CONVERSATIONS IN LEADERSHIP

Transcription

1 NIELSEN CXO SERIES CONVERSATIONS IN LEADERSHIP WITH MANU ANAND, CHAIRMAN & CEO, PEPSICO INDIA Copyright 2013 The Nielsen Company APRIL

2 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 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. 2 NIELSEN CXO SERIES

3 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. THE SLOWDOWN HAS LITTLE EFFECT ON CONSUMPTION PATTERNS FOR THE BRAND. Copyright 2013 The Nielsen Company 3

4 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. 4 NIELSEN CXO SERIES

5 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 consumerbasket point of view. After that we combine it with the right offerings in terms of price. Finally, the right promotion is important. PEPSICO WILL CONTINUE TO FOCUS ON GROWTH OPPORTUNITIES IN TIER II AND TIER III CITIES IN INDIA 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 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. Copyright 2013 The Nielsen Company 5

6 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. 6 NIELSEN CXO SERIES

7 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. COMMITMENT TO ENVIRONMENT SUSTAINABILITY, WATER CONSERVATION AND CORPORATE SOCIAL RESPONSIBILITY ARE INTEGRAL TO PEPSICO 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. Copyright 2013 The Nielsen Company 7

8 The interview was conducted in August 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. ABOUT NIELSEN Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands. For more information, visit Copyright 2013 The Nielsen Company. All rights reserved. Nielsen and the Nielsen logo are trademarks or registered trademarks of CZT/ACN Trademarks, L.L.C. Other product and service names are trademarks or registered trademarks of their respective companies. 8 NIELSEN CXO SERIES