US-based multinational giants like PepsiCo, Inc. (NYSE:PEP), The Coca-Cola Co (NYSE:KO), and Apple Inc. (NASDAQ:AAPL) might not be hurt in other countries due to the election of President-elect Donald Trump, but they could be discriminated against feels PepsiCo’s CEO, Mrs. Indra Nooyi. While speaking at the Dealbook conference in New York City yesterday, which was attended by Insider Monkey, Mrs. Nooyi talked about the presidential race, how the results have impacted the company, sugar taxes, as well as the company’s strategies going forward.
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Trump Presidency
Political pundits have argued that this presidential race was one of the harshest that has been fought in the last few decades in terms of language used, topics discussed, and allegations made, but Mrs. Nooyi feels that the real issues that the country faces were never talked about. She said that the “big issues” of technological unemployment, global trade, and immigration, all of which need reforms and should have serious conversations around them, were not highlighted during the campaigns, as they don’t lend themselves well to sound bites on television.
The election of Trump, who was quite vocal during his campaign about curbing immigration, bringing jobs back to the US, and protecting US businesses, is being considered detrimental for US firms who generate a chunk of their revenue overseas. Be it food and beverage giants like PepsiCo, Inc. (NYSE:PEP), The Coca-Cola Co (NYSE:KO) etc. or technology firms like Intel Corporation (NASDAQ:INTC) and Apple Inc. (NASDAQ:AAPL), more than 50% of their revenue comes from outside the US, including countries and demographics which Trump has offended during his campaign. Mrs. Nooyi said that though the talks about trade and protectionism that Mr. Trump carried out doing during his campaign won’t affect PepsiCo, Inc. (NYSE:PEP) per se, America’s foreign policy will have an impact on the company.
“Because we fly the American flag, because we are domiciled in the United States, we are a beneficiary or victim of America’s foreign policy and positioning in the world. And therefore, wherever we go, the first thing they talk to us is about the United States. What I worry about is that there might be discrimination against American companies overseas, if there is protectionism in the United States,” she said.
Soda Tax
In the last few years, several jurisdictions within the United States have been contemplating putting a tax on sugary beverages, with some of them already having imposed it, citing public health concerns. The ongoing discussion about soda taxes has caused some anxiety among investors of PepsiCo, The Coca-Cola Co (NYSE:KO) and other beverage makers, but hasn’t had much of an impact on the stocks of these companies. According to Mrs. Nooyi, the concerns about these soda taxes are overblown at the moment, as they have very little to do with public health concerns and more to do with the government increasing its tax revenue.
On the lobbying efforts being made by the beverage makers in Washington against the soda taxes, Mrs. Nooyi said that she doesn’t think that what the companies are doing is wrong. “What are we lobbying for? No discriminatory taxes, no regressive taxes. If you have a real public health issue on obesity, let us take it down as a national health issue and address it.” She further argued that over the last 15 years, the consumption of full sugar drinks has come down “substantially”, but that hasn’t brought down the obesity level in the country, as people’s eating habits haven’t changed. Moreover, she asked why the government is so adamant on taxing a beverage like Pepsi, which only has 140 calories, when people don’t think twice about ordering a 1,000 calorie appetizer and a 3,000 calorie main course at a restaurant.
Steve Jobs
Mrs. Nooyi revealed that she had a brief meting with Apple Inc. (NASDAQ:AAPL)’s co-founder and former CEO, the late Steve Jobs, when she became the CEO of PepsiCo a decade ago. She said that she learned a lot from the technology maverick during that 2-hour meeting, including the need to throw “temper tantrums” if one feels strongly about something. On a jovial note, Mrs. Nooyi told the audience that although she hasn’t gone “that far”, she said she is “beginning to use certain words a little bit more freely and I am screaming a bit more.”
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