Stakes Rising for PepsiCo’s Nooyi

The buzz continues from the Wall Street Journal's look at PepsiCo's fortunes this week, with an article titled "PepsiCo Wakes Up and Smells the Cola" and a sidebar profile on CEO Indra Nooyi titled "PepsiCo Chief Defends Her Strategy to Promote 'Good for You' Foods."

While the hook was Pepsi's return to TV advertising this week following a three-year hiatus to focus on social media and crowdsourcing via its Pepsi Refresh corporate philanthropy program, the spotlight turned to Nooyi herself, who has come under fire since Coca-Cola was revealed to hold the #1 and #2 sales slots (with Coke at #1 and Diet Coke unseating Pepsi to take #2) in the US last year.

The big question: did Nooyi take her eye off what should be any brand leader's top objective — marketing and positioning its products to boost sales — in order to promote what she calls "Performance With Purpose"?

Nooyi's comeback: corporate citizenship and healthier foods needn't be mutually exclusive with driving sales, and she wasn't going to engage in a war to gain a percentage point here or there of marketshare.

Like anyone with enough intestinal fortitude to rise to the top of one of the world’s largest food companies, Nooyi can toss aside criticism with the best of them. She called “rubbish,” for example, suggestions that she hasn’t paid enough attention to the company's embattled flagship Pepsi beverage brand, according to her WSJ interview.

But there’s no question that PepsiCo shareholders, bottlers and other key constituencies are counting on Nooyi finally to bolster sales and market share for the Pepsi flagship now that she has authorized the start of a new summer advertising campaign for Pepsi and its much-anticipated exclusive sponsorship of Simon Cowell's The X Factor debut on FOX this fall.

Nooyi has been a major change agent at PepsiCo since she became CEO nearly five years ago after her role as chief global strategist, in which she helped lead the company’s acquisition of Tropicana and the Quaker Oats and Gatorade brands. Those deals clearly indicated where she might go as the company’s CEO, and the 55-year-old Nooyi hasn’t flagged in her devotion to steering PepsiCo’s brand and product portfolio hard into better-for-you products – and away from what used to be called junk food.

Her philosophy also led her to back Pepsi Refresh and other social-responsibility positioning. But many in and outside of Pepsi complain that Refresh’s emphasis on creating a desirable but vague patina around the company and brand ended up dearly costing sales of the products themselves. The beverage division also has experienced continuing shake-up in top marketing positions. 

Meanwhile, PepsiCo’s better-for-you forays have produced only middling results. Frito-Lay has been an innovator in “healthful” salty-snacking but some high-profile products, such as Flat Earth chips, have disappointed. Gatorade’s new three-part product line has revived the brand to some extent. But Quaker Oats has tried all sorts of things to spark interest in oatmeal – one of the “best-for-you” foods there is – only to meet with little success.

The new initiatives behind Pepsi are being hailed by others with a stake in the brand but also being criticized as late. As always, Nooyi pooh-poohs the critics. “We are confident that we will reinvent the cola business the right way,” she told the Journal.

Much of the world will be watching.