Business Today

"India is going to be our biggest learning lab"

Indira Nooyi, Chairman and CEO, PepsiCo, took time to speak with BT's Rohit Saran and Shamni Pande on why PepsiCo India holds the key to the transformation that PepsiCo is unleashing upon itself globally.

Rohit Saran and Shamni Pande         Print Edition: January 24, 2010

Last November, Indra Nooyi, Chairman and CEO, PepsiCo, actually thought her schedule was easy. Hemmed in between the World Economic Forum meet in Delhi, a global Directors' meet in Mumbai and even fitting in an entire evening to commemorate India's Most Powerful Women at a Business Today awards function, Nooyi took time to speak with BT's Rohit Saran and Shamni Pande on why PepsiCo India holds the key to the transformation that PepsiCo is unleashing upon itself globally.

Pepsi entered India with several obligations—mostly concerning food and agriculture. Given the emphasis the company now has on food products and engagement with farmers, do those obligations look like worth having in retrospect?

We are a foods company dealing with a cause. We do so much around the world—we grow seeds, we transplant trees, we help farmers... Here, we have a great relationship with the Punjab government and now we have grown our footprint across the country as well. I think that the obligation word is gone, but it certainly feels good that we are helping agriculture, by aiding farmers in how they approach various crops and grow them, which in turn is helping the country, which in turn is making our business have a more sustainable future. I think the change is very good.

Clearly, the obligation has turned into opportunity. There are two examples in the way our relationship with vendors in India has panned out—a strong relationship with Jaipuria for bottling operations, and with farmers in agriculture. It is all adding up, especially as we are focussing on healthy and nutritious offerings.

Is there any dilemma in following a differentiated approach for a market such as India, where the future of conventional Pepsi seems much brighter as opposed to other Western markets that are looking at healthier choices?

Five years from now, you will see a range of products meant for the Indian market that use Indian crop, fruit, as well as vegetables, based on traditional medicine (Ayurveda). The cuisine here is rich, there are a variety of beverages here; and we are looking at how we can leverage the best of PepsiCo India, and build it to scale. India is going to be our biggest learning lab.

The best vision for the next 10 years has come from this region; I have not seen a better presentation from any other country than I saw here. We are looking at how we leverage the best of PepsiCo India, and build it to scale… in the process, do something that is right for its farmers, its middle class and all the other set of consumers and people.

There are huge opportunities in India. Just look at Aliva crackers. It is a tremendous breakthrough, it is uniquely an Indian product and has the highest quality standards.

What do you think is the big opportunity area in India?

I grew up snacking, this country has such a variety of local options in namkeens, it's a part of our diet. What we are now doing is replacing the lowquality product with a high-quality, consistent product. On the beverage front, there is a huge variety, we have to offer it in bottles. We had the highest growth in business this quarter from PepsiCo India.

Do you also foresee that some of these products will find markets outside of India?

Half of humanity lives in this region. I can take this product to South Africa, I can take this product to West Asia. Sure, things can be done, but keeping the local tastes in mind.

Isn't the idea of a local taste so diametrically different to the global idea of Pepsi, that it is the same bottle, with the same taste no matter where you are?

We are an interesting global brand, where we offer global products along with the portfolio that has a right mix of local brand, product, or, even global products done to a local taste. We have done that everywhere: Offered Indian spices in India, Chinese spices in China... A local product such as Aliva taken, perhaps with a different brand name, to Mexico with Mexican spices... the opportunity for global-local branding of products is enormous.

The popular image of the company today is that of the iconic Pepsi bottle, but today it is no longer the only big thing in the company; how do you handle the perception versus the reality of the company today?

You think of it with the addition of two more vital letters—as PepsiCo—of an organisation that is globally driven. In fact, (Chairman, India Region) Sanjeev (Chadha) and (President, India Region) Gautham (Mukkavilli) started to talk about PepsiCo in India as one company that's crossed a billiondollars in sales! That is a remarkable achievement in beverages and food, and people will automatically associate Pepsi with PepsiCo.

Would you agree that India has also been some kind of leadership nursery for PepsiCo?

PepsiCo India has an incredible management and it has lent talent to many countries. The other area where PepsiCo India does very well is how it offers solutions on low-cost techniques and production processes. They are very creative.

So, what about acquisitions?

If something comes along, we will look at it, however, we do not plan our growth on the basis of acquisitions.

How is the changed thinking of the company getting reflected in the PepsiCo system in the last few years?

The biggest change is that two years ago we hired the best research and development team. Mehmood Khan, who heads R&D, could have been anywhere in any pharma giant with a $4.5-billion R&D budget, but he was charged up about the touch-and-feel of our product, that relates to everyday life. And with him, we have attracted an entire team that is truly unparalleled. The challenge now is to transfer this R&D into a reality and see more of good-for-you products and nutrition flow into our existing product range.

The fact that you are an Indian, how much difference does or should it make to Pepsi India?

Though I have lived outside the country for many decades, but still if Pepsi India does well, I look good. It is critically important to me.

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