Has India's most powerful businesswoman lost her way?

Eric Stryson

In light of the recent decision not to allow multinational companies greater access to the retail market based on concerns over livelihoods, it is worth a critical examination of India’s most powerful businesswoman.  To put it bluntly, Indians should know better.

Indra Nooyi, the CEO of PepsiCo has made waves in recent years for her self-proclaimed diversity and her tireless work ethic.  Among her accomplishments is her position at #3 atop the Financial Times ranking of the most powerful businesswomen in the world, down from #1 last year.  She is the highest ranking Indian and one of only two in the top ten.

In a recent interview on CNBC in America, Nooyi says, “I want every product you eat and drink to be a PepsiCo product.  I want a larger share of your stomach…”  One has to assume she means the bigger the stomach the better.

These statements betray the age old value system of the Indian people, even in spite of those who occasionally enjoy a fizzy drink or packet of crisps.

Lest one assume these statements are only directed at Americans, it is of note that in 2010 more than 45% of the company’s revenue came from outside North America and 30% came from emerging and developing markets such as India.  PepsiCo India ranked fifth among the $60b snacks and beverage company’s businesses for sales volume growth, as of Aug 2011[1]

But is this good for India?  Do Indians want to eat more fast foods and buy more of everything they eat and drink from multinational companies?

India is a country where 72% of its 1.1 billion people live in rural areas and are largely dependent on agriculture for their livelihoods.  By definition, multinational agribusiness does not promote the best interests of small-holder farmers and other agricultural producers.  Their growth relies on the commoditization of food which is at odds with the majority of contemporary Indians.  The goal is to capture more of the value chain through processing, packaging and premiums based on brand perception, while sourcing agricultural inputs for as low cost as possible. 

Such food companies have little interest in sustainable agriculture, despite CSR statements, or in the culture and livelihood of people.  That is not their core activity.  One need only look to recent history for evidence that Indian farmers and communities have historically resisted exploitation by big agribusiness and big food brands.  Unilever’s history in the tea business[2] and Coca-Cola bottlers’ experience with water[3] provide particularly acute examples.

India is also a country where statistics of malnourishment and hunger remain shockingly high and are not necessarily showing signs of improvement.  According to the 2011 Global Hunger Index India has a score of ‘alarming’ and ranks 67th out of 81 countries surveyed, even below Rwanda.[4]  More fast foods through the industrialization of the food supply chain are not going to solve this problem.  To combat hunger India’s people need less processing and packaging and better access to high quality staple foods and nutrient rich whole foods, something which big agribusiness is typically not capable of providing.

PepsiCo’s stated ambitions for packaged nutrition are wholly inappropriate for India.  Nooyi has emphasized the company’s aims to be a leader in ‘convenience nutrition,’ with a goal to grow the portfolio of brands such as Quaker, Tropicana and Gatorade from $10b to $30b by 2020.[5] 

Nooyi says the new business will focus on “…the global product innovation agenda for fruits and vegetables, grains and dairy… functional nutrition, expanding beyond sports nutrition into new functional arenas (and)… nutrition services, providing education and incentives to help consumers change and sustain behaviours...”

Through long traditions Indian families know about proper nutrition.  If they have forgotten, do they need a big American snack food company to teach them new ways?

Real nutrition does not come wrapped in plastic or through processed ‘whole grains’ which are by definition not whole.  It is also not the case that chemicalized formulas in ‘functional nutrition’ drinks deliver any superior nutrition than properly cultivated legumes, vegetables and dairy products which have been hallmarks of the Indian diet for thousands of years.

What the modern Indian population needs is investment in infrastructure, to improve the process of harvest, procurement, storage and transport for foods its people should be eating.  It is estimated that currently nearly 30% of fresh fruits and vegetables are wasted due to a lack of cold storage and thousands of tons of grains are left to spoil in inadequate warehouses.[6]

If Nooyi really had the interests of Indians in mind she would leverage the company’s economic clout, supply and distribution expertise and create new business models in a move toward actually improving their access to food. She would avoid making vacuous statements about scenarios where everything one puts in their mouth has a PepsiCo label on it.  Suggesting that big business knows better how to feed Indian families sounds downright insulting.