Enrico, Roger

(1945-)
PepsiCo

Overview

Roger Enrico, chief executive officer (CEO) of PepsiCo Inc., is credited with using brand–building to increase sales for the soft drink company and its affiliates. Enrico ran the company with a flair for the dramatic and a keen knack for image–making and profit building.

Personal Life

Enrico was born in 1945 in Chisolm, Minnesota, where his father was a maintenance foreman at an iron–ore processing plant. When Enrico was in high school, his first job was at a local soft drink bottling plant. At the time, he could never have anticipated how soft drinks would ultimately factor into his future. Enrico was an average student, mostly preoccupied with leaving Minnesota. An offer of a full scholarship to Babson College in Massachusetts gave him the chance he was looking for.

While at college, Enrico ran his fraternity and edited the college yearbook; he graduated in three years. Although he had not given much thought to his future, Enrico realized he enjoyed interacting with people, and working in the area of human resource seemed like a logical career choice. He was hired by General Mills to fill an opening in Minnesota. There, he reunited with his high school sweetheart, Rosemary Margo, whom he later married.

What seemed like a good career match turned out to be otherwise. Enrico was bored by the isolation of the personnel division and considered pursuing an MBA. Instead, he attempted to join the navy, but that did not work out either because he failed the navy's test for colorblindness. Not wanting to remain stateside, Enrico volunteered for service in Vietnam in 1967. He was stationed in the northern part of South Vietnam and worked transporting fuel. When he returned from Vietnam, Enrico was hired again by General Mills, this time in their brand management division. Although he loved the work, he felt he was passed over for promotions because of his lack of educational credentials. He began sending his resume to headhunters across the country and was offered a job with the Frito–Lay division of PepsiCo in Dallas. Initially, Enrico was wary about moving to Dallas because of the lingering memories of the recent assassination of President John F. Kennedy, for whom he had once campaigned. Enrico was able to put that behind him when he recognized that both Dallas and Frito–Lay were on the brink of enormous growth.

Enrico and Rosemary have one son, Aaron. The couple enjoys vacationing on Grand Cayman, and Enrico is an avid scuba diver. The couple also owns a ranch in Montana. While in Turkey in 1990, Enrico suffered a heart attack during a company tour. It was a sobering experience for the executive, prompting him to give up smoking.

Career Details

When he first began to work for PepsiCo, Enrico was an associate brand manager for Frito–Lay's onion–flavored snacks, Funyuns. Enrico enjoyed working at Frito–Lay, and when he was 31, he was offered the job of president of PepsiCo Foods Japan. Japan was known to be a difficult and in many ways bewildering market, but Enrico accepted the challenge, as it would be a valuable learning experience.

Despite Enrico's efforts, the Japanese venture was unsuccessful, but PepsiCo understood the difficulties and challenges of that market and did not hold that experience against Enrico. First, he was reassigned to Brazil and then returned to the company's marketing division in the United States. The company's then–president, John Scully, appreciated Enrico's aggressive marketing views. When Scully left the company to take over Apple Computer, Enrico was appointed to his position. He remained president and CEO of beverages from 1983 to 1986. During that time, he began the Pepsi Challenge, forcing longtime rival Coca–Cola to come up with New Coke. Ultimately, his marketing idea boosted Pepsi sales.

In 1986 Enrico's book, The Other Guy Blinked: How Pepsi Won the Cola Wars, was panned by critics who regarded Enrico as nothing more than an ego–driven executive. The experience made him leery of the media, and he now shies away from press interviews. It also created additional tension between the two rival companies.

From 1991 to 1993, Enrico worked as chairman and CEO of Frito–Lay and Pepsi Foods International. There, he encouraged the company to push forward with a line of healthy snacks and slashed domestic operations.

In 1994, Enrico took over the position he would hold until he was appointed to CEO job—corporate vice chairman and CEO of Worldwide restaurants, a weak division in the corporate structure. Enrico began streamlining measures and reducing the number of units. The division had a 19 percent profit increase, with savings from operations estimated at more than $200 million. All of this was spearheaded by Enrico.

Not surprisingly, Enrico's efforts had come under the approving scrutiny from PepsiCo's board of directors over the years, and in 1996 he was tapped to take over as CEO when the company's top boss, Wayne Calloway, was diagnosed with prostate cancer. It took Enrico two weeks to decide whether or not he wanted to accept the position, as he was not sure that he wanted the responsibility that a CEO shoulders. The job, he once said, was nothing he had ever aspired to. Financially, PepsiCo made it worth his while, and he accepted. In 1997 Enrico was given a total compensation package of $2.8 million, which included his $900,000 base salary, plus bonuses.

Not long after taking over, Enrico guided the company through a rather spectacular loss: PepsiCo International's bottler in Venezuela, headed by an old friend of his, decided to switch to Coca–Cola. It was a well–publicized defection, symbolic of the company's continued losses in its overseas operations. Yet Enrico also moved quickly to reorganize management and revamp strategic planning processes inside Pepsi headquarters, forcing its sometimes too–dynamic executives to concentrate less on acquisition and more on performance. "I want to make sure that we walk the talk around here, not just on philosophy, but on implementation," Enrico told Time writer Frank Gibney, Jr.

Under Enrico, Pepsi continued to evolve. It spun off its entire bottling operations into an independent company, a move that mirrored the highly successful Coca–Cola strategy. The manufacturing and marketing of carbonated beverages is profitable, but the mixing, bottling, and distribution is far less so. "It's a better mouse-trap," admitted Enrico cheerfully in the interview with Gibney about copying Coca–Cola. "And there's no pride in this, so why not do it ourselves?"

Chronology: Roger Enrico

1945: Born.

1972: Hired at Frito–Lay.

1991: Appointed chairman and chief executive officer of Frito–Lay and Pepsi Foods.

1994: Named corporate vice chairman and chief of Worldwide Restaurants with PepsiCo.

1996: Appointed CEO at PepsiCo.

1997: Divested PepsiCo of its restaurant holdings.

1998: Acquired Tropicana for $3.3 billion; donated salary to scholarship fund.

2001: Left PepsiCo.

In the summer of 1998, PepsiCo announced the largest acquisition in company history and one that would further fuel the rivalry with Coca–Cola: Pepsi acquired juice maker Tropicana. With this $3.3 billion purchase from Seagram Co., Pepsi now entered the "orange juice wars" with Coca–Cola, owner of Minute Maid. "This fits in with what we want to be, a company of big brands staying within the beverage and snack business," the New York Times reported Enrico as saying upon announcement of the deal. "This is a company that is in great shape. It's not broken. I think we can add to it, and it will be additive as we go forward." Just a year later, the move resulted in enviable combined retail sales—$11 billion worth of Pepsi, Tropicana, and Frito–Lay snacks.

The company also launched a new Pepsi ad campaign called Generation Next, and introduced a diet drink, Pepsi One. Just two years after Enrico took over as CEO, the soft–drink maker had regained a bit of precious territory in the cola wars: PepsiCo's 1998 sales climbed nearly 7 percent over the previous year, to $22.3 billion.

In late 2000, PepsiCo announced that Roger Enrico would relinquish his role of CEO before the end of 2001 and that he would retire as chairman before the end of 2002. His designated replacement in both capacities would be Steve Reinemund, then president and chief operating officer of the company. But things went more quickly than planned, and by May 2001 both transitions had been completed.

At the beginning of 2001, Enrico was still contemplating his post–PepsiCo career. "If I planned it now, it wouldn't be much of an adventure," Enrico said, as he prepared to turn over the reins of the company to his successor.

Enrico once noted that upon first being appointed CEO, he hoped that he would have the wisdom not to stay on too long, and the perseverance to stay long enough to achieve his goals, which chiefly included restructuring the company and refocusing its activities on the food and beverage market. And true to form, during his tenure as CEO, PepsiCo's restaurant division and bottling operations were both established as independent public companies.

Key accomplishments during his tenure as CEO included beating out rival Coke in the acquisition of SoBe beverages, Quaker Oats, and Gatorade. In Enrico's final year as CEO of PepsiCo, he oversaw increases in operating profits for Pepsi–Cola of North America and Tropicana, which grew 8 percent and 32 percent, respectively.

Social and Economic Impact

Shortly after Enrico took over the CEO position from his relatively staid predecessor, he went into the ballroom of the Laguna Niguel, California Ritz Carlton escorted by a phalanx of white uniformed Star Wars storm troopers. As trumpets blared, Enrico took the stage and announced a coup: PepsiCo would join with George Lucas to promote the 1997 re–release of the smash science fiction trilogy, Star Wars. It was a heady moment for the beverage company accustomed to trailing behind rival Coca–Cola. It was also a moment which embodied Enrico's style and his energy.

In a company that values autonomy, Enrico was well suited for the CEO position. Beginning in 1997, he began divesting PepsiCo of its restaurant interests into an independent company. These included over 28,000 Taco Bell, Kentucky Fried Chicken, and Pizza Hut outlets. By doing this, Enrico created a restaurant operation second only to McDonalds. He also elevated the Frito–Lay division of the company, which Enrico has said is like "the Coke of snack foods without a Pepsi."

In a reflection of his personal values about the importance of education, Enrico announced in early 1998 that he would forego his $900,000 salary to contribute the sum to PepsiCo's employee scholarship fund, which provides educational money for employees earning less than $60,000 a year. As Enrico said in a company–wide memo, he had requested that the board cut his salary to just $1 a year and "consider using the savings to benefit our front–line employees," according to the Associated Press. Front–line employees, in corporate lingo, are those who have a hands–on connection to the product itself—in PepsiCo's case, those who bottle, ship, and distribute the soft drink and its auxiliary products. The board agreed to add $1 million to the scholarship fund. Enrico, who still received a $1.8 million bonus for 1997, planned to make the contribution an ongoing one, as a way "to say thanks to our often unsung heroes."

Sources of Information

Contact at: PepsiCo
700 Anderson Hill Rd.
Purchase, NY 10577
Business Phone: (914) 253–2000
URL: http://www.pepsico.com

Bibliography

"The Advertising Council Names PepsiCo Chairman and CEO as 48th Public Service Award Honoree." The Advertising Council, 26 March 2001. Available at http://www.adcouncil.org.

"Enrico Steps into Pepsi Spotlight." Beverage Industry, April 1996.

Gibney, Frank, Jr. "Pepsi Gets Back in the Game." Time, 26 April 1999.

Hays, Constance L. "PepsiCo to Pay $3.3 Billion for Tropicana." New York Times, 21 July 1998.

"PepsiCo Details Succession Plan." MMR, 16 October 2000.

"PepsiCo's Reinemund is New Chairman, CEO as Transition Speeds Up." The Wall Street Journal, 3 May 2001.

"Roger A. Enrico." Business Week, 8 January 2001.