Pepsi launches innovation hub to foster niche brands
Pepsi is hoping to foster a startup culture so it can spot new opportunities as sales growth at its core business slows.
PepsiCo is launching an innovation hub in the US, dubbed ‘The Hive’, as it looks to fosters its smaller and niche brands and give them room to grow.
In a results call for investors today (10 July), PepsiCo CEO Indra Nooyi revealed that the company is creating “a small entrepreneurial group” that will sit separate to the rest of the business.
She explained: “It is a business within a business and will be taken out of the core headquarters. It’s going to be an entrepreneurial group which will take some of the products we launched and nurture and incubate them to find what works.”
The Hive, modeled off a similar set-up that already exists in Europe, will look for “new age brands”, as well as fostering burgeoning ones within the business.
Separating innovation from the core business is a strategy PepsiCo used in its launch of new Drinkfinity earlier this year in order to foster a startup culture.
READ MORE: Product innovation or marketing strategy: What comes first?
The company reported better-than-expected second-quarter earnings with PepsiCo sales growing 2.6% year on year, despite a 1% drop in its North America beverage unit.
Nooyi said the company had seen “mid single digit growth in UK market with a decline in soft drinks offset by a boost in snacks.
This year has seen the company’s competitor Coca-Cola invest heavily in new flavours and marketing for its low-sugar product.
When questioned on it’s competitor Nooyi, was insistent the company is not changing its strategy.
“When it comes to zero sugar portfolio, Pepsi Zero Sugar is doing exceedingly well and Diet Pepsi is also back to good performance,” she explained.
“We will continue to support our biggest brands while incubating niche brands in market.”
Far more effective to buy the innovation – lower risk, much quicker – and no large corporate will ever be able to truly replicate the startup culture from within.