CONVERSATIONS IN LEADERSHIPManu Anand, Chairman & CEO, PepsiCo India, shares his views on the...
Transcript of CONVERSATIONS IN LEADERSHIPManu Anand, Chairman & CEO, PepsiCo India, shares his views on the...
1NIELSEN CXO SERIES Copyright © 2013 The Nielsen Company
WITH MANU ANAND, CHAIRMAN & CEO, PEPSICO INDIA
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CONVERSATIONS IN LEADERSHIP
A P R I L 2 0 1 3
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An ever-evolving strategist of a brand, PepsiCo has over the years
set high standards in terms of corporate social responsibilities,
environment conservation and most significantly, profitable business.
The company’s outlook towards the rural market, strategies to cope
with the economic slowdown and its unique management policies
make it one of the largest and yet rapidly growing companies globally
as well as in India.
Manu Anand, Chairman & CEO, PepsiCo India, shares his views on
the company’s outlook and a number of relevant issues in a tête-à-tête
with Piyush Mathur, President, Nielsen India Region. We get you some
excerpts from the interview.
PEPSICO CHAIRMAN & CEO MANU ANAND (LEFT) IN CONVERSATION WITH PIYUSH MATHUR, PRESIDENT, NIELSEN INDIA REGION
INDIA IS ONE OF PEPSICO’S FASTEST GROWING MARKETS IN SCALE; AMONG THE TOP FIVE MARKETS IN TERMS OF SIZE
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THE SLOWDOWN HAS LITTLE EFFECT ON CONSUMPTION PATTERNS FOR THE BRAND.
HOW DOES GLOBAL PEPSICO SEE THE INDIA OPPORTUNITY?
India is definitely one of PepsiCo’s fastest growing markets in
scale and among the top five markets in terms of size. Therefore,
PepsiCo has a bullish approach towards the Indian market. Both our
businesses – foods and beverages – are scalable, and there are some
phenomenal brands that are taking them forward. PepsiCo is positive
and confident about the infrastructure, the brands, the people selling
systems and the Indian consumer. We see big opportunities in the
market and will look to invest in India to do justice to our businesses
and consumers in the country.
WITH GDP FOR THE JANUARY TO MARCH 2012 QUARTER DECLINING TO 5.3 PERCENT, HOW IS PEPSICO HANDLING THE SLOWDOWN IN THE MARKET?
There is definitely a slowdown that has impacted industries across
sectors. It is not only an economic slowdown but also a slowdown in
terms of consumption. This is a tough scenario. However, we continue
to get healthy growth and I think there is a logical reason behind it.
Firstly, we are selling small indulgences, a beverage in the evening
or a snack sometime during the day or a combination of the two, at
very affordable price points. The lowest price point for snacks is Rs 2
and for beverages it is Rs 8. The reduction in spending by the average
consumer therefore has little impact on the consumption of these
items.
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HOW IMPORTANT IS INNOVATION IN THIS AGE WHEN THE CONSUMER IS CONSTANTLY EVOLVING? WHAT IS PEPSICO DOING WITH THE FOODS AND BEVERAGES BUSINESSES IN INDIA FROM AN INNOVATION STANDPOINT? First, PepsiCo maintains a healthy growth rate that originates from
the core. It is definitely important to have the infrastructure that
helps reach out to the consumer at various price points on various
occasions. However, we are also innovating beyond the core and
venturing into the health and wellness segment with our Quaker range
and our Tropicana juices. There are also several innovations taking
place for the consumers at the bottom of the pyramid.
In beverages, we have a joint venture with Tata’s NourishCo.
NourishCo has launched two new and innovative products– one is a
hydration product in cup form called Tata Gluco Plus, available at a
very affordable price point of Rs 7, and the other is Tata Water Plus,
which is value-added water with nutrients and minerals, sold both
in PET and pouch format. The objective of selling products at such
low price points is to merge a larger number of consumers, enhance
the distribution network and hopefully, add new consumers to the
category.
In foods, we have set up a value business model called the Lehar
vertical to try to get into more value product offerings with particular
focus on lower price points at Rs 2 and Rs 5. These will be the
mainstays of the business going forward.
EVEN AS FMCG PLAYERS ARE PENETRATING INTO THE RURAL MARKETS, THERE ARE ALSO OPPORTUNITIES IN THE FORM OF MIDDLE INDIA, A SEGMENT MADE UP OF APPROXIMATELY 400 TOWNS, EACH WITH A POPULATION OF ONE TO TEN LAC. HOW DO YOU LOOK AT RURAL INDIA VERSUS MIDDLE INDIA?
Growth in metros is certainly slowing down due to gradual saturation
of the markets. The next level of growth lies in the Tier II and Tier III
cities, where growth is almost two to three times that of the metros.
We have popular brands in these cities as well as in rural areas,
where TV penetration is now fairly high. We are not only leveraging
our brand but also our low price points in these markets. In the
beverage category, the returnable glass model and provision of chilling
infrastructure have yielded positive results for us.
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PEPSICO WILL CONTINUE TO FOCUS ON GROWTH OPPORTUNITIES IN TIER II AND TIER III CITIES IN INDIA
WHILE TRADITIONAL TRADE CONTINUES TO GROW IN INDIA, MODERN TRADE IS SLOWLY GAINING GROUND. WHAT IS PEPSICO DOING FOR MANAGING THE GROWTH OF BOTH TRADITIONAL AND MODERN TRADE? Traditional trade is expanding and I can see this every time I go
through Nielsen reports. I am staggered by the numeric additions to
the FMCG universe. Our job is to continue expanding our numeric
and weighted distribution in traditional trade, in order to make sure
that we are fairly represented in these expanding and increasing
outlets.
On the modern trade side, we are bringing in all our global learnings,
combining it with insights on the Indian consumer to try and provide
the right customer experience and ensure growth. It starts with
the right shopper insights. For example, while shoppers go into
modern trade outlets, understanding their preferences, habits and
budgets, provides us with key insights. For us, as a company, we
would certainly want to maximise our benefits and make sure that the
categories get the right space that they require from the consumer-
basket point of view. After that we combine it with the right offerings
in terms of price. Finally, the right promotion is important.
WITH SOCIAL MEDIA EVOLVING, LIKE IT OR NOT, TODAY PLATFORMS LIKE FACEBOOK AND TWITTER HAVE A SUBSTANTIAL INFLUENCE ON THE BRAND’S IMAGE AND SUCCESS. WHAT IS PEPSICO DOING IN THIS SPACE?
We have already taken up that challenge. We deal largely with young
consumers and you cannot really communicate successfully with
this group unless you have a social media presence. We started our
interaction in the financial year 2006-2007 but have scaled it up over
the last two years. Today, brand Pepsi has over three million Facebook
fans, and Lays has more than one million fans. We intend to do more
in this space.
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SOME OF THE BUZZWORDS TODAY ARE ENVIRONMENT AND GOING GREEN. PEPSICO IS SETTING A NEW STANDARD FOR WATER CONSERVATION IN INDIA. TELL US MORE ABOUT THAT.
Performance with purpose has been our main agenda in this segment.
Our CEO Indra Nooyi has outlined three areas in the purpose
agenda which includes human sustainability, talent sustainability and
environment sustainability. Our water conservation endeavours are a
part of the environment sustainability initiative.
The first thing to remember is that PepsiCo is water positive to
the extent of eight billion litres of water, which means that we are
recharging or putting back into the system eight billion litres of water.
This is more than one–and-a-half times our consumption each year.
Moreover, in a season like this, when the monsoon has been erratic,
efforts like ours become even more important. Farmers who were
unsure of these measures now find it a more sensible approach in
terms of water availability and economics.
DO YOU THINK INDIAN COMPANIES AND MULTINATIONAL CORPORATIONS ARE DOING ENOUGH IN THE CSR SPACE?
I think over the last few years the awareness towards Corporate
Social Responsibility has gone up significantly. It is no longer
about just signing a cheque for an NGO; it is about seeing their
efforts come to fruition. When you look around, you will find
companies wholeheartedly taking initiatives and using their areas of
specialisation to make a difference.
ONE OF THE THREE PERFORMANCE AGENDAS FOR PEPSICO YOU MENTIONED WAS TALENT. WHAT ARE THE STRATEGIES THAT PEPSICO IS ADOPTING WITH REGARD TO BUILDING AND MANAGING TALENT WITHIN THE ORGANISATION?
The most important thing for us is to have the right people at the
right place at the right time working on the right thing, and most
importantly, in the right way. The entire cycle starts from recruitment
- going to the right institutes, getting the right courses, depending
on the nature of the job enrolled and then ensuring that you have the
right programmes to train these people.
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For example, we have several management development programmes
including one called ‘Possibilities’. Through this programme not only
do we provide visibility to everyone within the organisation but also
allow them to chart out their own career path. We try to develop talent,
give them the right responsibility and career prospects and create a
solid platform within the company.
We also have an important programme within the company called ‘I
Care’, where the management interacts with the individuals to ensure
that the relationship is rewarding for both the parties. Moreover,
we have a strong value system within PepsiCo where everybody
understands and lives by them every day.
IT HAS BEEN 18 MONTHS SINCE YOU HAVE COME BACK TO INDIA. WHAT ARE THE THINGS THAT STAND OUT AND WHAT DID YOU NOT EXPECT TO SEE?
I feel India is truly a wonderful place to work. When I returned, it
was sheer growth opportunity and clearly the task was to maximise
that while continuing to build up the existing business. The other
rewarding aspect was returning to a group of talented employees.
Main concerns include the infrastructure as it impacts the productivity
here significantly. The fiscal uncertainty has also been a concern and
it is very important to strategise according to the rapidly changing
policies, bank rates and tax rates. Inflation has also been a challenge,
but it exists across the globe and companies have to work with that.
DO YOU SEE A LOT OF VOLATILITY? HOW DOES PLANNING AND EXECUTION VARY DUE TO THIS?
Your forecast and numbers have to change approximately every three
months. With the inflation and fiscal uncertainty, the biggest thing of
course is to ensure that the growth continues. It is not only finding
order in chaos, but continuing to thrive in it.
COMMITMENT TO ENVIRONMENT SUSTAINABILITY, WATER CONSERVATION AND CORPORATE SOCIAL RESPONSIBILITY ARE INTEGRAL TO PEPSICO
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The interview was conducted in August 2012. The views and opinions
expressed in this article are those of the client and do not necessarily
reflect those of Nielsen. All data provided in this article is for
informational purposes only.
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