PepsiCo plots major innovation drive

29 July 2010

NEW YORK: PepsiCo, the food and beverage giant, is undertaking a major innovation drive seeking to rejuvenate some of its leading brands and tap in to the latest communications technology.

Quaker, which was acquired by Pepsi for $13.8bn (€10.6bn; £8.7bn) around a decade ago and currently delivers $2bn in annual revenues, is one aspect of its extensive stable that will be the subject of a heightened focus.

As well as protecting Quaker against the challenges from low-cost and own-label alternatives, this effort also hopes to encourage more people to eat prior to leaving the house.

While 97% of US consumers agree breakfast is the most important meal of the day, only 40% regularly fill up in the morning.

"The issue is to get category momentum," Jaya Kumar, president, Quaker Foods & Snacks, said.

"There is a far longer-term issue we have to deal with, which is to get Americans to eat breakfast, [and] to make sure it's healthy."

In a bid to redress this situation, new offerings are being developed to suit the needs and tastes of a variety of different target audiences.

These will include Quaker Mix-Up for children, alongside a multigrain variant for adults and reformulated recipes that are lower in salt and sugar.

Several extensions have also been introduced for Gatorade, such as the G Series range that aims to hydrate athletes before, during and after exercise.

This initiative was a primary reason why the sports drink returned to growth for the first time in two years in the last quarter.

“Our highly leveraged advertising and media strategy with Gatorade, which utilises all channels … coupled with product innovation, is driving consistent improvements,” Indra Nooyi, PepsiCo's ceo, said.

“In fact, the perception of Gatorade improved significantly after the G Series launch, underscoring a halo effect on the rest of the Gatorade portfolio.”

The roll out of Doritos in New Zealand, Quaker Drinkable Oats in the Philippines, Quaker Congee in China and additions to Lay's in Saudi Arabia and South Africa in Q2 showed this process is global in scope.

Elsewhere, PepsiCo is attempting to transform its approach to marketing through an "incubator programme” that will see it partner with pioneering start-ups.

It has recently released a shortlist of 20 businesses that have submitted successful applications to the opening phase of this scheme, with half of this group ultimately set to win the chance to work on campaigns.

Firms that made the cut included FanFeedr, an online forum for sports fans, interactive music portal BreakoutBand, and RealGifts, a tool enabling web users to send presents to their contacts on Facebook.

Design company Evil Genius, and Zazu, the creator of an alarm clock for smartphones that reads topical headlines to wake up users, were two mobile specialists that featured on the list.

Meanwhile, AisleBuyer, a “virtual shopping assistant” for wireless devices, and MobeStream, which allows individuals to make in-store purchases on a mobile phone, were examples of the selected retail and experiential organisations.

"Technology and communications is the meeting place for brand experience today," said Bonin Bough, director of digital and social media for PepsiCo.

"For our company, social and digital media is a growing business driver, and it is important for us to constantly seek out new partners and opportunities in the space."

Data sourced from Wall Street Journal/PepsiCo; additional content by Warc staff