PepsiCo Plans to Make Snacks Into Beverages

PURCHASE, N.Y. -- Hoping to infuse new life into its beverage division, PepsiCo Inc. will try a new strategy of turning snack products into drinks, The Financial Times reported.

“A way to grow the beverage business is to take foods and drinkify them,” Indra Nooyi, chief executive of PepsiCo's U.S. drinks and snacks company, said earlier this week at an industry conference.

While she did not elaborate on what snack products could be turned into drinks, Nooyi did cite a drinkable oatmeal sold in Brazil as an example, as well as the company’s existing line of Naked juice drinks.

“There’s a whole range of products we have in the pipeline that are value-added products that can be snacks made into beverages,” Nooyi said during the conference.

According to The Financial Times report, these latest remarks by Nooyi indicate that she remains opposed to breaking up PepsiCo into separate snacks and drinks businesses even though some analysts have suggested that shareholders would benefit if the company’s faster-growing snacks business was split from the slow-growing beverage unit.

“The fact that PepsiCo is a food and beverage company gives us a more holistic view of the consumer, what foods they eat, what do they like to drink, what parts of what they eat are they willing to drinkify,” Nooyi explained.

PepsiCo, which has been losing market share to rivals, continues to work to boost its beverage business as part of a corporate “reset” that Nooyi unveiled nearly a year ago.

The chief executive also noted this week that with more research and the development of better sweeteners, the company will aim to reverse the decline in carbonated soft drink sales.

“When you have a secular trend and consumer fatigue with a category, I think it’s a great opportunity to reinvent that category,” Nooyi said.