PepsiCo places heightened emphasis on CSR

24 December 2009

PURCHASE, New York: PepsiCo, the US food and beverage giant, is placing a heightened emphasis on corporate social responsibility, both as a company and in its advertising.

According to Indra Nooyi, the firm's ceo, major corporations are increasingly required to play an active part in helping address problems ranging from excess water use to rising levels of obesity.

"Companies can no longer perform and toss costs to society. We believe that the new future is public-private partnerships, where companies feel responsible for society at large," she said.

Such issues are important both in Western markets and emerging economies like China, where consumers are "incredibly environmentally conscious" and look to brands to set an example.

In response, PepsiCo is "building a sustainable corporation, sustainable not just financially but sustainable in terms of being a great citizen of every society in which we participate in," said Nooyi.

This approach not only helps to improve popular perceptions, but also means the owner of Frito-Lay and Tropicana can attract the best talent.

"People … come to PepsiCo because they believe we're a company with a soul, that we truly believe we should be great citizens of the community," Nooyi suggested.

With regard to marketing, Doritos and Gatorade will both run ads during next year's Super Bowl, but Pepsi will not feature, with funds being redirected to support the Pepsi Refresh Project, a scheme giving grants to local communities.

"Next year, for brand Pepsi, we're going to do something very different. We are going to take all our advertising dollars and actually put it against community activities and giving it back to the people of the United States," Nooyi said.

"We believe the times are such that companies like us have got to figure out a way to sell our products, but rather than just spend the money on mass advertising."

The web will play a central role in this process, mirroring the greater prominence PepsiCo has given to social media in recent times, despite the fact this strategy can present some sizeable challenges.

Nooyi argued that it is "very hard to judge whether social media's working because it's just not ads. It's putting your life bare on the web."

"I watch Facebook, I watch YouTube. Man, it makes me very uncomfortable, because there's so much on it."

"You've got to be very, very careful in today's world not to do anything wrong, be a model citizen ... and be, above all, a company with high integrity."

While the difficulties associated with utilising such a platform could be perceived as an obstacle, the advantages can also be highly beneficial if communications are properly executed, Nooyi added.

"To the young kids, that's all they know. They don't know anything else. And when they start spreading a message around, it's like instantaneous message."

"So I think, used right, social media works. But here's the downside. If you do something wrong as a company, it's also going to spread very fast."

The New York-based organisation is also increasing its focus on health and wellness going forward, with low calorie products like SoBe and G2, wholegrain bars like Stila in Mexico, as well as staples like Quaker Oats, among its key offerings in this area.

"People are not going to buy products that taste like cardboard. These are all great tasting products. And we're still reducing salt, reducing sugar, frying our products in hot, healthy oil," Nooyi argued.

"I think we're doing a great job at transforming our portfolio, and I wish every food and beverage company was the same."

Data sourced from CNBC; additional content by Warc staff