Market Trends / Snacks / Industry News

PepsiCo snack, soft drink division better together, says CEO

January 13, 2014
/ Print / Reprints /
ShareMore
/ Text Size+

During a recent appearance on CNBC’s Squawk Box, PepsiCo CEO Indra Nooyi stood firm in her conviction to keep the company’s snack and soft drink division together, despite pressure from notable shareholders. “These two categories are better together, not just in the United States, but around the world,” she said.

Nooyi has fielded significant pressure from shareholders, especially Nelson Peltz, a major Pepsi shareholder, over a division of the two businesses because consumers have shown a clear pivot in their interest in sugary soft drinks, while Pepsi’s snack unit, the biggest in the world, is performing much better. However, Nooyi believes that it still makes sense for Pepsi to govern the divisions in tandem, posing the question on Squawk Box, “If you eat a bag of Fritos, do you reach for a beverage?”

Like its rival Coca-Cola Co., Pepsi’s soft drink business has been underperforming due to declining consumer interest in sugary, calorie-laden drinks. Peltz argues that Pepsi’s thriving snack unit is being overshadowed by its struggling beverage unit and made his concerns known in July at the CNBC-Institutional Investor Delivering Alpha Conference. However, it is clear that Nooyi is unwilling to be swayed by even the most activist investors about her strategy moving forward. Despite Peltz’s urgings to have Pepsi buy Mondelez, a snack food company previously owned by Kraft, Nooyi has showed no signs of moving in that direction.

Though consumers have shown an increased interest in low-calorie and more healthful beverage offerings, Pepsi has managed to still appeal to customers by offering more diet offerings and drinks that are lower in calories. CNBC reports that an independent evaluation executed this week showed that the world’s largest food and beverage companies, including Pepsi, have surpassed a five-year goal set in 2010 to cut trillions of calories from products sold in the U.S., and evidence of that can easily be seen in Pepsi’s newest and current offerings.

Nooyi told Squawk Box in her interview that she has fought internally and externally to “reduce the salt and sugar and fat in our fun-for-you products,” while also boosting the content of Pepsi’s “good-for-you products” and still allowing them to taste great. Nooyi recognizes that she has a far way to go, as soft drinks sales are still slower than they once were. She and her team are still planning ways to increase Pepsi’s popularity in the future, and for now, it is clear that the CEO doesn’t plan on separating her divisions anytime soon.

Source: Wall St. Cheat Sheet

Did you enjoy this article? Click here to subscribe to Snack Food & Wholesale Bakery Magazine 

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

Blue Diamond Almonds Facility

Blue Diamond Almond’s new  processing facility in Turlock, CA.

11/7/13 2:00 pm EST

Food Plant of the Future: The Future of Wastewater Management

Available On-Demand Effective management of wastewater is becoming increasingly critical to food and beverage processors as the cost for incoming water increases...

Snack Food & Wholesale Bakery Magazine

Cover Image

2014 August

This month's publication of Snack Food & Wholesale Bakery takes a special look at Blue Diamond's growers and advanced technology, as well as a tour through the Blue Diamond production plant in Turlock, CA.

Table Of Contents Subscribe

School Lunches

Millions of children will soon be returning to school, lunchboxes in hand. What was your favorite lunchbox treat when you were a kid?
View Results Poll Archive

THE SNACK AND BAKERY STORE

organic-production-&-food-q.gif
Organic Production and Food Quality: A Down to Earth Analysis

Effects of Organic Production on Food Quality is the first comprehensive book on how organic production methods influence the safety and quality of foods, based on an unbiased assessment of the latest scientific findings.  The title is a 'must-have' for everyone working within the food industry.

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

The Weekly Mix

Operations Weekly Logo

Written by Snack Food & Wholesale Bakery editors, our Operations Weekly weekly enewsletter provides bakers and snack food manufacturers with up-to-the-minute news, ideas and industry trends.

Sign up today!

STAY CONNECTED

Facebook IconTwitter IconYoutube IconLinkedIn Icon