Pepsi: In Need of a Refresh?

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When industry market share numbers came out in March, showing Pepsi-Cola slipped to No. 3, analysts quickly accused PepsiCo—and Chairman and Chief Executive Indra Nooyi—of taking their eyes off the company’s biggest brand.”

Just a couple of years ago Ms. Nooyi was considered a visionary and the messiah who had come to transform Pepsi. Today, the same people are raking her over the coals for not delivering in “the numbers” in the short-term.

Granted that Ms. Nooyi has had some major missteps along the way with the disastrous re-branding of Tropicana and the Sun Chips LOUD bag fiasco but I think that is to be expected when one is trying to fundamentally change the DNA of a company and brand.

From the beginning, Indra Nooyi, made clear that she was embarking in an ambitious and risky plan to change the complexion of Pepsi Co. by making it a more responsible and health conscious global company. She never hid the fact that she was going to do this by re-orienting Pepsi’s product portfolio to be healthier and less “junk-filled.” This is the equivalent of a corn flakes brand entering a country like India where people ate hot and spicy meals for breakfast. This brand laid out a strategy that said they would not expect to break even for at least 10+ years because their first objective was to change generationally entrenched consumer habits.

The same applies for Ms. Nooyi’s strategy. It is based on a long-term vision and relies on changing consumer habits over the period of a generation, not over a quarter. By taking advantage of a global health trend that is only going to grow in the future she is among that rare breed of CEO’s actually doing their job by thinking about the company ten to twenty years down the road.

I believe that one of the major reasons companies today fail to dominate like they once did in the global marketplace is because so many have become slaves to quarterly earnings and profit mentality, driven by Wall Street.

The reason companies like Kellogg’s and IBM succeeded and stayed dominant for more than 100 years is because they more often than not took the long view; which meant investing and accepting losses in the short-term, to enter a market or implement a bold new strategy, which would only pay dividends in the long run.

There is no substitute for a CEO’s long-term vision and strategy for a company.