Many corporate leaders viewed the recent recession as a time to hunker down, put long-term plans on hold, and simply ride out the storm. Eric Foss, chairman and CEO of Pepsi Bottling Group (PBG), wasn’t one of them.

“One of the things leaders look to do in very challenging times is reshape the business model and hopefully reshape industry boundaries,” Foss says.

That’s exactly what his company did when it agreed to merge with PepsiCo in August 2009. Upon completion of the merger, PepsiCo will form a new bottling entity called PepsiCo Bottling North America (PBNA). The new entity will comprise the operations of PBG and another Pepsi bottler, PepsiAmericas. Foss has agreed to serve as PBNA’s CEO.

“To be a great people leader, you’ve got to start with a passion for people,” Pepsi Bottling Group chairman and CEO Eric Foss told Mays students. “You’ve got to give people hope and insipiration.” (view more photos)

He sees the merger as a big opportunity for the Pepsi system to stand out in the market. “I think this deal will give us a competitive advantage as we come out of the recession.”

The process leading up to the merger was unique. PepsiCo, who owns a 40 percent stake in PBG and also has a franchiser/franchisee relationship with the bottler, made its initial bid to purchase the company in April 2009. PBG was suddenly confronted with the challenge of maintaining an ongoing business relationship with PepsiCo, while simultaneously negotiating for a better deal for the sake of its independent shareholders.

“It was an interesting dating process,” joked Foss.

PBG rejected PepsiCo’s initial bid of $29.50 per share, and several months of negotiations ensued. Eventually PepsiCo increased its bid to $36.50 and the deal was cinched.

“When something like that happens, as a leader you’ve got to be ready to play, fight, and win,” says Foss. “In the end, we were able to provide outstanding value for PBG shareholders, create a new company that will better meet the needs of our customers, offer new and expanded opportunities for PBG employees, and accelerate growth for the Pepsi system going forward.”

Foss’s circumstance is unique: he was part of the management team at PepsiCo 10 years ago when it spun off its asset-intensive bottling and restaurant businesses (PBG and Yum! Brands, then called Tricon Global Restaurants). Now he’s overseeing the reverse action as PepsiCo reacquires the bottling business. “It was a once in a lifetime experience to go through that process,” he says.

While Foss says he enjoys being a public company CEO, he is excited to rejoin PepsiCo and lead PBNA. “As I’ve looked at setting up this business, I felt a huge sense of ownership and obligation to our 70,000 employees to make sure this thing gets set up for success.”

“As a leader, you can’t always predict what’s going to happen, but you can try to prepare.”
—Eric Foss

Foss has been with Pepsi in a variety of positions for the past 27 years—since soon after he graduated from Ball State University in Indiana in 1982. Beginning as an entry-level sales-rep, he moved up through the ranks of management, eventually attaining the top spot in July 2006. His first assignment with Pepsi brought him from his Midwestern home to Austin, Texas. Five months later Foss was transferred to Bryan/College Station where he met his wife, then a student at A&M. He says he sees many similarities in the culture at A&M and at PBG. Though he resides in Connecticut, he says he still loves to visit Aggieland, especially now that two of his three daughters are students here.

His daughters have contributed to his success as a leader, says Foss, as they have taught him much about how to work with and lead women. These lessons were solidified when he coached their athletic teams, where he learned that motivating females is very different from motivating males. “The way I was coached…was a more in your face, “you will get this done’,” he said. “I found out real early coaching fifth and sixth grade girls that was not going to work.”

His role at PBG is similar. “At the end of the day, my number one job is that of head coach and cheerleader.”

“To be a great people leader, you’ve got to start with a passion for people. You’ve got to give people hope and inspiration,” he said.

An integral part of his leadership style is gratitude and recognition, says Foss.

For example, every Monday morning, he expects his management team to write 10 thank you notes to employees who have done something well. “The key is not a plaque or a trophy…really great leaders build a culture of appreciation into [the company’s] DNA. Because what people appreciate most is the little things…The personal touch goes a long way.”

While on campus, Foss presented a check for $10,000 on behalf of PBG to student organizers of The Big Event.
While on campus, Foss presented a check for $10,000 on behalf of PBG to student organizers of The Big Event.

One of Foss’s initiatives at PBG has been to increase diversity at all levels. “We’ve created a more diverse and inclusive culture,” he says, noting that in recent years the number of women in management roles has tripled, and the corresponding number of minorities has quadrupled. “It’s very important to us, from the backroom to the boardroom, that our employees look like the marketplace, look like our customers who drink our products.”

Foss’s leadership skills have been honed over nearly three decades with Pepsi, but his rise to power was not faultless. He shared a defining moment in his career when he made a mistake that cost the company millions. He says he owned up to the mistake and quickly tried to mitigate losses. Though it was costly, it ended well. “Not only did I not get fired, ultimately, I got promoted…the point is you’ve got to be willing to take risks,” he says. He credits some of his professional success to his courage in calculated risk-taking, as well as his confidence. “He who makes no mistakes makes no progress,” he says, paraphrasing Theodore Roosevelt.

“You really do have to believe in yourself and trust that you know what you’re doing and exude that to the organization…people will decide to follow you or not based on whether they believe in you,” he says.

Foss recently visited Mays Business School to serve as an executive speaker, addressing several groups of students. While on campus, he also presented a check for $10,000 on behalf of PBG to student organizers of The Big Event. This is the second time PBG has made a gift of this significance to The Big Event, which Foss sees as an important investment in students and in the community. To see more information about this contribution, read “Big Event at Texas A&M receives $10,000 from Pepsi Bottling Group.” (The Battalion, November 2009)