Soda and potato chips don't exactly sound like a recipe for success in today's weight-obsessed, low-carb world. But Steven S. Reinemund has built PepsiCo Inc. (PEP ) into much more than a purveyor of junk food standards. Through constant innovation and savvy moves like the $14 billion acquisition of Quaker Oats Co. (PEP ), Reinemund, 56, has created a nimble, $27 billion food and beverage giant. Every year, PepsiCo adds more than 200 product variations to its global portfolio of brands that includes Frito-Lay snacks, Pepsi-Cola sodas, Gatorade sports drinks, and Tropicana juice. Many are aimed at wooing ethnic tastes as well as satisfying health-conscious consumers.
But Reinemund's greatest achievement is in developing people more than products. While some rivals are mired in management challenges, PepsiCo has developed one of the deepest executive benches in Corporate America. Moreover, the diversity of that bench has proved to be an asset in tapping new markets. As Reinemund puts it: "To be a leader in consumer products, it's critical to have leaders who represent the population we serve." He personally takes a major role in mentoring and teaching staff -- both formally and informally. He also demands that everyone in the senior ranks do the same.
The payoff: consistent double-digit earnings growth and solid sales at a time when many of the company's staple products are under threat from fears over childhood obesity and other health concerns. PepsiCo has outperformed Coca-Cola Co. (KO ) in boosting sales and has logged earnings growth that is more than double that of its rival. The company is expected to report 17% growth in earnings per share in 2004. One reason is the increasing strength of its operations in foreign markets such as India and China, thanks largely to the talent of local teams. PepsiCo's efforts to quench consumers' growing thirst for noncarbonated beverages also helped boost the bottom line. For Reinemund, the key is making enough new bets to keep customers coming back while delivering strong shareholder returns.