The Yin and Yang of Chips; How to Match Cold Flavors with Hot Weather, and Other China Tips from PepsiCo International's CEO

By Hastings, Michael | Newsweek, January 31, 2005 | Go to article overview

The Yin and Yang of Chips; How to Match Cold Flavors with Hot Weather, and Other China Tips from PepsiCo International's CEO


Hastings, Michael, Newsweek


Byline: Michael Hastings

Michael White is a veteran general in the cola wars. He has been going to China to sell Pepsi for more than a decade. In 2003, he became CEO of PepsiCo International, the group now responsible for 50 percent of the sales growth at PepsiCo. China is now the company's second largest beverage market, after the United States and Canada. Under White, Pepsi has also aggressively expanded its Frito-Lay brand, helping to make potato chips a part of the Chinese diet. Two months ago he spent a couple of weeks in rural China, and even spent a day in the home of one family who were all "sitting in front of the television set, eating bags of Lay's." He'll be addressing a panel on the Chinese consumer at the World Economic Forum in Davos this month. He spoke to NEWSWEEK's Michael Hastings. Excerpts:

How has Pepsi's view of China changed over the past 20 years?

We've been committed to China for over 25 years. Our focus hasn't really changed. What's certainly changed is the pace of growth in China--it's exploded over the last decade. It has become a hugely dynamic consumer market, and there's still tremendous growth potential. The estimates I see, Chinese consumption spending is only about 9 percent of the U. S. levels. By 2014, nine years from now, we think it's going to be somewhat north of a third of U.S. levels. Our focus has been on trying to excite youth with our brands, particularly Pepsi and Lay's and tailoring our marketing to Chinese sensibilities. We've pioneered the use of local celebrities, and the use of local flavors on the snack side.

How so?

China is not one market. It's many markets, particularly in the case of food, from the south to the west to the north. We have a number of chip flavors tailored to local tastes: seafood flavor, a Peking-duck flavor and a red-meat flavor that sells better in the north. There's the Chinese concept of yin and yang--you don't match hot weather with a hot-flavored product. So for the summer, we came out with a "cool lemon" Lay's.

What's your favorite Chinese flavored chip?

I eat all of the products wherever I travel. I think the "cool lemon" is terrific, though.

And for drinks? …

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