With consumers going the healthy way, PepsiCo decided to transform its portfolio from 'fun-filled' to 'good-filled' products, the beverages major's chief Indra Nooyi said today.
The transformation has worked well for business and many of the healthier products are giving good margins, India-born Nooyi said here at the World Economic Forum (WEF) Annual Meeting.
Indra Nooyi is the Chairman and CEO of PepsiCo.
Speaking about the transformation that PepsiCo has gone through, she said it was a portfolio of fun-filled products earlier but when "we looked at eating and drinking habits of the people, we realised there was a need to have healthier products and good-for-you products".
"Then we realised we cannot tell the customers that healthier products would cost more and may be tasteless. So, we adopted a strategy and that transformation worked well," she added.
Indra Nooyi also spoke about geographic transformation.
"When we wanted to expand into emerging markets, we went for acquisitions. There has been a normal cycle that when we make the acquisition it looks expensive, but few years down the lane it becomes attractive," she said.
According to Indra Nooyi, PepsiCo also realised that it needs to work with communities in the countries where it operates.
"All this was not just for corporate social responsibility, but also because we wanted to make money in a different and more responsible way.
"Now overseas transfers at our base in US are not about London, Paris and Geneva, it is about Africa, Asia and other emerging markets," Nooyi said.
Some of PepsiCo's healthier products are giving very good margins, because the company has tried to change its fun-filled products into healthy products or "good-filled products", she said.
Noting that the world is changing, Nooyi said the 'big transformation' has happened.
"For example in India, we are doing local breakfasts with Quaker oats in India and we have huge plans for Africa... we have got the core platform for further transformation," the PepsiCo chief said.
Between shareholders and customers, she said it was difficult to decide who is more important.
However, she said that now it is about stakeholders rather than only shareholders. These stakeholders include customers, suppliers as well as everyone with whom the company deals.
"I also think the challenge for a CEO is to manage the duration of the returns along with the level of returns. It is not good to focus only on getting a very high level of returns," Nooyi said.
About the role of CEOs in today's world and the need to engage with governments, Nooyi said: "I think every company is a product, a victim or beneficiary of government policies of every country where it works".
According to her, every CEO has to decide with whom they want to build a relationship but it is tough because governments change.
Referring to the global economic crisis, Nooyi said that all the CEOs who worked in the first part of the decade had strong tailwinds from the earlier economic growth.
"But then CEOs changed and the economy collapsed. It was a big challenge for all of us... we had to take big decisions which were not easy at all.
"I was out there like a missionary explaining employees what I was doing. There were many questions, but we went ahead. And now people admit that I was right and we followed the right path," she said.