With the goal of more than doubling PepsiCo's $13 billion nutrition business to $30 billion by 2020, Chairman and Chief Executive Officer Indra Nooyi has her sights fixed on so-called “good for you” brands like Quaker Oats, Tropicana and Sabra.
But it was a different type of diet product that likely gave Nooyi pause recently, when, for the first time in the history of the cola wars, Diet Coke bested PepsiCo's biggest brand to take the No. 2 spot behind its share-leading parent brand, Coca-Cola.
Nooyi and her team responded with the first new advertising campaign for Pepsi-Cola in three years, themed “Summer Time is Pepsi Time,” and a 30% boost in television advertising of its North American beverages.
Perhaps as part of an effort to win share of the calorie-conscious soda consumer, a mid-calorie version of PepsiCo's flagship product also hit test markets this month. Called Pepsi Next, it has just 60 calories per can, compared with Pepsi-Cola's 150 calories.
At a time when natural sweeteners and a PepsiCo-developed “designer salt” promise to deliver maximum flavor with limits on calories and sodium, forays into entirely new categories are also in the snack and beverage brands' future, Nooyi told SN.
Last December, PepsiCo established itself as a major dairy player while boosting its nutrition business from $10 billion to $13 billion when it acquired a 66% stake in Russia's largest food and beverage brand, Wimm-Bill-Dann Foods. PepsiCo will leverage its scale in dairy and other nutritious ingredients as it concentrates on innovation.
“We're looking at creating new product categories by pursuing what we call convergence opportunities,” Nooyi said. “We have untapped potential to leverage our capabilities in fruits and vegetables, whole grains and dairy to enter new product categories that are healthy, convenient and great-tasting.”
Although she did not provide specifics, Nooyi has mentioned the possibility of “drinkifying snacks and snackifying drinks,” with one example being a drinkable oatmeal packaged in a bottle, according to reports. The company is also testing iron-fortified cookies and cheese puffs geared toward poor adolescent girls suffering from anemia in Nooyi's native India.
Here in the States, retailers are benefiting from new merchandising efficiencies at the point of sale. Since merging its two anchor bottlers, PepsiCo has created the industry's fastest, most flexible and efficient food and beverage system, Nooyi said.
“We are the global leader in savory snacks, and those snacks can now be paired with our beverages in the marketplace to provide unique offerings to retail and foodservice customers,” she said. Strategies include joint promotions, shared displays and bundled products.
Included in the mix may soon be beverages packaged in the industry's first 100% plant-based PET bottle. It's made entirely of natural waste from food production such as cornhusks. The bottles will join a quieter version of Frito-Lay's SunChips compostable bags when they're piloted in 2012.