The Pepsi Dilemma:
Are Healthy products in or out?
Candace Nicole Davis
Strategic Management in Global Environment MGMT599
Mr. Hamid Noorani
PepsiCo is a multi-national beverage and food company that owns popular brands such as Doritos, Ruffles, Sierra Mist, Tropicana, Mountain Dew, Sobe, Aquafina, Gatorade and of course America’s beloved “Pepsi-Cola.” The imagery of holding the blue and red logo can, popping back the lid and hearing the fizz as you sip are the first thoughts to many Pepsi lovers. Reminiscing on the cold, refreshing taste and depending what generation, Singing, "You got the right one baby! Uh-huh!” Or either remembering the latest commercials with popular artist such as Nicki Minaj or One Direction. This cold refreshing taste was once the signature to America’s fun-for you company. Now there is a dangerous dilemma: Pepsi going strictly health conscious and losing its image
Pepsi current strategic vision for the company is to concentrate on promoting the brand as health conscious. “Good for you products such as granola bars, humus, energy drinks, sports drinks, dole and Tazo teas are now the focus to generate more revenue. For the last five years this has been an issue with the current CEO: Indra Nooyi. Stockholders and Investors are aggravated with the new strategy because they say, “The trouble is that good-for-you products aren't nearly as profitable as branded sugar-water.” (http://management.fortune.cnn.com/2012/02/13/pepsi-indra-nooyi-earnings/)
Back in 2010 when the plan was first implemented Nooyi (whom is a vegetarian) felt that if more Americans exercised then obesity wouldn’t exist. In actuality, 10 billion of the company’s annual revenue came from the healthy products line. Nooyi hired a chief scientific officer and several members of the World Health Organization to figure out how to take sugar and fat out of PepsiCo products and wanted to implement new food processes. “For example, the scientists invented a micro-crystallized salt that could reduce sodium in Lays chips by as much as 25%. “ (Mangalindan, 2010) Nooyi was passionate about increasing that number to $30 billion by 2020. She says in an interview of why she focuses on promoting healthy foods:
“If all consumers exercised, did what they had to do, the problem of obesity wouldn't exist. But because society has changed so much, I think we can also be part of the solution by transforming our portfolio. “If I look at our portfolio, I think you can classify them into three groups: "fun-for-you foods" like Pepsi, Doritos, Lays, and Mountain Dew, "better-for-you" products like Diet Pepsi, PepsiMax, Baked Lays, Sobi Life Water, Propel, all of these products, and "good-for-you" products like Quaker, Tropicana, Naked Juice, Gatorade. There's a place for balance in everyone's portfolio. Our overall goal is to increase the number of great tasting, "better-for-you" products and "good-for-you" products, while making sure our "fun-for-you" products still have a place in consumers' lives. We are putting a lot of R&D dollars behind developing more "good-for-you" products that taste great and we're also investing in new sweeteners and salt-reduction technologies to make our "fun-for-you" products better for you. So we've made the investments and we've made it work within the portfolio.” (Mangalindan, 2010) Then she explains why she would like to see $30 billion in the next few years for revenue:
Question: One of your goals is to increase the $10 billion in revenues received from "good-for-you" products to $30 billion over the next decade. That's pretty ambitious. “We've drawn a whole roadmap for the next 10 years, and I think it's definitely doable. There's been a lot of organic growth based on the businesses we have already. Also, we'll offer fruit and vegetable offered in different forms, whole grains or any...
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