The Pepsi Generation Gap

By Lipman, Joanne | Newsweek, October 31, 2011 | Go to article overview
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The Pepsi Generation Gap

Lipman, Joanne, Newsweek

Byline: Joanne Lipman; Joanne Lipman is a media adviser and Newsweek's C-Suite columnist.

CEO Indra Nooyi wants Wall Street protesters to know she's on their side--sort of.

Still shaking off jet lag from a business trip to Russia and Turkey, PepsiCo CEO Indra Nooyi is talking about the growing Occupy Wall Street crowds at home. "Here's the problem," she says. "They are protesting capitalism. To me, capitalism is a source of job creation, it's a source of innovation, it's what keeps the engines of democracy going. It's wrong to paint with a negative broad brush on capitalism."

Nooyi tells me that she empathizes with the protesters' frustrations--"a large part of the population feels disenfranchised"--but differs on the solution. Occupy Wall Street wants to fight, according to its website, "against the corrosive power" of banks and "multinational corporations." Um, yes, that would refer to PepsiCo. Nooyi, on the other hand, says corporate power is actually the answer: it's what is needed to solve the jobs crisis that sparked the protests in the first place.

"Private enterprise," she declares, "shouldn't be looked at as the bad guys."

That line pretty much sums up Nooyi's business philosophy. The Indian-born, indefatigable PepsiCo boss--she admits to sleeping only four hours a night--spends a good deal of her energy trying to prove that companies can do well by doing good. She has refocused the $60 billion PepsiCo--best known for sugary soda and Frito-Lay snacks like Doritos and Cheetos--on more nutritious foods. At the same time, she has championed multiple corporate do-gooder efforts, both in the U.S. (buying electric trucks for its fleet) and abroad (helping potato farmers in China). "We're doing the right thing, and it's creating jobs for people," she says, pointing to another U.S. program, a recycling effort tied to job training for disabled veterans.

Her critics--and they are growing in number as well as decibel level--point out that none of this sells soda. They complain that by focusing on selling more nutritious foods, Nooyi has neglected the company's core business. Sales of its flagship Pepsi-Cola soda tumbled 4.8 percent last year, falling behind not just Coca-Cola but also, for the first time, Diet Coke. PepsiCo's share price is off about 5 percent in the past year, while rival Coca-Cola Co.'s shares jumped 9 percent during the same time period. Analysts are clamoring for her to break up the company; PepsiCo by this point has denied breakup speculation more times than Brad Pitt and Angelina Jolie.

"It's a very enticing vision to be more focused on health and wellness, to be focused on global hunger and all of those things," says Ali Dibadj, an analyst with Sanford C. Bernstein & Co. "The problem is, you have to remember where three quarters of the company comes from: sugary, salty, fatty" foods.

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