Indra Nooyi Scores as PepsiCo Quarterly Results Show Turnaround

FacebookTwitterLinkedIn

Indra Nooyi may be starting to get comeuppance on her constant critics of the last few years. Today PepsiCo posted better-than-expected quarterly earnings and forecasted continued better times in 2013 as the once-embattled CEO continues to fight back from the low ebb of a couple years ago, when many investors were so disappointed with PepsiCo’s performance that there were calls to split up the company a la Kraft.

“We enhanced the equity of our global brand,” Nooyi said on a conference call Thursday morning. “We stepped up our game-in innovation by bringing to market more balanced offerings, from line extensions that bring additional locations to our existing products, and to new-product platforms that are truly transformational.”

She cited, for instance, Quaker Real Medleys, a high-quality oatmeal with real fruits and nuts that was just named breakfast product of the year for 2012. Nooyi also was high on Pepsi Next, Starbucks Refreshers and Gatorade Energy Chews as examples of products and brands that are leveraging strong existing franchises with fresh approaches. [more]

Fourth-quarter earnings rose 17 percent as sales growth indicate that Nooyi has PepsiCo clicking on turnaround plans that she launched in earnest last year. They involved boosting advertising spending by $500 million to $600 million in 2012, putting more attention on the core Pepsi brand, using local tastes and preferences to gain market share in emerging countries and generally investing more in what Nooyi called “fun-for-you” brands such as Pepsi and Doritos as well as PepsiCo’s “good-for-you” brands that include Quaker and the new Muller Yogurt venture.

It’s true that PepsiCo’s annual revenues fell one percent to $20 billion, but much of that was currency problems from a stronger dollar. PepsiCo’s soda volume also fell about one percent, emulating a global trend.

But Pepsi is once again gaining market share against Coke and Diet Coke, and a big reason for that has been Nooyi’s rededication to the company’s flagship brand, indicated by a variety of marketing initiatives ranging from its sponsorship of “The X Factor” to its $50 million partnership with Beyonce, including the Super Bowl halftime show.

It’s evident that Nooyi is enjoying a different vibe these days than even from a year ago, when some investors accused her of short-changing solid but traditional fun-for-you brands to focus on healthier brands and offerings. She laid out a plan about a year ago to respond to that critique and the fourth-quarter earnings report to a great degree was a reflection of the plan’s success.

“We’re seeing positive results already from our increased investments,” Nooyi said on the call, “both in higher brand-equity scores and in market share results that are beginning to improve nicely.

“Our business strengthened during the course of the year,” the CEO concluded. “And we are well positioned to compete and create value as we enter 2013.”

FacebookTwitterLinkedIn