To crack the code on the future, PepsiCo may need some of the same kind of boldness out of new CEO Ramon Laguarta that it got from his predecessor, Indra Nooyi, in her 12 years running the diverse food, snack and beverage maker of Pepsi and Frito-Lay brands.
Nooyi was one of only a small number of women running major US corporations when she announced earlier this year that she’d be stepping down and handing the reins to PepsiCo veteran executive Laguarta. But her bigger contribution to PepsiCo was in determinedly moving the company away from its dependence on carbonated soft drinks and salty snacks and into the realm of better-for-you products that are determining the winners and losers in the food and beverage business of an new era.
For example, PepsiCo just announced one of its most significant acquisitions, at the tail end of Nooyi’s tenure: It stepped out of its comfort zone to acquire SodaStream, which makes machines that use carbon dioxide and syrup pods to allow consumers to create carbonated beverages in reusable containers. The Israel-based company has been emphasizing the utility of its system for consumers who want to make flavored sparkling waters, but it wasn’t long ago that SodaStream directly attacked PepsiCo by going after consumers who wanted to make counter-top soft drinks.
Yet Nooyi recognized that PepsiCo not only had to swallow its pride in this particular gambit but also had a long-term interest in purchasing a company that could help it cut its reliance on disposable plastic bottles, given the rising currency of the plastic-waste issue among consumers worldwide.
In addition to diversifying PepsiCo’s product portfolio across the board toward more healthful new products, Nooyi has nodded boldly toward the edgier kind of marketing that modern brands must consider as they seek to maintain relevance among millennials and Gen Zers. That backfired last year when Pepsi had to quickly pull an ad featuring Kendall Jenner that critics said trivialized the #BlackLivesMatter movement.
Still, for the time being at least, PepsiCo’s prospects rest on its biggest brands, Pepsi and Diet Pepsi, and those seem to be in a long-term decline along with the rest of traditional soft drinks such as Coca-Cola. Nooyi has run rather hot and cold on making the investments in R&D, packaging and marketing that could allow Pepsi to squeeze some growth again out of a long-term losing proposition, and that waffling makes critics howl the most.
But Nooyi kept trying to find seeds to plant for future growth that eventually may make Pepsi irrelevant. For example, the company has launched its own small-company incubators in the US and Europe that are aimed at uncovering and supporting new-brand unicorns. Now it’ll be up to Laguarta to pick potential winners and losers.