions.
4. Capturing millennials
Millennial-aged consumers—those born between the mid-1990s and early 2000s—"are good for the future of the convenience and gas channel," Carey said, offering the following reasons:
- This generation's spend in convenience stores has grown by double digits in the past year.
- Its c-store basket size is substantial.
- Most millennials use mobile devices in stores, opening the door to cutting-edge marketing campaigns.
- Millennials eat "snack meals" each day in addition to the usual three meals.
- More than half of millennials say convenience stores are "just as capable" as fast-casual restaurants in delivering fresh foods and beverages.
5. Improving distribution
On the front line of the business, PepsiCo is "listening to the employees," adding new delivery routes and innovating its truck-loading methods to group all the products for each order together.
"It saves time at each stop, but also sales are up because [the drivers] spend more time on merchandising in the stores," Carey said.