PepsiCo chairman and CEO Indra Nooyi was joined by Eric Foss of Pepsi Bottling Group, Dick Detwiler of PepsiCo International and Richard Goodman (PepsiCo CFO) in a conference call on 1 March to announce the completion of the $7.8bn strategic acquisitions of its two largest bottlers – Pepsi Bottling Group and PepsiAmericas – and answered questions on how it will affect the company over the next few years.
Indra Nooyi opened the call, explaining: “The acquisitions will create a more flexible, competitive enterprise with revenues of nearly $60bn. We expect to achieve 11-13% core constant currency growth in 2010, and we reiterate our expectations of achieving low double-digit core constant currency growth in 2011and 2012.
“With the completion of the mergers, PepsiCo is the largest food and beverage business in North America and the second largest in the world with around 285,000 employees. It’s also the global leader in savoury snacks.
“Today marks day one of the new PepsiCo. Bringing together these three great companies enables us to create the industry’s fastest, most flexible and most efficient food and beverage system. It will leverage the capabilities of the entire enterprise, which we call ‘The Power of One’, to achieve many years of healthy, profitable growth. If consumers are eating a salty snack, there’s an 80-90% chance of them drinking a beverage with it.”
Ex-PBG chairman Eric Foss is to head up PBC – Pepsi Beverages Company. Indra Nooyi then introduced him as “a talented executive with great knowledge of and passion for the business”.
He commented: “This is a transformational moment for the business. We’re now bigger, stronger and faster and can be leaner, simpler and more agile. This will drive retail and accelerate growth in North America. All 70,000+ employees here are ready to hit the ground running.
“The strategic advantages this offers are the pairing of snacks with drinks to offer retail and foodservice customers unique promotions. 80% of our North American beverage manufacturing, sales and distribution will be consolidated under one roof, enabling greater operating efficiencies and speed to market.
“In Europe and Mexico, the company will have more integrated operating systems and be especially well-positioned to capture the clear growth opportunity in the dynamic, non-carbonated beverage segment.
“We can unlock ‘The Power of One’ by joint merchandising opportunities and bundled value.”
Dick Detwiler said: “We have met all the approvals and the transaction is now complete. We’re now one Pepsi. A more flexible, competitive company and the second-largest food and beverage company in the world. The fastest, most flexible and most capable of leveraging ‘The Power of One’.”
Claire Phoenix, managing editor of ‘Beverage Innovation’, asked three questions:
What are the implications of the new Pepsi structures in Europe. Will this create a new dynamic?
“Many European retailers have consolidated and we have excellent relationships with the larger retailers, but we also recognise the importance of the smaller retailers. For example, in Russia where we acquired Lebedyansky and we are strong with Frito Lay. Regarding beverage snack synergies, we can be more agile and are aware that we can achieve top-line growth by looking at food business in Russia, Poland and the Ukraine.”
What about Pepsi’s energy drink presence in Europe?
“We do not as yet have a strong pan-European energy brand, as many countries have their own.”
How do you see the Pepsi portfolio in five years’ time: far more non-carbonates, more health drinks, or still a focus on fun?
“As for changes in the portfolio, we still see our drinks as being fun for you, but at the same time being better for you; being lower calorie and with natural sweeteners. So we see growth in ‘good for you’ beverages containing fruit, vegetables and dairy – in liquid food or meal replacement snacks.”
Anjali Cordiero of Dow Jones asked: What are the first changes that retailers will see?
“Clarity in terms of decision-making and streamlined supply chain will all help with speed to market on innovation. For instance, when meeting the Super Bowl surge in the past, we had orders four, six and even eight weeks beforehand. This time, we had the product on the truck within 24 hours so agility and speed of execution have already increased dramatically. There will be more big changes concerning route to market with the two bottling companies coming together.”
© FoodBev Media Ltd 2019