BOSTON — What do Generation Z and millennial moms have in common? These two consumer groups are helping guide PepsiCo, Inc.’s product development, said Al Carey, chief executive officer, North America.
|Al Carey, c.e.o., North America, PepsiCo|
“We have a great deal of consumer research that tells us where the Gen Z consumer is going and the millennial moms,” Mr. Carey said during a Sept. 7 presentation at the Barclays Global Consumer Staples Conference in Boston. “Those are two we watch real carefully.”
A trend among millennial moms, for example, inspired a forthcoming product launch from PepsiCo’s Quaker business.
“I’ve only been involved with Quaker now for about four months, but Google ‘overnight oats,’ and see what comes up, and it’s this absolutely beautiful array of different overnight oats that millennial moms have invented,” Mr. Carey said. “I mean, the idea is you put oats in a jar overnight, pour in milk or yogurt, put in fruit, some people put in chocolate, some people put in peanut butter, and what you get at six hours later in the morning when your kids wake up for breakfast, is this wonderful, healthy product... I think there’s a great opportunity for Quaker to brand overnight oats. We have the dominant share, and I think this is an example of how you can take oats and turn it into something really healthy and on trend.”
Health and wellness is a key driver of product innovation at PepsiCo, which is also set to launch Tropicana with probiotics, Naked cold-pressed juices, Mtn Dew Kickstart with 60% less sugar, Stacy’s organic pita chips and Sabra vegetable-infused guacamole.
|Vivek Sankaran, president and c.o.o., Frito-Lay North America.|
“We’ve had brands in the premium better-for-you space for a while, like Smartfood and Simply and such,” said Vivek Sankaran, president and chief operating officer, Frito-Lay North America. “We have doubled down on those. We have increased our investment there. And those, that portfolio of brands, for us is growing four times faster than the core. So there’s a lot of momentum on that front. And we are finding that there is a segment, a large segment of consumers who want better-for-you and premium but also want a brand they can recognize. And that’s playing to our strength.
“The other thing we are doing is we’re also incubating. We are incubating brands you won’t recognize it as a Frito-Lay product in the marketplace. And as we see something sticking, we’ll amplify it, so we’re starting to play that.”
PepsiCo also is offering consumers healthier options alongside its top brands, Mr. Sankaran said.
“You will see Doritos, but you’ll also see in a school reduced-fat Doritos,” he said. “You’ll see Smartfood; you’ll see Smartfood Delight. Smartfood Delight is 35 calories a cup. So first of all, we are giving choice to consumers on pretty much all our portfolio. Lay’s, reduced salt Lay’s, which does very well by the way.”
In PepsiCo’s North America Beverages segment, product development efforts are directed at faster-growing spaces within the category, said Kirk Tanner, president and chief operating officer, North America Beverages.
|Kirk Tanner, president and c.o.o., North America Beverages, PepsiCo|
“When you play a portfolio strategy, you can see across your portfolio where you have growth, explosive growth and no growth,” Mr. Tanner said. “And we talked about carbonated soft drinks; that’s in the low to no growth area. But we’ve seen explosive growth around teas, coffees, our sports portfolio with Gatorade, the water portfolio across enhanced waters and premium waters to everyday water. There’s a lot of growth in the category out there, and we’re watching where consumers are going. And if you pay attention to what consumers are buying on college campuses, what Generation Z is buying, and you’re trying to meet those consumers’ needs with the innovation platforms, I think that’s where we’re aligned. We’re aligned with having a broad portfolio strategy and then we’re innovating against that.”
The company, which recently debuted organic varieties of Gatorade, is planning another big launch for the sports drink brand.“The one I’m most excited about that we’ll get started in next year, start to roll it out slowly, but it’s the idea of a different customized Gatorade pod,” Mr. Carey said. “So you get a Gatorade container that we’ll sell at retail, you fill it with water, and you put this little pod in the top and shake it, and you have a customized Gatorade. And the way you find out what kind of Gatorade you want is you’re wearing a patch, and you take it off and it will measure the kind of sweat you have and it will guide you toward a certain formula of Gatorade.”