The ‘iron woman’ who finally put Pepsi ahead in the soft drinks wars

Pepsi drinkers were once encouraged to embrace “the choice of a new generation”, notes the FT. The “lipsmackin’” appointment of Indra Krishnamurthy Nooyi as CEO shows the firm is as good as its word.

Even ten years ago, the appointment of an Asian woman as head of an American icon would have been unthinkable – still less such a punchy one as Nooyi.

Her “bulldog determination” is so legendary that a colleague once rewrote Black Sabbath’s Iron Man in her honour: “Driving them up the wall/Iron Woman rules them all.” A renowned electric-guitar enthusiast, Nooyi plays a mean power chord herself.

But her appointment was hardly unexpected. Having served at PepsiCo as CFO for the past five years in close alliance with the retiring chief, Steve Reinemund, she is credited with much of the “big thinking” that led to Pepsi’s triumphant repositioning in high-growth areas such as sports drinks and low-fat snacks. Last December, the company’s market capitalisation overtook that of Coca-Cola for the first time.

Madras-born Nooyi, 50, spent the first 23 years of her life in India. She credits her demanding grandfather with pushing her up the academic ladder to business school in Calcutta and, from there, to Yale. In fact, she is one of a family of high achievers, says The Hindu: her older sister, Chandrika, and younger brother, Nandu, also enjoy successful careers on Wall Street. Friends from Madras Christian College remember Nooyi as a “tough and independent team player” whose first taste of business was managing college magazine advertising, says The Observer.

Her subsequent jobs – including a stint as product manager for sanitary towels at Johnson & Johnson in India – proved rather more challenging. But the effort paid off: in 1978, she won a place at Yale School of Management, working as a receptionist to make ends meet, before taking a series of senior management positions with Motorola and engineering group ABB.

When Nooyi joined Pepsi in 1994, the firm was at a nadir, says Fortune. But it turned out that being trounced by Coke in the “cola wars” was “the best thing that ever happened to Pepsi” – forcing it “to retrench, regroup and ultimately outflank its old foe”. Nooyi played a pivotal role, pushing the top brass to acquire the Tropicana fruit juice brand in 1998 and later brokering the $13bn acquisition of Quaker Foods.

The chemistry between Nooyi and CEO Steve Reinemund helped: “We complete each other’s sentences,” she told The New York Times. But their respective styles couldn’t have been more different. Reinemund, a former marine, is a self-effacing type, “Nooyi likes to joke around”.

Inheriting the reins of a company that is at the top of its game has clear disadvantages: with investors accustomed to strong growth and mushrooming profits, “Nooyi’s ability to surprise Wall Street lies mostly on
the downside”, says the FT.

But although her appointment can be seen as an exercise in continuity, it would be characteristic of Nooyi to make her mark early. An obvious target would be Danone, the French maker of yoghurts and Evian bottled water, which, bolstered by protectionist French politicians, saw off a putative bid from Pepsi last year. It would be a fitting tribute to Nooyi’s “tough character and bold deal-making” if she were to pull it off.

 

Why Indians are grabbing the top jobs

Nooyi’s appointment “is a source of both pride and embarrassment for India”, says The Observer. “Pride because she  makes history by becoming the first Indian woman to head a Fortune 100 company; embarrassment because a pesticide controversy has led some Indian states to impose a ban on Pepsi and Coca-Cola products.”

No doubt Nooyi’s elevation will help PepsiCo steer a path in India – for all her American credentials, she remains wedded to her Indian roots, often donning saris – and her appointment was certainly greeted with delight there. “It’s great for India, great for womanhood and great for Pepsi,” said HSBC India’s chief, Naina Lal Kidwai.

Still, Nooyi is far from blazing a lone trail, notes the International Herald Tribune. At least eight of the 500 biggest companies in the world are headed by Indians. There’s Lakshmi Mittal of Mittal Steel; Ramani Ayer of Hartford Financial Services Group; and Rajat Gupta, the first foreign-born chief of McKinsey.

What they have in common is a “rigorous education” at the Indian Institutes of Management, created after independence in 1947. These schools might be “American-inspired”, but the standards they set put many comparable US institutions in the shade. The acceptance rate at the IIM college in Ahmedabad, for instance, is one in 532, compared with one in 13 at Stanford business school.

So will India’s impressive supply of executives continue? There’s little sign of Western demand drying up, but with India’s economy growing at 9% a year, the most ambitious are increasingly staying put. As Roopa Kudva at Standard & Poor’s Mumbai points out, “India is turning out to be the bigger story”.