Transforming Portfolio to Broaden Brand Loyalty at PepsiCo

Officials at PepsiCo, the parent company of Pepsi, Frito-Lay, Tropicana, Gatorade, and Quaker, realize what they have−which includes an expanding portfolio of 22 billion-dollar brands−and how they must transform to broaden its already considerable brand loyalty.

In her annual letter to shareholders, PepsiCo CEO Indra Nooyi talked about transforming the company’s portfolio with a strong eye toward an abundance of healthy choices.

“We continue to meet changing taste preferences by offering new products that appeal to health-conscious consumers and expanding our Everyday Nutrition business and unlocking new opportunities for top-line growth,” the letter says. “But from the beginning, it was also clear that if we wanted to make sure our future was as bright as our past, we needed to transform our company in a number of critical ways. With changing consumer preferences, reflecting a growing shift toward a healthier lifestyle in the U.S. and around the world, we needed to transform our portfolio with more nutritious options.”

With increasing strains on natural resources, the letter reads, “and the increasing importance governments were placing on protecting our planet, we needed to transform our operations to limit our environmental footprint. And with Millennials entering the workforce in large numbers, we needed to transform our workplace and our culture to make sure we were meeting the evolving expectations of a new generation of associates. The urgency of responding to all these shifts—the necessity of navigating a series of demographic, environmental and societal trends that were challenging us like never before—is what gave rise to the approach all of us have come to know as “Performance with Purpose.”

From the start, Performance with Purpose has been more than a slogan, more than a single program, the letter notes.

“It has been an overarching vision—a governing philosophy—guiding every aspect of our business,” the letter says. “At heart, it’s about building a healthier future for all our stakeholders. And that starts with generating healthy financial returns for all of you, my fellow shareholders. But the truth is, that’s just table stakes. Our challenge is to do more than simply deliver healthy returns. Our challenge is to deliver them consistently, sustainably, quarter after quarter, year after year. And the way we’ll continue doing that is by doing the same thing we’ve been doing over the past 10 years.”

What does that mean?

Making healthier foods and beverages for consumers

Generating healthy growth for retail and foodservice partners

Contributing to a healthier planet while boosting the bottom line

Creating a healthy workplace and culture for company associates

And promoting healthier communities wherever PepsiCo operates

To meet the evolving needs of its global customers, PepsiCo is shifting its portfolio to a wider range of options such as Everyday Nutrition products, which are products with positive nutrients like grains, fruits, vegetables, or protein.

“Together, these steps form a virtuous cycle that is powering our ongoing transformation as a company, enabling us to do well by doing good, positioning us for success not only over the short run, but also over the long run, and securing our place as one of the defining corporations of the 21st century,” the letter says.

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