Pepsi Beverage Guru Unveils His Plan to Win the World Over
It's at times been obscured, but the world view of PepsiCo's longtime beverage guru Massimo d'Amore is finally becoming clearer.
Mr. d'Amore sits atop a beverage empire that 's equal in distribution to that of rival Coca-Cola -- both company's brands are sold in 200 markets internationally -- but with a decidedly smaller global footprint: One in two soft drinks consumed around the world is marketed by Coke, while fewer than one in four is marketed by Pepsi.
Now, partly in recognition of the shrinking world created by digitization, PepsiCo is making a grab for a more global future, plotting its first worldwide campaign for its flagship brand for next year; juicing up its international push for Gatorade and putting to work an ambitious executive restructuring aimed at identifying long-range global insights and operating on them faster.
"There is real logic to this perceived madness," said Mr. d'Amore, CEO for PepsiCo Beverages Americas, acknowledging the breadth of changes at the company and at the $20 billion beverage division, in particular, over the past few years.
Mr. d'Amore, a charming Italian who has been a lightning rod for controversy for such efforts as the packaging redesigns of Pepsi and Tropicana by Peter Arnell, was candid over lunch at his Purchase, N.Y., office in describing the beverage division's journey, as well as why a global management structure is the right move.
The creation of the Global Beverage Group is a strategic shift and a "rite of passage" for the company, Mr. d'Amore said, noting that PepsiCo is transitioning from a multi-regional structure to a global company. A Global Snacks Group is also being analyzed.
"[Before] it was more of a global coordination as opposed to a global management," Mr. d'Amore said. "Technology, both social networks and mobile platforms, have created this global generation. We really want to connect our global brands with the global generation, and the best way to do that is with global management."
Structures for PepsiCo Americas Foods, PepsiCo Americas Beverages, Europe and the Asia, Middle East and Africa region still exist. But the Global Beverage Group will operate across those divisions, with a mandate to think broadly about innovation and marketing programs that are 12 months to 36 -- if not 48 -- months out. By contrast, regional groups are charged with thinking zero to 12 months out, Mr. d'Amore said.
It's a shift that analysts believe will address a chink in Pepsi's armor. "For a long time we have argued that nobody speaks for the entire global beverage business of PepsiCo, operationally or functionally," said Carlos Laboy, an analyst with Credit Suisse, in a recent report. He believes Pepsi's "image, design and a brand's promise cannot be out of sync from one market to the next."
In the U.S., Simon Lowden, a longtime PepsiCo exec, is taking the reins as chief marketing officer, while new hires Brad Jakeman and Lorraine Hansen are responsible for global carbonated soft drinks and hydration brands, respectively. Initially, Mr. Jakeman's group will be more robust, as the brands Ms. Hansen is responsible for don't yet have a strong global presence. Both are expected to have teams of about 15 people each, located in the company's U.S. headquarters."Now that we have clarity, I think morale is much better," Mr. d'Amore said.
The new global teams will be charged with innovation and identifying local trends that could have ramifications globally, as well as shepherding global campaigns. Brand Pepsi's first worldwide push is slated to launch in the first quarter of 2012. Already, a creative brief has been circulated to key offices for both BBDO, which handles Pepsi in international markets, and TBWA/Chiat/Day, which handles the brand in the U.S. (OMD handles media.) Mr. d'Amore said that he's been happy with the work from both shops and sees no need to consolidate the account, in the wake of the shift to a global management structure. A "steering committee" with representatives from both shops is evaluating creative concepts, Mr. d'Amore said.
Already, Gatorade, run by President Sarah Robb O' Hagan out of Chicago, is operating as a global brand, with TBWA/Chiat/Day coordinating worldwide messaging. Mr. d'Amore, who has been criticized by some former PepsiCo executives as controlling, describes himself as a "balanced optimist," a global thinker and digitally savvy. An engineer by training, he's able to be "very analytical in analyzing business opportunities," while still being "passionate and emotional" about the company's beverage brands. He admits to being a very hands-on manager, when, for example, a turnaround demands it.
"Sarah [Robb-O' Hagan] would tell you that I was very hands-on 18 months ago, 12 months ago, but now she's really running the ship, because we are going in the right direction. We have alignment meetings but then she goes on and runs solo," he said. "Right now I'm very hands-on on the soft drink business, because we're in the middle of turning around. I think it's the only way you can drive through turnarounds."
Mr. d'Amore is now particularly focused on the Pepsi brand, noting that the new "Summer Time is Pepsi Time " campaign, which he says has helped boost morale, will be in heavy rotation through Labor Day. Then, in the fourth quarter, the brand will have a massive integration with "X Factor."
Throughout the hour-long interview, Mr. d'Amore was upbeat about the future and pragmatic about the past. "I believe it's better to go to market faster, because of the pace of innovation, with stuff that 's 80% or 90% finished, than to go for absolute perfection and be much slower," he said, when asked about the Peter Arnell-fueled redesigns of 2009. "We did things that if we had another six or 12 months might not have happened. But I believe there's nothing wrong with correcting while you're doing things."
In fact, Mr. d'Amore said that approach has become prevalent at Gatorade, which is able to track consumer comments and sentiment via its Mission Control center. "Thanks to the capability we have and the development of technology, on Gatorade we don't consumer-research ads anymore. The best consumer research is the social network. So we develop new ads using the best judgment of our team and the agency. We put them on the air and for the first 24 hours we track what's being said. ... If needed, we go back in the editing room, and fix it."