Indra Nooyi, Chairman & CEO, PepsiCo (Pic by Tribhuwan Sharma)

There is a price to being good. What kind of price are you willing to pay?
That is a tricky question. The question we have to ask ourselves is not the price to be good but to look at the cost of not being good. If you look at the cost of not being good, the price of being good, whatever it is — human cost, dollar cost — is minuscule. To be good is to preserve a reputation. An example of being good is environmental sustainability. You think of that as a green programme, but how we think of it is how we could do better by doing good because we are saving a lot of money through environmental sustainability.

How is the shift from fun to fitness portfolio progressing, and what are your plans on that front?
It is not a full shift. It is a balance between treat-for-you and good-for-you products because there is a place for each of these in our diets. We have bought a lot of nuts companies globally, we bought rice cake companies in Australia, and we moved from oils that had transfats to transfat-free oil. We are trying to source oils that are heart-healthy.

Overall, we are transforming the portfolio every which way to give customers a really good choice… We are working to see how we can reduce fats, salt and calories on the treat products and, at the same time, provide an incredible array of good-for-you products.

Coming to the performance-with- purpose agenda, how far have you gone in achieving your objective?
Performance with purpose has energised the company. It has tapped into the emotions of people. The human sustainability, the whole issue of transforming the portfolio: this journey we started six-seven years ago is picking up steam, and we are shifting the portfolio to a nice combination of treat-for-you to good-for-you products.

In the area of environmental sustainability, our goal is that by 2015, globally, we want to reduce water consumption per unit of production by 20 per cent, electricity by 20 per cent and fuel by 25 per cent. The goal is to reduce, reuse and recycle. I am proud to say that at this point, relative to where we want to be, we are ahead of the original plan. The last part, the whole issue of talent sustainability — how do we make sure that people who come to work at PepsiCo are here not just to make a living, but to have a life — has unleashed the creativity of people. And they have come up with interesting new programmes to make PepsiCo a much more fun place to be.

One issue that remains on the environment front after you take care of water and energy conservation is packaging trash. How do you plan to address that?
First of all, our bottles use up to about 25 per cent recycled PET (polyethylene terephthalate). Second, in a country like India, the way bottles are recycled is pretty extraordinary. In our case, we incorporate recycled PET to make bottles again. In addition, we are doing a whole bunch to reduce the weight of the bottle. For example, in our Aquafina bottles, we have trimmed the plastic significantly. In all of our packaging, every year we look to trim the amount of PET in packaging.

Despite global inflation and slowdown in the US market, PepsiCo has maintained double-digit revenues and operating profit growth in the previous quarter. How have you done it?
The overall business environment is a difficult one. There is inflation. The US market has slowed a bit… The wonderful thing about PepsiCo is that we have a great diversity in portfolio, both in terms of product and geography. From product diversity perspective, we have products from simple-treats to healthy-eats at very affordable prices. Geographical diversity has helped us because when one market is down, others pick up.

In addition, we have a terrific innovation pipeline and, even in a slow market, we keep on generating news, which keeps excitement in our categories. Lastly, I’ll be remiss if I did not add that PepsiCo has got extraordinary people. It is people who make a company hum even when the economy is down.

How has PepsiCo’s performance in India been so far this year?
India is clearly a star in our portfolio. It is a big bet market for us. The demographics are very favourable. The investment climate is becoming very attractive. We are committed in a significant way to India. The performance of Indian business in the first half of this year, both on the beverage and snacks sides, has been among the highest in our overall portfolios.

India, in both beverages and snacks, is among our Top 10 markets. If you look at our international markets, India is among the Top 5. What we should not forget is that India is based on rupees. If you look at purchase power parity, I say, India would be much more prominent in all the numbers. What makes us very bullish about India is three things: one, the demographics — India is a young country; two, the continued 8-10 per cent growth of the economy; and three, India has an extraordinary reservoir of talent. We can use Indian talent to help grow many of our other markets.

You have many country heads and functional heads around the world in PepsiCo who are from India. What kind of talent pipeline are you looking at now?
Many of our business heads keep looking for people who have had experience in India to come and run other countries and be functional heads. They can function in any economy because they made it in India where there are many challenges from the infrastructure point of view. And one of the things they learn in India is to get by without much, and do things the low-cost way.

You have also rejigged the organisation a little, and created new positions such as chief scientific officer...
You look at the marketplace, the need of the business environment, and adapt to the new conditions. While we had very good R&D people in all our divisions, I felt the need to have somebody who came in from a very different perspective to coordinate our R&D activity and give it a little extra oomph. So, I brought in Dr Mahmood Khan from the pharmaceutical industry. The job of the CEO is to constantly look at how to alter the structure to cater to changes in the marketplace, or to cater to management development without disrupting the organisation. That is the biggest balancing act that I have to do.

Though it is early in your stint as chairman of PepsiCo, what do you want your legacy to be whenever you leave?
I think about this often. Whenever I leave PepsiCo, looking back I want people to say that in the first part of the 21st century, if you look at the defining corporations of the world, PepsiCo was one of them because PepsiCo was a good company — good in the commercial as well as in the moral sense. And PepsiCo set the standard for what a good corporation should be.

(Businessworld Issue 23-29 Sep 2008)