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Innovating the hell out of PepsiCo

News, 10 January 2017
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NEW YORK: PepsiCo faces significant innovation challenges ranging across every aspect of its business, from manufacturing to distribution to marketing, according to two of the snack food giant's top executives.

"Around the world, our categories are growing somewhere between 3% and 4%, which means that every year, if we want to maintain or gain [share] in the world, we have to grow our revenues somewhere between $2.5bn and $3bn—just to stay flat," Indra Nooyi, chief executive officer, explained to Fast Company.

"And then our base erodes every year because [some of our] products die," she added. "So our gross growth has to be about $5bn a year. That is a big challenge.

"I have to innovate the hell out of the company. The magnitude of addition that we have to do to the top line just to hold share or gain a little globally is huge."

Chief scientist Mehmood Khan distinguished between invention and innovation: "Innovation is when you take inventions and actually solve for a consumer need".

And the consumer only sees the product on the shelf in store. "There is another [innovation] on the back end," he said: "what products we make, where we get the ingredients, how we grow the agricultural components, how we distribute, how we manufacture."

Khan described his role as understanding "how to put the jigsaw puzzle together" at a time of rapid change when "the consumer is … telling us what they want, but not often in very clear terms".

Innovation also has to tie in with the sustainability agenda the company announced last October, featuring ambitious health and wellness, environmental and social goals.

Those translate to reducing salt and sugar levels in its food and drinks ranges and nudging consumers towards healthier choices, reducing water usage and empowering its employees around the world.

"To succeed in today's volatile and changing world, corporations must do three things exceedingly well: focus on delivering strong financial performance, do it in a way that is sustainable over time and be responsive to the needs of society," said Nooyi.

Data sourced from Fast Company, Food Business News; additional content by Warc staff

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