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PepsiCo’s transformative R&D and its impact on food-bev packaging

Keeping a broad perspective, collaborating across departments, and leveraging “technology unlocks.” If packaging innovation at PepsiCo were viewed as a three-legged stool, these would be the legs of that stool. That’s not to say that cost containment, manufacturing efficiency, commitment to sustainability, advanced IT, and a number of other things aren’t influential in shaping the Purchase, NY, food and beverage company’s packaging innovation efforts. But these all funnel into or support the big three.

That’s the impression after a number of conversations with a handful of PepsiCo’s best and brightest, starting with Dr Mehmood Khan, who is Executive Vice President, Chief Scientific Officer, and head of Global Research and Development.
Physician, nutritionist, endocrinologist, and former head of R&D at Takeda Pharmaceuticals—Khan’s resume is peppered with all of these previous roles and responsibilities. So if anyone is responsible for the broad perspective that PepsiCo takes in its approach to R&D and packaging innovation, it’s Khan. He explains why his diverse background fits—now more than ever.

“Historically the food and beverage industry has had a relatively narrow and short-term focus, where obvious things like processing, distribution, and sales were the drivers. But as the world has changed, consumers are increasingly interested in nutrition, in understanding origins and sources of food, and in understanding how food and beverages interact not just with taste but also with the body. There’s so much more awareness of the environment, too. So it’s essential for a head of R&D to have a broad perspective when it comes to looking at food and beverages and the packaging that contains them. That’s why we’ve brought in people with such diverse backgrounds, people with experience in biology, life sciences, computational modeling, agronomy—skills not typically thought of as being part of a food and beverage company.”

Since he became the head of R&D about seven years ago, Khan has led what many at PepsiCo refer to as an R&D transformation. Evidence of his transformative thinking is abundant in packaging, as he believes that packaging now more than ever must be part of the product experience, part of how the product is consumed. Ethnographic consumer research, which is the collection and analysis of empirical data on consumer behaviour, is among the tools PepsiCo uses to make packaging part of the product experience. Khan points to the South American market for an example.

“We saw that a lot of people there liked to open up their snacks and add toppings to them, things like cheese or seasonings. This meant they had to empty the bag contents into a separate container and then add the seasonings. So we asked ourselves how do we make the package itself suitable for use in a way that eliminates the need for the separate container while still keeping the price where it needs to be. It led to the launch of our Lays brand in a reconfigured pillow bag that’s reclosable. The packaging equipment is the same, but we can change the way that it’s formatted so that it produces a reclosable bag.”
The fundamental roles of packaging are of course viewed as givens at PepsiCo. But moving beyond that, how does PepsiCo communicate a product’s key attributes, and how should packaging maximize the effectiveness of that communication? Lee Nicholson, Director of Advanced Packaging Research, thinks interactive packaging is one of the answers.

“Packaging today is dictated by what I like to call the four Cs: containment, convenience, communication, and custody, which is another word for security or tamper evidence. What’s missing is the fifth C, and that is connectivity. Packages would be far more enabled and the consumer experience could be so much richer if the industry could create an interactive connected package that provided a differentiated and personalised experience involving a multiway transfer of data.

“One of the things we’ve been pioneering in the area of interactive packaging is what we call the packaging trifecta. It’s a multiway communication enabled by or through packaging that links brand owner with retailer with consumer. We think of it as an ecosystem of connectedness.”

Packaging as strategic asset
Another thing that quickly becomes clear in talking with PepsiCo is that packaging is not applied as an afterthought once a new product or product extension has been developed. Instead, packaging is viewed as a strategic asset, says Denise Lefebvre, Vice President of Global Beverage Packaging.

“When I joined the organisation eight years ago we knew packaging drew volume growth and was important to the consumer,” says Lefebvre. “But what’s also become apparent is that it has a tremendous impact on both the top and bottom lines. Once people understand its value and what it can bring, then it occupies a more strategic place in the portfolio.”

Talking with Lefebvre also serves as a reminder of how serious PepsiCo is when it comes to collaborating across departments….. Read the full article