How Seven CEOs will Change the Food Industry

Fourteen of the 15 largest food companies have changed CEOs in the past three years. Here’s a look at how seven of them will change the food industry.

By Diane Toops, News & Trends Editor

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Last year, PepsiCo’s net revenue was $39.5 billion. PepsiCo’s international business grew a whopping 22 percent, triple the growth rate in the U.S., and now accounts for 40 percent of total revenue. ROI was up 29 percent, and the company announced its 36th annual dividend increase.

PepsiCo’s portfolio includes 18 megabrands which generate over $1 billion each in worldwide annual sales. Some of its leading brands include Pepsi-Cola, Aquafina, Frito-Lay, Tropicana, Quaker, Gatorade, and Naked Juice. “We are No. 1 in the fastest-growing category — non-carbonated beverages, including energy drinks, teas, juices and isotonics,” Nooyi said at PepsiCo’s annual meeting.

She recruited Mehmood Khan, a former Mayo Clinic endocrinologist, naming him chief scientific officer to head up R&D and created a vision – Performance With Purpose – that describes how she wants PepsiCo to do business both at home and abroad. She has the reputation of nurturing employees and wants the company to work toward a net-zero impact on the environment.

Known as a strategic thinker, Nooyi has been an advocate of improving the nutritional value of PepsiCo’s portfolio. Although 70 percent of PepsiCo’s products are still what the company defines as “fun for you” foods, compared with “better for you” or “good for you” products, the company is moving forward in last two categories. “PepsiCo is well on its way to achieving 50 percent or more [better-for-you products] by 2010,” Nooyi said recently.

Trans fats have been eliminated through the use of sunflower oil, sugars have been reduced or eliminated, Frito-Lay’s Flat Earth line of baked fruit and vegetable crisps has been introduced and most recently Pinch of Salt chips with less salt debuted.

Now an American citizen, Nooyi sometimes wears traditional Indian saris to company functions, and is certainly the only CEO to have played in an all-girl rock band. She has also expressed a desire to go to Washington after her tenure at PepsiCo to “give back — to work for no money for four or five years.” 


David Mackay, Kellogg Co.

When Kellogg chairman/CEO Carlos Gutierrez was tapped to be Commerce secretary in 2004, he had pretty much completed a six-year turnaround of the company. Still, his departure must have come as a shock, because the cereal giant named a relative outsider, James Jenness, as interim CEO (also chairman) while taking a little longer to groom the eventual CEO and longtime heir-apparent David Mackay.

As COO, Mackay (he pronounces his name “McKey”) had been Gutierrez’ right-hand man. He has a wealth of international experience. Born in New Zealand and brought up in Australia, he joined Kellogg Australia as group product manager in 1985. He transferred to corporate headquarters in Battle Creek, Mich., in 1987 as category director for ready-to-eat cereals. Mackay returned to Australia in 1991 as marketing and sales director of Kellogg Australia.

From 1992 to 1998, he worked for Sara Lee Bakery in Australia, but returned to Kellogg as managing director of Kellogg Australia. He quickly moved up, to managing director of UK and Republic of Ireland, then corporate senior vice president and president of Kellogg USA, then executive vice president of Kellogg Co. In 2003, he was named president and COO. He has been actively involved in developing the growth strategy for the company.

“[Mackay’s] contribution to growing and sustaining the company’s performance has been invaluable,” Jenness said upon Mackay’s appointment.

Known for his easy style, Mackay, who sometimes calls colleagues “mates,” often breaks into an easy laugh and seems surprised at how far he’s gone professionally, reports Business Week.

With sales of almost $12 billion in 2007, Kellogg Co. is the world’s leading producer of cereal and a leading producer of many convenience foods, including cookies, crackers, toaster pastries and cereal bars. Brands include Kellogg’s, Keebler, Pop-Tarts, Nutri-Grain, Morningstar Farms, Famous Amos and Kashi. Its brands are marketed in more than 180 countries around the world.

Mackay’s challenges are many. High commodity prices translate to higher prices for cereal. Grab-and-go options are becoming more popular than cereal in a bowl. There has been increasing consumer and government pressure over sugar-laden cereals being advertised to kids. In June last year, the company announced new initiatives in how it markets to children under 12: new front-of-pack nutrition labeling and new guidelines in nutrition. The Kellogg Global Nutrient Criteria of 200 calories per serving, 2g of saturated fat, 0g of trans fat, 230 mg of sodium and 12g of sugar is the standard.

“The initiatives set a new standard of responsibility and are consistent with our 100-plus year heritage, further strengthening our commitment to helping consumers make informed food choices,” said Mackay. “Around the world, Kellogg continues to play an active role in helping consumers successfully manage both sides of the calories in/calories out equation through product choices, in nutrition education, community programs and partnerships promoting the importance of a balanced diet and physical activity.”

In April this year, Kellogg reported strong first quarter 2008 sales growth of 10 percent and operating profit growth of 9 percent. These results were driven by innovation, recent price increases and effective brand building and were achieved after absorbing significant cost inflation.

"Our continued focus on executing our business model paid off during the first quarter," said Mackay. "We posted strong results, despite the impact of higher commodity inflation as well as increased advertising and up-front investments. As a sign of our confidence, the board announced its plans for a 10 percent increase in the quarterly dividend starting in the third quarter."

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