PepsiCo CEO Vows Company Will Learn From Its Mistakes

Nooyi: Selling Brand Overhaul to Entire Organization, Sweating the Details Among Lessons Learned After Rocky '09

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NEW YORK (AdAge.com) -- PepsiCo is ready to close the book on the difficulties its North American beverage business has encountered in the last year. At its first analyst meeting since 2006, CEO Indra Nooyi said the company hasn't been happy with results in the division and will learn from its mistakes. She also publicly acknowledged the controversies the division has weathered.

Indra Nooyi
Indra Nooyi
"There were a couple of brand refreshes that didn't work and a couple of agency partners that were misinterpreted or misquoted, and that led to controversy in North American beverages," she said during a keynote that opened the two-day analyst meeting.

Later she added, "The squeaky wheel [makes] the most noise. In this case, it's unfortunate because some of the stuff I read about I didn't even know about. But, you know what, it happened. When you have high-profile agencies these things happen."

PepsiCo has been dogged by criticisms since beginning its beverage overhaul in 2009. The failed Tropicana rebrand has been a hot-button issue, dissected by consumers, media and the advertising industry, and PepsiCo's partnership with Arnell Group, which designed many of the new logos and packaging for the company, has also been a lightning rod for controversy. Still, Ms. Nooyi urged the media to put any issues the company has dealt with into context of the entire program, which included the updating of 1,200 stock-keeping units.

"2009 was not a good year for North American beverages. We didn't like the North American beverage results either but when you are undertaking such a massive undertaking, you have to bite your tongue," she said. "Next time we have to do something like that every one of these lessons will be reviewed, and we won't make the same mistakes."

Ms. Nooyi said the first lesson learned from the beverage portfolio overhaul is that the organization has to buy into the program. Realizing that it couldn't overhaul only two brands or drag out the revamp for several years, the company made a lot of changes in a short period of time.

"I would have taken more time in getting leadership in North American Beverages to sell it into the organization," she said. "At the end of the day would it have been a different outcome, I don't know. But that's lesson one."

Other lessons included realizing that it's not possible to stop a program midstream. Ms. Nooyi cited the massive refresh of Gatorade, which coincided with the recession. She said the company had to ask itself whether it had the courage to stay the course. Indeed, Gatorade has been battered in the media and among analysts who have decried the brand's continued decline and share losses, even as it has remained the No. 1 brand in the category. Ms. Nooyi also cited the importance of "sweating the details" even when it's a massive project like the revamping of more than a thousand packages.

But, now, Ms. Nooyi said the company's efforts are paying off and will continue to pay off into 2011 and 2012. "The good news is most of that work is behind us," she said. "As of now, let's look forward."

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