Pep Positive ‘overarching umbrella’ of how company approaches better initiatives

PepsiCo is continuing its diversity, equity and inclusion journey and is in the second year of a five-year, $575 million investment focusing on communities – primarily those that are underserved. 

Kent Montgomery, SVP of industry relations and multicultural development, and Chris Yemma, senior director of industry relations, with PepsiCo, North America recently spoke with The Shelby Report about the company’s journey.

Montgomery was named SVP on Jan. 1. Previously, he had served as VP of industry relations, but PepsiCo’s multicultural function was incorporated into his role. “The multicultural work is in support of our DE&I journey at PepsiCo,” he said.

In addition to DE&I, the company also has seen “a convergence” between what it is looking to do, what retailers are looking to do and the need in the community. Montgomery said sustainability is becoming a key topic, along with social responsibility.

“We’ve had certain things happen in our communities that would suggest new cohorts, like Gen Z, want to know what you stand for…Chris and I are talking about PepsiCo all the time, and we need to make sure that we’re inclusive of what PepsiCo stands for,” he said. “We see the integration being very positive.”

The company’s five-year investment plan includes a list of programs being rolled out into communities. This includes Dig In, a Black restaurant program that provides opportunities for education, grants and sponsorships for restaurateurs. On the Hispanic side, PepsiCo offers Juntos Crecemos, a program for owners of small shops and bodegas who need opportunities, skill sets, access to grants or dollars to support their businesses. 

The PepsiCo Foundation offers grants to junior college candidates, people looking to get two- and four-year degrees, by helping them “fulfill that dream of advancement,” Montgomery said. “All of these roll up to investments we’re giving back into the marketplace.”

Yemma added that the company’s initiatives also go down to brand level.

“Individual brands are part of the whole racial equality journey, and you’re starting to see that programming come to life with things like Doritos Solid Black, which is lifting up Black changemakers and culture makers around the country,” Yemma said.

Cheetos’ Deja tu Huella campaign, which launched last year, translates to “leave your mark,” Yemma said.

It celebrates those in the Latin community “who have left their mark in American culture and helped kind of shape American culture to this day. So it’s on a corporate level, it’s multiple angles, which I think is awesome,” he said.  

“Consumers know us by our brands as well, and so if we’re able to unlock the power of iconic brands like a Mountain Dew or a Cheetos, then that’s just going to raise more awareness about our overall racial equality journey.”

PepsiCo also is looking at ways to be “healthful,” Montgomery said. In 2022, the company reported 10 percent organic revenue growth, led by Frito Lay in North America. The zero-sugar category was up 26 percent. PepsiCo customers are looking for health-conscious products that they truly enjoy. “Innovation has been strong, and I think that’s really fueled our company.”

Montgomery noted that PepsiCo’s supply chain has “come back significantly,” which has given the company the opportunity to bring back innovation. He mentioned Frito Lay Minis – chips in mini canisters – as innovation from the company’s portfolio. It also is seeing strong sales in variety pack innovations, as shoppers have an eye on value.

“I think that’s a sign that maybe the consumer still may be a little wary but is still trying to find the right balance,” he said.

‘Better’ strategy

Montgomery said PepsiCo has adopted a “Better” strategy – faster, stronger, better. “Faster is more thinking about our innovation, stronger is about our capabilities and better is about how we leave the planet.”

While they use the “Better” strategy internally, the company’s PepsiCo (Pep) Positive sustainability initiative is something they talk about externally.

“Pep Positive is that sustainability starts to fit,” he said. “It’s really our kind of end-to-end transformation, that we’re talking about sustainability from the beginning to the end. From our agriculture and how we work with farmers, to the package and design and what we ultimately put on a shelf. And everything in between is part of that end-to-end work that we’re doing around sustainability. So it is front and center.”

Yemma added that “faster, stronger, better” is the vision that PepsiCo Chairman and CEO Ramon Laguarta laid out a couple of years ago. “But if you talk about sustainability, you might argue that is at the top of his list with PepsiCo Positive…it’s about really future proofing our business.”

He said that Gen Z is going to be the most diverse generation in history. “They care about more than just your product itself. You need to stand for something.”

Yemma said two things that stood out in research with Gen Z is climate/climate change and diversity and inclusion. Those are two pillars within Pep Positive. 

“It’s people and planet that we’re focused on,” he said. “Pep Positive is kind of an overarching umbrella of how PepsiCo approaches better initiatives. It starts with people, which is multicultural…and then there’s sustainability on the other side. That is a huge priority for our organization.”

Montgomery added that PepsiCo is continuing to work with its retailers to help them understand omnichannel in a better way. It also wants to use its proprietary data set, PepBiz, to work as a consultant to retailers to help them build traffic and shopping solutions for their customers. “We believe that the data is the way to get at that.”

He said there is a real focus on Gen Z, with a significant number of products leaning toward that generation. One example is Starry, a new lemon-lime carbonated soft drink PepsiCo recently launched with good response.

Montgomery said upcoming trends include more better-for-you options. Pop Corners is one example, and he added that spicy options also are trending, along with the energy drink category. Protein, in both snacks and beverages, is another growing trend. Yemma added that the zero-sugar trend is “huge.”

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