When you think about PepsiCo…your brain either beelines to carbonated soft drinks and their flagship Pepsi brand or packaged foods and their significant market share across salty snack categories. But how about what I like to call the “three-headed categorical monster” of active nutrition? Or maybe it’s time to expand my phrase slightly…especially after PepsiCo CEO stated last week within its third quarter earnings call that “fiber will be the next protein.” However, while PepsiCo leadership now talks wildly about “elevating its innovation agenda with core brands by capturing new occasions through added functional benefits,” categorical offerings outside hydration (so energy, protein, and fiber) were mostly strategic afterthoughts only a handful of years ago. Though, if your primary indicator for strategic change was looking for broad-based portfolio product innovation, you’d likely believe PepsiCo leadership was “all talk” in 2022 when expressing "optimism about the runway for growth within the active nutrition category." Outside of Gatorade deepening its “fuel solutions” for athletes and simultaneously broadening into more active lifestyles…PepsiCo could’ve just looked like another Big CPG player plagued with a mix of poor portfolio management, missed opportunities, and persistent share loss. In fact, you’d only understand where it was heading due to PepsiCo leadership leaving breadcrumb after breadcrumb throughout quarterly earnings statements and investment conference presentations regarding how the $200 billion market cap sized CPG conglomerate would transform its products to better reach shifting consumer preferences…as more moved closer towards this four-way intersection of taste, convenience, nutrition, and functionality. However, heading into 2025…when the business landscape seemed cloudier than ever, as massive “drivers of demand” like GLP-1 weight loss second-order effects became more pronounced and the MAHA movement gained political power, PepsiCo appeared to build further conviction surrounding its long-awaited strategic game plan. Suddenly, all those “nice if possible” innovation cycles focused on reimagining products quickly turned into a cascade of “must have” strategic actions. But my latest first principles thinking content will explore (through the lens of hydration, energy, protein, and fiber) why I believe PepsiCo contains one of the most fascinating “active nutrition” brand portfolios. And while PepsiCo is also making huge “nutrition” adjustments across its entire portfolio, I’ll only sporadically mention the most relevant changes that are adjacent or congruent to adding “functionality” in products. I'll cover subject matter that ranges from Muscle Milk and Gatorade MAHA changes, the recent energy drinks deal that involved PepsiCo, CELSIUS, Alani Nu, and Rockstar Energy...along with how more grams of protein seem to be making its way into anything and everything that’s quick, easy, and accessible (including Doritos, Quaker, Sun Chips, PopCorners, and Smartfood products). Also, I'll cover the two massive decisions (Poppi acquisition and Pepsi Prebiotic) that really showed how serious PepsiCo is about the “fiber will be the next protein” CEO statement. Lastly, PepsiCo is a world-class company with iconic brands, and its willingness to reinvent those brands (against the backdrop of shifting consumer habits and preferences) is venerable. If PepsiCo keeps this “disrupt ourselves” mindset going…I believe it’s well-positioned to continue winning in this important “active nutrition” space.
