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CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S JIM CRAMER SPEAKS WITH INDRA NOOYI, CHAIRMAN & CEO PEPSICO TONIGHT ON "MAD MONEY W/JIM CRAMER"

WHEN: TONIGHT, THURSDAY, DECEMBER 17TH AT 6PM ET

WHERE: CNBC'S "MAD MONEY W/JIM CRAMER"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with PepsiCo Chairman & CEO Indra Nooyi tonight on CNBC's "Mad Money w/Jim Cramer". Nooyi discusses the footprint of Pepsi, Tiger Woods, the Super Bowl, obesity and the economy, among other topics.

All reference must be sourced to CNBC's "Mad Money w/Jim Cramer.

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CRAMER: Ms. Nooyi, welcome back to MAD MONEY.

Ms. INDRA NOOYI: Thrilled to be here. Thank you for having me.

CRAMER: Thank you so much. Thank you. Got the full array here.

Ms. NOOYI: You sure we have enough?

CRAMER: No, there's never enough Pepsi, Pepsi products. OK. Your company, frankly, is more than just a company the way we typically look at companies. You're doing a lot of things that on the surface might, to Cramericans, not make sense who own the stock and have listened to me because I have recommended the stock repeatedly since this show began. I'm talking about things like, and let's just go right to it, performance with a purpose, talking about the environment, talking about the footprint of Pepsi. Why is this important? And why if I'm a shareholder do I want this?

Ms. NOOYI: Since you're a shareholder, you should be thrilled that we are practicing performance with purpose because to understand what performance with purpose is, you need to really talk to people like me.

CRAMER: OK.

Ms. NOOYI: And let me explain what it is. It's basically PepsiCo saying that companies can no longer perform and toss costs to society. We believe that the new future is public-private partnerships, where companies feel responsible for society at large. So let me give you an example. If companies use water from the ground, it's important we put the water back. It's important we contribute to energy balance. It's important we contribute a sustainable family if you're in the agricultural business. It's important that if society has a problem with obesity, rather than say, `It's not my problem,' you work with the lawmakers, work with the regulators and legislators, with NGOs to say, `How can we address it?' So our performance with purpose is how can we as a company do better by doing better, and that's really the whole idea of performance with purpose, and that's why I believe shareholders should be thrilled that PepsiCo's in fact building a sustainable corporation, sustainable not just financially but sustainable in terms of being a great citizen of every society in which we participate in.

CRAMER: In the new societies, I know you've spent some time in China, is this--does this--China, a big.. (unintelligible)...considered to be, when we do this Copenhagen, when you, you know, when you bring the world together, they have not been that focused on what they--on the pollution. Why does this resonate in a--in China? Why does it resonate in Russia? Does it play any role in these countries?

Ms. NOOYI: Oh, absolutely. In fact, we opened our first green plant in Chongqing, in Sichuan province. I was there, I opened the plant. It's a plant that is completely green, it's energy-efficient, it's water-neutral. And it's the training ground where we're going to bring school kids from the area to come and see the plant and learn all the principles of green management. So China is very, very interested in environmentally efficient plants, even more so than many companies in the West because--countries in the West because China's water stopped. China's growing population and emerging population needs more energy. So they have a hell of a lot more needs than anybody else does in the West, so they are incredibly environmentally conscious, and they need companies like us to actually set the example for greater environmental stewardship.

CRAMER: All right. Let me ask you a question, putting on my Wall Street hat. You happen to offer, I think, maybe the single best benefits package of any major American company. You are committed to environment and to renewing resources and a small footprint. If you scrap those, couldn't you do 25 cents more a share in earnings and we would be happier?

Ms. NOOYI: Sure, for one year, and then all my people will leave me, because today the best and the brightest come to PepsiCo and stay at PepsiCo for several reasons. One, they come to PepsiCo because they believe we're a company with a soul, that we truly believe we should be great citizens of the community. And, Jim, I tell you, as I go around the world and talk to our employees, our employees are first husbands, wives, mothers, daughters, children before they're PepsiCo employees. So they don't want to be part of a company where we're not worried about the community and the impact, the negative impact we may have on communities. So people want to come to work for a company that they know is worried about the next generation. So we attract the best and brightest because of that. Second, people stay in PepsiCo because they know they can have--make a living and have a life because we provide a great work environment. And third, people stay in PepsiCo because they know they can build a long-term career and still have a nest egg when they leave. So I firmly believe we are a great company because we provide all these benefits and for the kind of company that we are.

CRAMER: What would you say to the critics who'd say that you're working with the politicians and leaders and you're trying to give back to your community, which is something that Altria does, and they have a product that we have linked definitively to causing death, OK? Your products, some of them, not all of them, obviously, but when you eat one of my favorites, Ruffles, I happen to love Doritos, these are products that are linked with obesity. Is--what do you say to critics who say that all of what you're saying is a cynical attempt to mask what is really an unbelievably great Frito Lay franchise?

Ms. NOOYI: But let's separate out these issues.

CRAMER: OK.

Ms. NOOYI: A medical company does good for communities.

CRAMER: Right.

Ms. NOOYI: You know, a university does community outreach activities. So let's separate this community outreach activity with the products we make.

CRAMER: OK.

Ms. NOOYI: We make outreach to the community because we believe it's the right thing to do, our employees want to do it. We believe that's the way we should operate as a company. So let's separate that out.

CRAMER: OK.

Ms. NOOYI: Now let's get to our products. And I want to tell you something. Let's take Ruffles. I eat a bag of Lays--I eat a bag of Lays every day.

CRAMER: You do?

Ms. NOOYI: A single serve bag of Lays every day.

CRAMER: You're looking pretty good given that.

Ms. NOOYI: Because, you know, obesity doesn't happen because you eat a bag of Lays every day. Let's think or Lays or Ruffles. What is it? It's a potato, an American farmer-grown potato, right here in the United States, that comes out of the soil from the United States, comes straight into a plant that's in the United States. It's merely sliced, fried, lightly salted and put in a bag. And let me just say something, Jim. There's less salt in a bag of potato chips than there is in a slice of bread. There's less salt in a bag of potato chips. Now, if you keep eating potato chips or any chips and don't exercise...

CRAMER: Right.

Ms. NOOYI: ...and eat all kinds of unhealthy foods beyond that and say, `I'm obese,' there's something wrong, OK?

CRAMER: Right.

Ms. NOOYI: So I think what we have to--what we have to do is think about obesity as a societal problem and say lifestyles have changed. There's too much sedentary activity going on, sedentary behavior, not activity, sedentary behavior.

CRAMER: Right.

Ms. NOOYI: And people just are not practicing good nutrition. So we have to look at it as a holistic societal issue and say how do we address every aspect. If it gets people to eat right, get them to exercise, get them to change their habits. And we have to approach it that way.

CRAMER: So you don't think there's a longer term decline in the product as people become more sophisticated about what they're putting in their bodies?

Ms. NOOYI: Well, I look at our portfolio and say thank God for us. I mean, I look at zero calorie SoBe Life Water, I look at G2, half the calorie. I look at these Chinese herbal medicine drinks...(unintelligible). These are all incredible products. Naked, the ultimate, good-for-you products, Quaker Oats. I look at all of our products. Stila bars from Mexico, which are whole-grain bars. I look at all this and go, `Thank God for companies like PepsiCo, which are making a difference to their portfolio and we're providing great tasting products.' Great tasting. And people are not going to buy products that taste like cardboard. These are all great tasting products. And we're still reducing salt, reducing sugar, frying our products in hot, healthy oil. I think we're doing a great job at transforming our portfolio, and I wish every food and beverage company was the same.

CRAMER: Would do the same thing.

Ms. NOOYI: Yes.

CRAMER: OK, look, after the break, more with Indra Nooyi, the chairman and CEO of PepsiCo, symbol PEP. We're back with Indra Nooyi--I love that ad, OK?--chairman and CEO of PepsiCo.

Indra, you guys have been in the news a lot. First, I want to quote from your most recent conference call. This is about water. Now, in--unfortunately, in beverages vs. food, there is a free alternative called tap water. Today's New York Times: "Tap water is legal, but may be unhealthy." Good for your company.

Ms. NOOYI: Great opportunity.

CRAMER: So will you take advantage of it?

Ms. NOOYI: Absolutely. That's why we have all these great beverages.

CRAMER: And...

Ms. NOOYI: Look, unhealthy tap water; we give you the best-tasting beverages and, incidentally, we also give you the cleanest bottled water in Aquafina.

CRAMER: Now, water's water, right? And Mayor Bloomberg tells me that we got the cleanest water, and it comes out of my tap.

Ms. NOOYI: You just read the article, so.

CRAMER: Right. OK. Yeah.

Ms. NOOYI: Look, I've been into our Aquafina plant, and when you see the filter and the muck that it filters out, I just feel great that I'm drinking a bottle of Aquafina.

CRAMER: There you go. Now, today's Journal: "Pepsi Benches Its Drinks." Not long ago I went out with your senior team. They were raving to me about the YouTube selection of actual customers' ads on--in the Super Bowl and how important the Super Bowl was. What's changed?

Ms. NOOYI: Actually, I think this is the biggest issue about calling Pepsi Pepsi, and not PepsiCo.

CRAMER: OK.

Ms. NOOYI: We are PepsiCo.

CRAMER: Oh.

Ms. NOOYI: Doritos is very much in the Super Bowl. It's just that--ah, you see that?

CRAMER: Oh. OK.

Ms. NOOYI: Doritos is doing to be a big factor in the Super Bowl. Pepsi, the beverages, Gatorade is going to be on the sidelines all over the Super Bowl, because an athlete cannot play unless he's hydrated with Gatorade. So you see Gatorade all over the place. It's just that next year, for brand Pepsi, we're going to do something very different. We are going to take all our advertising dollars and actually put it against community activities and giving it back to the people of the United States, because we believe the times are such that companies like us have got to figure out a way to sell our products, but rather than just spend the money on mass advertising...

CRAMER: Right.

Ms. NOOYI: ...spend it in a targeted way to give it back to people. So we have a whole Pepsi Refresh project which is giving grants to people based on what consumers tell us.

CRAMER: If--would Coke be excited about that, because they're going to be able to monopolize the airwaves against you?

Ms. NOOYI: I really don't know. You should ask them.

CRAMER: I may. One of the greatest products in the world, I drink it before every show, you know that. You've e-mailed me about it.

Ms. NOOYI: Yes.

CRAMER: Gatorade. Why mess with success? G, suddenly G. I mean, isn't Gatorade one of the greatest brand names ever?

Ms. NOOYI: Mess with success. No, that's the wrong word, Jim. I tell you, Gatorade, besides--you know, Nike is the biggest and the most famous sports franchise.

CRAMER: Right. Right.

Ms. NOOYI: Gatorade is the second most important sports franchise. The problem with Gatorade was for a few years between 2004 and 2006 Gatorade was being consumed by too many people as a general beverage as opposed to a sports beverage.

CRAMER: Right.

Ms. NOOYI: Gatorade is a very targeted use to be consumed by athletes in the field of play. Doesn't matter if you're a competitive athlete or just an athlete. In fact, when you do the show and I watch you, I think you should be drinking a lot of Gatorade because you are an athlete of sorts, the way you run around, OK? So, to me, Gatorade is for that athlete who needs to be rehydrated. When everybody else came into the franchise and made it yet another beverage, there's a problem, because the price points go down.

CRAMER: Right.

Ms. NOOYI: And the athlete says, `Hey, is this everybody's beverage instead of my beverage?' So we realized very quickly that we needed to take Gatorade back to the sports athlete. And so this is not fixing a broken business, this was elevating the credentials of Gatorade all over again. And the G is resonating phenomenally with athletes. People actually believe that Gatorade is now cool to them again. Brand equity scores are up, our share is going up again.

CRAMER: (Unintelligible)

Ms. NOOYI: And next year when the innovation is launched, I think Gatorade's going to, pardon my French, kick ass.

CRAMER: Didn't know it was French. I like it.

Now, I've e-mailed you the moment your campaign started, and it was in a game, where you had a very exciting music, very exciting portraits of athletes, no one athlete singled out. At the same time, again, talking about headlines, you've been--your company's been involved with Tiger Woods. Is it not better to be involved with a vast panoply of athletes rather than one, given the risk that it could be Woods, that it could be Michael Vick who plays for my Philadelphia Eagles and, frankly, turned a lot of people off? So is it right to go, is it--or is it better to brand it another way?

Ms. NOOYI: Look, Gatorade is for the athlete. And in many cases, the best athletes want to be associated with Gatorade. And that's why we have all the best-known athletes associated with Gatorade. My favorite, Derek Jeter, from the New York Yankees, your favorite team.

CRAMER: (Unintelligible)

Ms. NOOYI: You know, we have some of the best athletes...

CRAMER: (Unintelligible)

Ms. NOOYI: We have some of the best athletes are associated with Gatorade. And we do not focus just on one athlete, we focus on a whole range of athletes ranging from ice hockey to football to baseball to basketball to, you know, snowboarding to all kinds of sports, even dancing, because Gatorade is about democratizing athleticism.

CRAMER: Right.

Ms. NOOYI: So dancers are also associated with G2, for example. Tennis is associated with Gatorade. So we really have a diversified portfolio of athletes.

CRAMER: All right. But again, not to push too hard on it, it's not "Meet the Press," and I'm not a prosecutor. But I--when I hear Tiger Woods and I hear Derek Jeter, Derek Jeter off the field, every bit as a gent as on the field. Tiger Woods, we have stories would say that is not the case. What is the future of Pepsi and Tiger Woods?

Ms. NOOYI: Tiger Woods is a great golfer, so I would just leave it there.

CRAMER: All right. That's a little definitive, and I don't mind that.

But going from Tiger Woods to someone who was a great soldier. Donovan Campbell told us--This is "Joker One." This is one of the greatest books I've read about war, and I've read them all, a Marine platoon's story of courage, leadership and brotherhood--offered tremendous opportunities to go in New York to fat cat bankers, chooses to go to PepsiCo. Why?

Ms. NOOYI: For one simple reason, performance with purpose. He believed that PepsiCo was an actual extension of his life. What he wanted to do with life was live a meaningful life.

CRAMER: Right. Right. That's...

Ms. NOOYI: And he said, `I can do that and still work for a great corporation, PepsiCo.' And I'm going to tell you Donovan Campbell's story, if we have time.

CRAMER: Sure.

Ms. NOOYI: Donovan Campbell is now running an operation down in Texas. And one of his employees was diagnosed with cancer and had to go get chemotherapy and then lost all his hair. He came back to work on a Monday morning, and when he came back, Donovan Campbell had lined up all of the employees in the office and every one of them have--had shaved their head to welcome this employee back to work. The father of the employee wrote to me, saying, `I've never come across such a fine company as PepsiCo, that made my son feel so welcome even though he'd been away with cancer for several weeks.'

CRAMER: Different ethos from other companies.

Ms. NOOYI: Absolutely.

CRAMER: Now, you made a decision to offload Yum. In your biography, it says you also made a decision at one point to offload the bottlers. Decisions that were right?

Ms. NOOYI: Absolutely.

CRAMER: Yum's a fabulous company.

Ms. NOOYI: Yeah, at that time--yep.

CRAMER: That--you don't regret that?

Ms. NOOYI: Not at all.

CRAMER: And now you're taking back bottlers. One time was right to spin off, another time right to have? Why?

Ms. NOOYI: Absolutely. Marketplace changed radically on the bottling situation. When we spun off the bottlers then, the LR--the carbonated soft drink market was growing 5 percent plus.

CRAMER: Right.

Ms. NOOYI: The market was predominantly carbonated soft drinks, was growing.

CRAMER: Mm-hmm.

Ms. NOOYI: But it was also a time when you needed incredible operating focus on the bottling system. And we were not giving it that, we were giving it more of a marketing focus. So, at that point, it made sense to spin off the bottlers. Now the C and C market is down. The overall beverage market is about flat. The carbonated market's up...

CRAMER: You had a tough year. Tough year for PepsiCo, right?

Ms. NOOYI: Absolutely. But then three companies--PepsiCo, Pepsi Bottling, Pepsi America, all three of those companies feeding off the same profit pool doesn't make sense. So it made sense to vertically integrate the bottlers back with us.

CRAMER: Ah.

Ms. NOOYI: But I think this whole bottling acquisition is not just about this profit pool, it's really a fantastic offensive play, Jim, because if you look at Frito-Lay and Pepsi, you know, the beverage business...

CRAMER: Right.

Ms. NOOYI: ...85 percent of the time that somebody consumes a salty snack, they have to consume a beverage.

CRAMER: Yeah.

Ms. NOOYI: Eighty-five percent of the time. Now, if you didn't have beverages, Frito-Lay would be searching for a beverage company to partner with So I think it's the synergy between Frito-Lay and the beverage business that makes PepsiCo such an exciting play. And I think we haven't even begun to talk about all of the offensive opportunities this bottling transaction presents to us. And to me, that's the big story for 2010.

CRAMER: Dr Pepper Snapple, $7 billion market cap as of this morning. A $900 million deal with them. Why not buy the whole company?

Ms. NOOYI: I--didn't make sense to buy the whole company and...

CRAMER: You just need to put--you need the fluid to put through the great bottling system.

Ms. NOOYI: You know, we have enough to put through the bottling system. That's plenty.

CRAMER: Now, one last question. When you talk about the notion of a "Joker One," Donovan Campbell, coming in, I talk to a lot of companies and they tell me, `Look, the way we're going to get people is social media.' You and I are a similar age. What the heck do we know about social media? How do you do it?

Ms. NOOYI: I know a little bit more than you, then, because I have a blog.

CRAMER: There you go. All right, so you're a little more comfortable working in social media than me.

Ms. NOOYI: I think so. I think so. Look, it's very hard to tell--you and I, very hard to judge whether social media's working because it's just not ads. It's putting your life bare on the Web. I watch Facebook, I watch YouTube. Man, it makes me very uncomfortable, because there's so much on it. But to the young kids, that's all they know. They don't know anything else. And when they start spreading a message around, it's like instantaneous message.

CRAMER: It's viral. Amazing.

Ms. NOOYI: Just gets around. So I think, used right, social media works. But here's the downside. If you do something wrong as a company, it's also going to spread very fast.

CRAMER: Right.

Ms. NOOYI: So you've got to be very, very careful in today's world not to do anything wrong, be a model citizen...

CRAMER: Right.

Ms. NOOYI: ...and be, above all, a company with high integrity.

CRAMER: Is that what you're most proud of at PepsiCo?

Ms. NOOYI: Absolutely. Absolutely.

CRAMER: All right, terrific. I want to thank Indra Nooyi, chairman and CEO of PepsiCo, for doing a great job for all the people who watch MAD MONEY. Thank you so much.

Ms. NOOYI: Thank you. Thank you, Jim. It was a pleasure to be on the show.

Thank you.

CRAMER: Great to see you.

Ms. NOOYI: Thank you.

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