Indra Nooyi – Successful strategies which have helped PepsiCo.grow
PepsiCo is currently the second largest food and beverage company in the world, with approximately $65 billion in revenues. This achievement owes thanks in part to its CEO, Indra Nooyi, who has consistently taken the company in a profit-making direction since 2006. Armed with a clear vision as to where she sees the company in the near future, and confident about its ability to expand its market further, Nooyi’s clear-sightedness and determination is what drives her to formulate successful strategies for success, some of which are shared here. Nooyi made it clear in a recent interview that PepsiCo, unlike some of its rival companies, was not a “one trick pony”, and went on to state that it benefited from multiple sales in a number of departments. Interestingly, the beverage sales account for only half of its profits, the rest come from the sale of salty snacks such as Doritos’s and Lays chips. With a series of introductions of healthier alternatives in the food and beverage market, Nooyi has made it clear that her eye is on the shifting trend from blatant consumption of junk food, towards the more discerning customer who will be likely to purchase products which have health benefits. Her focus is on pushing the newly-acquired Muller Quaker joint venture, which has introduced yoghurt into a booming market which is already full of other options. Nooyi’s strategy to expand PepsiCo’s area of operation into other areas has also resulted in a breakthrough in Myanmar, Burma, where talks and negotiations are on to build a separate plant and develop an agricultural area which will manufacture and cater to the market there. After visiting the region post-World Economic Forum for East Asia, she is said to have described the opportunity as “a story that is just beginning to unfold”. Apart from the various acquisitions and mergers, a clear objective of PepsiCo, is for it to be able to return capital to shareholders while it grows. This appears to be moving well due to the various kinds of cost reduction within the company; the workforce has been reduced by 3% whereas spending on marketing has increased by $500 million, with additional cost reductions being expected in 2014. Nooyi has stated that the company will increase its dividend by 5.6% over the next 3 years through a $10 billion share repurchase plan. Much of Nooyi’s current strategy involves reaching out to a rapidly growing middle class market through cross category in-store programs which ensure frequent purchase of PepsiCo’s products; this accounts for over 35% of sales in emerging and developing markets. The fact that PepsiCo retains the position of being the market leader for global salty snack sales, and second position in the sale of beverages, is testimony to the success of Nooyi’s current strategies. It is predicted that PepsiCo will gain the market leader position for beverages as well, owing to plans for it to enter the currently booming health food market with even more juices, sports drinks, and carbonated beverages with reduced sugar, and with Nooyi at the helm of affairs, assuring profit to stakeholders, the future for PepsiCo looks bright and promising.