PepsiCo’s ‘new normal’

by Keith Nunes
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PURCHASE, N.Y. — Five “mega trends” will shape PepsiCo’s “new normal,” said Indra Nooyi, chairman and chief executive officer of the company.

“ … Future success is continued in our ability to capitalize on the trends shaping the marketplace, and there are five trends in particular I want to spend a moment highlighting,” Ms. Nooyi said on May 7, during the company’s annual shareholders meeting.

“First, as we look out over the next 5 to 10 years, growth in developing and emerging markets will continue to outpace the growth in developed markets,” she said. “Additionally, by 2030, experts estimate that another 3 billion people might join the middle class, all in developing and emerging markets. These are both enormous opportunities we’re committed to maximizing by further developing our people, skills and tools.

“Second trend, the ongoing consumer shift toward more nutritious products will continue to accelerate. You know, we anticipated these trends early, we took the necessary steps to transform our portfolio. And in 2014 and beyond, we will keep innovating to deliver the convenient and functional nutritious snacks and beverages that consumers demand today, while never sacrificing on taste.”

The rapid pace of change in digital technology was ranked third on Ms. Nooyi’s list. She noted that digital technology will disrupt business at every point along the value chain.

“The way we interact with retailers, shoppers and consumers is changing dramatically,” she said. “To keep up with the technological advancement and adapt to the dynamic digital landscape, we are laser focused on evolving all points where technology touches our business.”

Calling geopolitical and social instability the “new norm,” Ms. Nooyi said it requires new levels of vigilance against threats to the company’s employees and its supply chain.

“And finally we are facing increasingly extreme weather affecting everything from commodity prices to our ability to operate during extreme weather events,” she said. “While our size and scale allows us to manage the risks, our R.&D. team is working on developing formulations for new products to be able to cope with changes in raw material availability and prices.

“We believe these five mega-trends make up the ‘new normal.’ And with our focus, investment strategy, product diversity, operating model and people, we believe PepsiCo is well prepared to deliver great returns going forward.”

Amid calls for PepsiCo to consider breaking up its business, Ms. Nooyi noted that its diverse portfolio of food and beverage products gives it the ability to weather any negative impact from the trends she outlined.
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