More Than a Cola: Inside PepsiCo

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May 29 (Bloomberg) –- There’s more to PepsiCo than Pepsi. Bloomberg's "Inside" visits one of the world's largest food and beverage companies. This inside look features an exclusive interview with PepsiCo Chairman and CEO Indra Nooyi. Join Bloomberg’s Betty Liu as she gains access into the company's Gatorade and Snacks research and development facilities. (Source: Bloomberg)

Here that pop?

See that popstar.

When it comes to pop culture you have to think pepsi.

The brand has been in the soda game for more than 100 years.

Theat's the story we all know.

For more, we take you inside pepsico.

It is all that and a bag of chips.

There is more to pepsico than pepsi.

It has 22 brands, each polling in $1 billion in sales per year.

It started with brant street.

In 1940, pepsi made history with the first-ever national advertisement to have a jingle.

A catchy jingle when each bottle sold for a nickel.

You remember the pepsi challenge.

How about its super bowl ads.

Michael jackson to be on say, pop stars and pepsi go together at halftime.

There is a soda war.

Coca-cola holds 50% of the carbonated beverage market globally.

Pepsi has about 20%. starting with everybody's favorite crispy snacks, fritos corn chips started in 1932. a small business selling chips out of a model t ford.

In 1961, emerged company formed frito-lay.

In 2001, pepsi merged with the 135-year-old quaker oats company.

Plus, gave them gatorade.

That is the time indra nooyi.

Became chief operating manager.

As the only indian born ceo of a major company, she's a global powerhouse all her own.

If you are starting to create a food and beverage company you would try to create a pepsico.

If you are beverage company, you get with a snack company.

Let me tell you why.

If you need a salty snack, you have to drink a beverage with it.

You have to.

Every day.

Isf you drink a beverage, half the time it is with a salty snack.

The pairing is like peanut butter and jelly.

They go together.

They naturally go together.

If you're creating a food and beverage portfolio, you'll be creating a pepsico.

This is how you would be constructing a. how much are you putting into research and development to create the next big snack?

Let's step back and talk about why rmb?

Today's world, it is what is going to define a successful company from a company that is not.

What is different today than what it was 10 years ago, in the past that were tailwinds in the category.

You could do line extensions, flavor extensions and deliver growth.

In the last 6-7 years, with the slowing down of categories, the internet pervading every country around the world, and innovation slowing, it is critically important we spend enough money to develop different shade of products.

Different shade of platforms that can give you increment talent in terms of volume and profit.

This is what i am driving it.

How different can you make snacks?

What can your research due to make snacks that different?

Let's talk snacks and beverages.

You talk across the food and beverage portfolio.

In all of our products we had to do three things.

Line extensions.

New flavors, new package formats.

We do all of that like we breathe every day.

That is what we do to keep the core flat.

To deliver growth, we have to deliver between its $3 billion and $4 billion of growth every year.

We have to do a couple of things.

Get the look for difference in innovation.

Different shades of innovation could be new form functions, consumer needs that we haven't served before.

Knowing after competitor products that didn't meet consumer needs.

We look at these vacant spaces and we innovate against that so consumers can come into are categories.

They have been years, the power of one strategy, how it is driving shareholder value.

One investor has been after pepsico to split the company.

You have done your own research and said no that is not a good idea.

It is not going to increase shareable or -- shareholder value.

When you sit up to him and said we are not going to do that.

I wouldn't call it standing up to any shareholder.

We listen to all of our shareholders.

Our goal is to create good value for all of our shareholders.

We listen to their points.

Any time a shareholder gives us any sort of feedback, comments, input, we take it seriously.

At the end of the day we are all shareholders of the company.

If anybody has an idea on how to create or value, we are the first people to take that to heart.

I own 20 times my salary in pepsico stock.

Anything you have, we take it seriously.

All the suggestions we have received, we study it with great care.

Is power of one a strategic advantage?

We've always known it was a strategic advantage.

We are even more convinced now that pepsico is about, mentoring products that work better together.

-- complementary products that work better together.

The partnership is spectacular.

Walk me through that.

After you took a look at him and you are more convinced it is the right strategy for pepsico.

What gives you that resolve?

I will give you personal experience.

I was in europe last year.

I was being invited to talk to meetings with ceos of large european retailers.

It has never happened before to the extent it was happening now.

I'm saying to myself, there must be a reason they are inviting me to these talks.

It is because snacks and beverages individually, we were the 35th player.

When we put the two together and talk about consumer insights jointly, how to drive the business jointly, we became the 10th, 11th, 12th most employer -- most important.

The velocity of our category, salty snacks are consumed in 40 and 50 tons.

They pay us in the 30's. we are huge cash and greater for retailers.

You have high philosophy categories they can drive traffic.

If consumer insights that allow people to come into the store.

Pepsico must partner with companies.

They are asking for more top to top joint business planning sessions, they are seeking us out to help them think about store layout, how to design and cap, so they can drive baskets and ticket sales.

I think as i said in the beginning, if you're going to craft a snack and beverage business today, you would craft a pepsico.

We visit a lab where scientists study sweat.

That is next as we go inside pepsico.

Can gatorade help you dunk like an nba superstar?

Maybe not.

If seco puts a lot of research into its signature brand of sports drinks and products.

We went to the sports science institute in florida for a firsthand look at the science of sweat.

The mission is to help athletes optimize their performance and their health through research and education.

We work closely with the different parts of r&d. what we do is get insights from the athletes to drive innovation in the future.

This test is looking at what feels he is using so we can put them in his body.

All the air that he is inhaling and neck sailing is measured.

From that we can calculate how much oxygen he is using.

What do you do with this data?

We can compare him to other athletes who do the same sport.

We can see where he is.

It helps us to estimate where he could get to.

Keep pushing through.

We do a sweat test.

Every athlete sweats differently.

We apply ashes to capture the sweat.

After that, we measure the weight again.

We measure the bottles, how much they drank.

We know exactly how much the sweat is, what they are sweating, siu know how much to replace.

-- so we know what to replace.

What is this measure?

The combination of your vision and your ability to respond.

Do i dare try?

Go ahead.

Ready?

4305. 4528. almost 100%. what we do, it is coordinated.

The affirmation we collect comes together in the central database.

From there we can start to do the analysis and see the trends.

We just try to understand what their needs are.

At the same time we have some ideas.

There are some scientific insights that can help us to develop products in the short term.

Pepsico's chief scientific officer was hired by the ceo to translate insights into consumer products.

Tell me about the data you gather from the florida facility.

How do you use that data for products across the board?

We try and leverage all of our data everywhere we can across the company.

In the specific example of gatorade, that helps us understand rehydration of the body.

The physiology of an athlete who is performing, and their professional athletes, and what we're trying to understand is to the person's life, as they become and remain active, what are the types of beverages, the type of foods.

This isn't just about a beverage.

We have taken gatorade into a solid form.

To fit the form and the function to the athlete's consumer need.

Why were you hired?

Pepsico, until 2006, was always a great development.

We did a lot of flavors.

That work in the market was growing in leaps and bounds.

That was the norm in innovation.

In 2006-2007 we realize the market base was changing radically.

You needed different shade of products to drive consumers to our brands and the cup to the clutter.

-- and cut through the clutter.

We had to do that to maintain the core, but in order to get the incremental growth we needed it differing treated -- differentiated.

We cast our net to see who we could bring into pepsico to organize our already terrific team.

We saw a lot of candidates.

What we're looking for is somebody who understood not just product development but who understood the chemistry, the biology of tastes, the chemistry of product formulation, and the actual physics of creating the project.

Said would think that you are, one of your jobs would be the holy grail in beverages, the sweetener, that everyone will enjoy.

As i know you enjoy innovating on, the salty taste without the sodium.

What is your biggest challenge now?

Our biggest goal is to meet consumer needs.

They want them inconvenient forms in prices they can afford.

We want to hit all three of those depending on the type of product.

Is a finding that sweetener?

Is it finding that one thing?

It is never one magic bullet.

Everything we consume is a complex mixture of textures, aroma, taste, physical form.

We are humans.

We have five senses.

We want to excite all five senses.

You came from the pharmaceutical industry.

I'm an endocrinologist.

I started my career teaching and researching nutrition.

For me, coming to pepsico was the commendation of 20 years started in nutrition.

In this point of my career, with the greatest company on the planet in nutrition.

I remember, he was asking me, i'm running this huge organization.

Why should i come to pepsico?

I told him, look and taste every product you make.

It is different than pharmaceuticals.

How many have you taken yourself?

You can try everyone that you do here.

Pepsico pushes the envelope to design creative innovations on classic snack foods.

We don't want to just sell you potato chips with seasoning.

The company's top chef how cooking +'s opens new frontiers of flavor.

As we go inside pepsico.

Head research chef stephen leads pepsico's efforts to go where no snack food has gone before.

Pepsico opened a: mary -- culinary institute to change the way your chips are made.

The definition is the blending of cal and technology.

-- food science and technology.

They create alternate executions based on their own: airy creativity.

-- culinary creativity.

It is a special team of marketing, food scientist, executives, and we will bring the consumer is in and taste we identified as the gold standard.

It is the target of what you want the final execution to be.

The mass-produced product should match this gold standard flavor.

This is a perfect transition to cheesy garlic bread.

What is this?

Parmesan.

It is about layering flavors.

We have raw garlic.

We have sweet.

Garlic.

We have some black pepper in there.

That is the gold standard of execution that became the imo -- final cheesy bread.

Once we have identified the seasoning experience, inevitably they come back to us and we evaluate this along the gold standard that evaluated.

How do you know when you have it?

The flavors are identical.

The experience and emotions that they evoke are identical.

We don't want to just sell you a potato chip with seasoning.

Three different types of garlic, for different types of cheese, this has the right elements to give you a dynamic multi-flavored experience.

At the same time, let you feel like you are eating comfort that is cheesy garlic bread.

I'm going to try the chips.

Very similar.

I hope so.

The limits innovation doesn't end with flavors.

It extends to ingredients.

At pepsico, they show me how far the company goes to refine and improve the products.

We go round the world and look for flavors.

It is going to help us in our initiatives for lowering salt, sugar in our products.

A lot of these ingredients, it is interesting.

We have a seaweed here.

It can help us in our lower sodium efforts.

C woul -- seaweed is nationally salty?

It can flavor the dish, flavor our applications in a way that we can lower our sodium.

Then we also have a natural salty plants here we discovered in china that can give us this salty taste.

What this dome does, it captures the flavors real-time so we can study later.

What are the avocados for?

They are to give us this full fat effect without adding fat to the dish.

If you smell this, it has a smokey quality to it.

That is almost like, you would put this in a barbecue flavored chip?

You can try them right here.

This is a salsa made from smoked avocado.

The hickory adds another layer of flavor that allows us to minimize the added salt we put into it.

We take the flavor information here and the consumer insights, and the flavor attributes, quebec to our labs, and say ingredients we can use an product development for a future snack moving forward?

You had designer salts that you had created.

Are you using that in your products?

Yes.

Designer salts.

We look at the size of the crystal to look at how we taste salt, how is perceived in our chips.

We have some dishes here.

Tell me about this.

This is an execution of macaroni and cheese that is lower in salt and lower in fat.

It incorporates the smoked a book auto salsa.

It is seasoned tofu to add texture.

There is more of a thickening agent going on with some savory notes to replace the cheese flavor.

You learn from this in what way?

We take the insights from this dish that can give us the full fat flavor without the using salt and fat, and move into our products in the future.

How does it cost when you're searching?

Cost plays an important role.

We want our consumers to have a lot of options and choices in their snacks.

I imagine something like that plan, is it cheap enough together that plant?

We don't know.

We may be able to cultivate in the future.

We have to look at exactly -- we might not need the whole plant in the future.

Managing costs and driving shareholder value isn't always easy for a company putting emphasis on long-term rmb -- r& d. you mentioned before that you listen to shareholder proposals and you are at the same time looking to cut costs starting in 2015. one of the proposals out there is to consolidate your headquarters.

Is that something that is on the

This text has been automatically generated. It may not be 100% accurate.

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