As I counsel clients, I often ask myself: What’s the recipe for success in today’s fast-changing marketplace? 

One company that seems to have cracked the code is PepsiCo, which today celebrates its 50th anniversary, signifying the merger of Pepsi-Cola and Frito Lay on June 8, 1965 (Pepsi’s own roots stretch back to 1893). Today PepsiCo, which has been an APCO client since 2011, is one of the world’s largest food and beverages companies, serving a billion consumers in over 200 countries and territories around the world. It has grown from revenues of $510 million in 1965 to a juggernaut of more than $66 billion today. It has more than 20 of the world’s most loved consumer brands, including Pepsi, Lays, Walkers, Doritos, Tropicana, Mountain Dew, Aquafina, Quaker and Gatorade.

But most interesting for me is how PepsiCo has put Performance With Purpose at the center of its business strategy, embracing the idea that long term, sustained financial performance relies on concurrent respect and value creation for business, society and our shared planet. This vision was laid out by PepsiCo’s CEO, Indra Nooyi, soon after she became the company’s fifth leader in 2006. Despite facing one of the most challenging economic climates in a generation, Ms. Nooyi and her leadership team stuck to the convictions she laid out in Performance With Purpose, balancing fast-evolving consumer expectations with shrewd evolution of its brands and business operations.

A recent Fortune article details the journey (See: PepsiCo’s CEO Was Right.  Now What?). Indeed, while pursuing (and largely achieving) top-tier financial results, the company has:

  • nudged its product portfolio (and consumers) in a healthier direction – e.g. increasingly offering healthier options, as well as reducing salt and saturated fats in its key brands across major markets;
  • reduced its environmental footprint – e.g. Improve water use efficiency by 20 percent per unit and improving energy efficiency by 14% against a 2006 baseline;
  • addressed the needs of suppliers and communities where it operates, through programs like its Sustainable Farming Initiative and its Safe Water Access initiative; and
  • fostered employee engagement and diversity of the executive leadership team.

As the leader of APCO’s Sustainable Growth and Corporate Responsibility group, I find PepsiCo’s ambitions, strategy and achievements intriguing and inspiring.  There are a couple of distinguishing factors that others can learn from: 

  1. Purpose: Its leadership has communicated a clear vision through its Performance With Purpose strategy. This has aligned and mobilized employees, management, and other stakeholders around a common purpose.
  2. Balance: It has balanced long-term interests with ongoing profitability, investing sensibly in portfolio transformation that meet future market trends (such as health and wellness), while consistently delivering for the quarter.
  3. Globalization: It has delivered smart globalization, “lifting and shifting” its technologies, tastes, trends and innovations from one corner of the world to another
  4. Diversity: It has catered to increasingly diverse tastes, capitalizing on shifting demographics (racial diversity in the U.S., an aging population in much of Europe, and urbanization in many emerging markets), while attracting top, diverse talent
  5. Boldness: It has optimized synergies between its brands (who doesn’t love munching on Doritos while sipping a Pepsi?!), and employed bold marketing (think Pepsi Refresh, Beyonce, and Super Bowl)    
  6. Sustainability: It has done all this while advocating and acting on its most material sustainability issues—water, climate change, agriculture, and the health of its consumers.

Its brands have long held the secret recipes to its iconic foods and drinks. But today, PepsiCo seems to have found the illusive ingredients for successful business that is primed for the 21st century.  There’s a lot to look forward as it embarks on the next 50 years!

 

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James Robinson

James Robinson, is managing director of APCO Worldwide's Shanghai office and global sustainable growth & corporate purpose practice lead. Read More