2010 Power 50: No. 27 Indra Nooyi

PepsiCo’s $7.8 billion acquisitions of its two largest bottlers — The Pepsi Bottling Group and PepsiAmericas — creates a faster, more efficient food and beverage system, said Indra Nooyi, company chairman and chief executive officer.

“By merging with our two largest bottlers, we gained important strategic advantages — for both our beverage and food businesses — that will benefit consumers, our retail customers and our shareholders,” Nooyi told SN. “What’s more, PepsiCo is better able to anticipate and serve the evolving needs of our retail and foodservice customers.”

The deal makes PepsiCo, based in Purchase, N.Y., the largest food and beverage business in North America, and the second largest in the world, with nearly $60 billion in annual revenues.

Key to PepsiCo’s operations is its “Performance with Purpose” mission to do what’s good for business and society.

“We provide great-tasting products, outstanding quality and supreme value to consumers worldwide, while maintaining an underpinning of integrity and responsibility,” said Nooyi.

That means taking such actions as harnessing local products, increasing workplace diversity and investing in its employees.

“We take seriously our responsibility to find innovative ways to use less energy, water and packaging, our responsibility to hire local people in the communities where we operate, create products designed for local tastes, and partner with local producers and suppliers,” said Nooyi.

Environmental sustainability is a critical piece to fulfilling the Performance with Purpose mission. PepsiCo’s goal is to reduce consumption of water by 20%, electricity by 20%, and fuels by 25% per unit of production by 2015, as compared with the company’s 2006 consumption.

One of the ways it’s doing so is with a pilot involving Tropicana Pure Premium. When Tropicana measured the carbon footprint of Pure Premium, it discovered that the largest single source of carbon emissions — about 35% — was fertilizer use. To address this, Tropicana and one of its long-time growers, SMR Farms in Bradenton, Fla., launched a pilot study to test two alternative fertilizers to determine whether using either could significantly reduce the carbon footprint associated with the agricultural production of oranges. If successful, the change could reduce the total carbon footprint of Tropicana Pure Premium by as much as 15%.

“If this test is successful, it could positively impact growing practices far beyond our business alone,” said Nooyi.

Other sustainability initiatives are also noteworthy. The Dream Machine is a new recycling program that includes computerized recycling kiosks where people can return bottles. Dream Machine users collect points that can be redeemed for discounts and rewards at greenopolis.com. About 200 Dream Machine kiosks are in place in the U.S.

Created in partnership with Waste Management, the Dream Machine was developed to support the manufacturer’s goal of increasing the U.S. beverage container recycling rate from 34% to 50% by 2018.

In terms of packaging innovations, PepsiCo launched what it says is the first-ever 100% compostable chip bag under the Sun Chips brand. “This bag is a terrific innovation because it will completely degrade in weeks, adding nothing to landfill,” said Nooyi.

Health and wellness is also a priority, so much so that PepsiCo plans to triple its $10 billion “good-for-you” business to $30 billion in revenue by 2020.

To do so, it will increase whole grains, fruits and vegetables, nuts, seeds and low-fat dairy in its product portfolio; and reduce sodium, saturated fat and added sugar in key brands.