To understand PepsiCo's successful snack strategy in China, look at one of its local bestsellers: cucumber-flavored Lay's potato chips.
PepsiCo's Katty Lam Woos Chinese Snackers With Surprises
"Our guests who come to China say, 'Cucumber chips? Are you out of your minds?'" said Katty Lam. "But if you understand the yin-yang concept, it makes sense."
In Chinese traditional medicine, potato chips are said to heat the body, since they're fried. Cucumbers, a "cool" food, counteract that effect.
Ms. Lam, a Hong Kong native, was promoted to president, PepsiCo Greater China region on July 30, following her success as the company's general manager for foods in greater China.
She has been overseeing PepsiCo's Chinese food business and brands including Lay's and Quaker Oats. Under her leadership, business is booming: In the first quarter of 2013, PepsiCo's mainland food business grew 47% by volume.
The company's food and drink brands appeared in a multimedia Chinese New Year campaign called "Bring Happiness Home" that PepsiCo says hit more than 1 billion views.
In China, PepsiCo's food brands are known for blends that connect with local consumers, like wolfberry congee or lemon tea-flavored chips.
To make foods healthier, "in the western world it's more about taking out stuff -- taking out fat, taking out sodium," Ms. Lam said. "The Chinese concept is about balance and sometimes about adding ingredients."
In nearly two decades with PepsiCo, Ms. Lam, 47, has worked in finance, business development, marketing and general management.
"She's seen the business from all angles," said Tim Minges, senior VP, strategic business initiatives, North American Beverages, who led PepsiCo's China business in his previous role. That's "critical, since our company is quite complex, with food and beverage, including agro. There's a lot to know."
The company is reaching out to inland, lower-tier areas of China through a new food plant in Wuhan. In Shanghai in November, PepsiCo opened its largest R&D center outside North America, a sign of commitment to Chinese and Asian innovations.
One new concept in China is "pick and mix," with customers choosing an assortment of tiny snack bags and paying by weight. Other markets in Asia are studying that concept. French fries sold in a cup, another Chinese product, might have potential elsewhere, Ms. Lam said.
Even when products seem like obvious winners, "innovation is never easy," she said. Rice chips didn't work, perhaps because they didn't conform to Chinese expectations about rice as warm and soft.
"In the past we tried a lot more," Ms. Lam said. "Now we try less. We focus on fewer, bigger and better."