PepsiCo's Nooyi Talks 'Snackification'

Beverage, snack company CEO emphasizes need for adaptability

Indra Nooyi

SCOTTSDALE, Ariz. -- When PepsiCo Chairman and CEO Indra Nooyi took the stage as the keynote speaker at CSP Information Group's recent Restaurant Leadership Conference (RLC) in Scottsdale, Ariz., her message was "we're all in the same business today--the business of adaptability. Failure to adapt can be fatal."

Under Nooyi's leadership, PepsiCo has developed a model of adaptability to keep it performing and transforming in a changing world.

Although PepsiCo does business in 200 countries around the globe, the United States is its single most important market and "an innovation hub," and Nooyi is focused on growing domestically. Toward that end, she shared a new area of product development called "convergence"--the "snackification" of beverages and the "drinkification" of snacks. Specifically, ingredients like grains and dairy are creating a hybrid category to feed consumers' demand for on-the-go eating and the blurring of dayparts. "Convergence is the largest area of growth for us right now," Nooyi revealed.

And she highlighted the leadership qualities needed to succeed in today's fast-changing world. She shared four strategies with attendees:

Open your eyes. Scan the horizon for what's coming next, figure out future trends and define your ability to lead them. "It's important to see the world through the eyes of others; your customers, employees and consumers," Nooyi explained. Seeing that healthy eating, sustainability and social responsibility were major concerns, PepsiCo set the goal of "performance with a purpose." Creating healthier products is a big part of reaching that goal and today, products under the PepsiCo umbrella include Quaker oatmeal, Sabra hummus and Tropicana juices. They also hit several other foodservice trends—breakfast, snacking and portability.

Open your ears. "Adaptive leaders are good listeners," Nooyi pointed out. "Good ideas come from inside and outside." She suggests listening to your customer partners, social media communities and consumers—and act on what they tell you.

One of PepsiCo's most successful programs was "Do Us a Flavor," launched in the U.K. When the company asked consumers to submit ideas for new flavors, they got 1 million entries. "It was a great way to engage consumers, it cost much less and we created five new flavors," Nooyi said. The program is now active in 30 more countries around the world. In the U.S., PepsiCo launched a "Crash the Super Bowl" campaign, crowd sourcing Super Bowl commercials using its products.

Open your mind. Sometimes you have to disrupt businesses before the trends disrupt you, and you have to make changes no matter how hard they can be. "Tap into the entrepreneurial spirit that got you into the restaurant business in the first place," Nooyi advised. "Re-adapt, rethink and keep your mind open. The next company changing idea may come from your franchisees."

Lead with an open heart. Employees don't only want to make a living; they want to contribute to the world. An adaptive company culture that promotes community responsibility and sustainability drives sales and can cut costs.

Click on File Attachments below to read her complete RLC remarks.

Purchase, N.Y.-based PepsiCo is a global food and beverage leader with net revenues of more than $65 billion and a product portfolio that includes 22 brands that generate more than $1 billion each in annual retail sales. Its main businesses--Quaker, Tropicana, Gatorade, Frito-Lay and Pepsi-Cola--make hundreds of foods and beverages. PepsiCo Foodservice was a title sponsor of the RLC conference for the 11th consecutive year.