Superficially, PepsiCo is a CSR dream. Led by an India-born woman who wears her cultural heritage proudly, the company both is a financial juggernaut and, through its evolving product mix, leading a crusade for “healthy” eating. However, as this Wall Street Journal analysis indicates, PepsiCo is financially successful mainly despite, not because of, its portfolio of “good for you” products.
Two quick observations about Indra Nooyi-led PepsiCo:
(1) Its “healthy” foods strategy is based on notions of nutrition that are in decline—blaming fat and sodium for health problems that are now more frequently associated with carbohydrate consumption (e.g., obesity, type-2 diabetes). Both PepsiCo’s “fun for you” and “good for you” snacks consist mainly of carbohydrates. Thus, the distinction between its product lines may not mark an actual distinction in their contribution to health.
(2) Its public relations effort to identify itself and its CEO with healthy products is especially effective with this writer’s business students, many of whom will forget their financial analysis skills to maintain Nooyi’s good-for-you-snack-foods strategy is the source of PepsiCo’s surging financial success—despite the numbers showing that its traditional snack brands are driving increases in the company’s profitability.
Nooyi-led PepsiCo is clearly a feel-good story. Is it also a do-good story? >>>
LINK: PepsiCo Wants to Sell Healthy Food, Consumers Want Chips (by MIKE ESTERL for Wall Street Journal)
Despite an expanding stable of “good for you” brands like Quaker oatmeal, Naked juice and Sabra hummus, PepsiCo Inc. fell behind the goal it made in 2010 to triple revenue from nutritious products to $30 billion this decade. Its new 2025 goal, announced in October, is that sales growth of its nutritious products “will outpace” the rest of its portfolio.
But buoyed by less-healthy snack brands such as Doritos chips and Cheetos puffs, PepsiCo’s sales and volumes are on the rise and its profit margins have expanded in 15 quarters straight. Its stock price set a record high in July. Ms. Nooyi has revved up performance enough that earlier this year, Nelson Peltz, an activist shareholder who had dogged her for three years, congratulated her and walked away.
What do you think?