Cnbc exclusive: cnbc excerpts: cnbc's sara eisen sits down with pepsico chairman and ceo indra nooyi

WHEN: Today, Monday, October 17th WHERE: CNBC's Business Day Programming Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with PepsiCo Chairman and

CEO Indra Nooyi. Excerpts of the interview will air today, Monday, October 17th, throughout CNBC's Business Day programming with a larger piece of the interview airing on CNBC's

"Squawk on the Street" (M-F, 9AM-11AM ET).Following are links to the video on CNBC.com:

http://video.cnbc.com/gallery/?video=3000559917,http://video.cnbc.com/gallery/?video=3000559921and http://video.cnbc.com/gallery/?video=3000559920. All references must besourced to CNBC.

NOOYI ON PEPSICO'S NEW HEALTH INITIATIVE AND SLASHING CALORIE COUNTS BY 2025 INDRA NOOYI: First, we want to reduce the amount of sugar in our portfolio, reduce the amount of salt and

saturated fat in our portfolio overall. We already removed trans fats, so that was, you know, already behind us. SARA EISEN: The word healthy can be sort of squishy, and I'm not sure

the consumers really have a sense of what is healthy. If you look at, you know, this, the fastest carbonated beverage is energy drinks, which are certainly not healthy. INDRA NOOYI: So that

is the biggest dilemma we all face because any research through the consumer, they'll tell you that they're eating healthier. They want to eat healthier, but the definition of

healthy is a big question mark, you know. Something loaded with fat and sugar, but is non-GMO natural healthy? To some consumers, yes, okay. So there isn't a true north that explains

exactly what healthy is. SARA EISEN: Is Naked Juice healthy, for instance? I'm thinking about some of the marketing problems and the legal questions that the word healthy – INDRA NOOYI:

Naked Juice is incredibly healthy. If you look at the Naked Juice package, it tells you exactly what's in the bottle. It tells you exactly how many fruits, how many leaves of kale, how

many, you know, vegetables it has. It's as authentic and healthy as it comes. Now, if you want to eat a fruit by itself, that combination of fruits by itself, be my guest. But

you're not going to carry around all those fruits in your bag and consume it in those quantities. We just make it more convenient for you. And Naked Juice is as healthy, as

authentic,and as true to its mission as it's ever been. SARA EISEN: Which is why you're going to fight this lawsuit. INDRA NOOYI: I don't even understand this lawsuit, so

that's a whole different question. NOOYI ON CUTTING AMOUNT OF SUGAR IN DRINKS I think overall societies are changing, and, you know, consumers are changing their habits because they

want to focus a lot more on remaining healthy because they're living longer. So they want to remain very healthy for the duration of their lives. And so as consumers change, we have to

change our product portfolio. Now, what is regulation trying to do? I honestly believe, at this point, regulation is well-intentioned. They do want to address issues related to obesity or

other issues. But I'm not sure they're focused on actually improving the healthiness of the consumers if you want to call because they're proposing all kinds of regulation,

but they want to actually use the money from the regulation to fill budget gaps, not necessarily put it back in public policy programs. NOOYI ON INNOVATIONS FOR NEXT YEAR Lots of lower-sugar

products exciting lower-sugar products with a little bit of a twist. You're going to see a lot more in the nutrition area, whether it's expanding Quaker drinks a lot more and our

China Quaker beverage has the equivalent of one and a half bowls of Quaker oats in their drink. And every time I go there, I come back with some of that because it's just such a great

tasting product. You're going to see a lot more growth in Sabra, you know, expanding way beyond hummus. They've already started to do that. You're going to see more of that.

Naked Juice,which is over a billion dollars in retail sales today. You'll see a lot more of that coming to the market. Our tea portfolio is doing phenomenally well. You'll see a

lot more innovation coming from our tea portfolio. NOOYI ON DIVERSITY AND THE ELECTION SARA EISEN: You have some performance goals here when it comes to people and adding diversity,

something you've also been saying for a long time. Do you feel that this is sort of an especially significant task for you, as one of the most powerful female CEO'sin this country?

INDRA NOOYI: I think it's business imperative, whether you're a male CEO or a female CEO. It is a business imperative because if you look at graduating seniors from colleges,more

than 50% are women. More than 50% are women. And if you look at the best grades, they're being gotten by women. So if you really want companies to be successful, we've got to draw

from the entire pool. Not try to say, "Hey,we're going to exclude a portion of the population and drop – SARA EISEN: Why are we so behind on this? INDRA NOOYI: I don't know. I

think it's because we don't have the right policies to support women after they come into the work force. SARA EISEN: It's certainly is one of the issues that's being

talked about on the campaign trail right now.I'm curious which one of all of them is most important to you in looking at this election in a little over three weeks? INDRA NOOYI: I think

we have to think about growing the economy in a significant way. And again, I think we've got to grow the economy with an eye towards the world because, you know,global companies like

ours operate in 180 countries. We want to make sure that any economic program does not make us a pariah in other countries because people go, "Hey, you're putting up barriers in

your country, so we're not going to let you operate in ours." NOOYI ON COST CUTS AND M&A IN INDUSTRY I think when you have so many mid cap and small cap companies, there's

room to take out some more costs. I think as a large cap company ourself we are at scale. We are efficient, and if we need to do something from an M&A perspective, it'll be small

tuck-ins to fill out, you know, white spaces. I don't think there's any need for an almost$65 billion company that's present in so many countries to make any mega-deals. NOOYI

ON SUSTAINABILITY SARA EISEN: I do want to hit sustainability. You're making some aggressive goals. I know it's very important to you, and you've been out front on this. Why

is this so important for the bottom line and for investors to understand? INDRA NOOYI: So let's go through water, greenhouse gas emissions, and sort of the packaging and the recycling

and the recover ability. Let me start with water. We use a lot of water in our operations across the board in every country in which we operate.So we've been maniacally focused over the

past decade, and will be over the next decade, to reduce the water use in our operations and ensure that the entire community around us is water-positive. And that's our goal, to make

sure that we get welcomed into communities and societies, not shut down by communities and societies. And by doing so, we actually save money because we don't have to pay for water to

run our operations…Our sustainability initiatives have saved us $600 million. So I'd say to you— SARA EISEN: Cost savings. INDRA NOOYI: Environmental sustainability is not a nice to-do,

it's a fantastic profit-driving initiative which also is the right thing to do for societies and communities. NOOYI ON THE ELECTION SARA EISEN: With your strong domestic presence, do

you see the election uncertainty hurting the consumer,hurting decisions. Do you see that impact? INDRA NOOYI: Not yet. Not yet. Not yet. SARA EISEN: Are you expecting that? Does that usually

happen? INDRA NOOYI: I don't think so. It depends on what happens to markets. Depends on what happens to, you know, overall economic mood after the election. But at this point,

we're not seeing too much of an impact. NOOYI ON THE U.S. CONSUMER SARA EISEN: You didn't mention the U.S. consumer. Do you attribute the recent strength in North America and

clearly a part of your products and your categories are working, but how much of it is consumer in better shape here? INDRA NOOYI: I think the consumer is in decent shape in North America. I

mean, the overall food and beverage market is still growing at about two and a half to three and a half percent. That's a pretty decent growth for the U.S., which is such a big

market.And I think the convenience to our business is still growing. NOOYI ON RETAILERS DOING A GOOD JOB I think if you think, for example, I've had many meetings with Tesco. Tesco

wants to lean in on healthier products. I mean, they've had explicit conversations with us on what can you do to accelerate this journey? If you look at what Kroger's doing with

that whole natural, organic, healthy section, they want to lean in too. So I think there's no exception. Wal-Mart's always been somebody, in spite of their size, asking us to give

them healthier products, healthier offerings. I can go on and on.Every retailer wants balance. They don't want to swing the pendulum one way or the other. They want to make sure they

give the consumers a choice. NOOYI ON MAKING SNACKS HEALTHIER In the case of saturated fat,that was a challenge because people love fried snacks. So we had to really invest in technology to

reduce the saturated fat levels. It's taken us a while,but now, we've done two things. We are frying our snacks in many countries in heart-healthy oils. And we have a technology

breakthrough – a significant technology breakthrough – which is now commercially being adopted in China,which is a new frying technique which actually reduces saturated fat levels by about

20% and increases capacity of the machine by 25%, so we're very excited about that. NOOYI ON GLOBAL OUTLOOK SARA EISEN: Globally, you're coming off of a quarter where the

macroenvironment looked good. I know you said on the call you were cautiously optimistic. It does seem like your world view economically was more positive than others. So I'm wondering

what you're seeing that others may not be right now. INDRA NOOYI: You know, I think we're executing so much better than, you know, we've ever done before.Our innovation's

working. Everything we're doing in every country seems to be working. Economically, there are hot spots, as I mentioned, you know. Brazil,Argentina, definitely hot spots. If you look

at the Middle East, many parts,you know, there's still crisis. Europe is tepid recovery, but it's not negative. Brexit is still a big question mark. Asia is still doing well. And

so I look at our portfolio and our footprint. Net net together, it's working. SARA EISEN: And Russia's doing better? INDRA NOOYI: Russia's actually doing very well, and so I

look at our footprint. I look at our portfolio. It's doing well right now. And what we can do is control what we can, and that's what we're maniacally focused on. NOOYI ON

RECENT PULLBACK AND M&A OUTLOOK SARA EISEN: It was a good quarter. Has it been frustrating to sort of watch the stock underperformance since then? It gets grouped together with these

consumer staples and— INDRA NOOYI: You know what? In the long term, the stock will come back. Again, we're going to deliver the numbers. We're going to deliver great top line and

bottom-line performance.It's got to be balanced. I think hitting the pedal on one or the other is not a very good thing. Our performance is balanced, you know. Good top line growth.Good

bottom-line performance. We're just going to keep focusing on that. We cannot control the markets. We can perform. We can tell our story. The rest of it is whatever happens to overall.

SARA EISEN: Your story's been somewhat unique within the industry. There's been a lot of consolidation,M&A, that has completely reshaped the industry. Do you expect to see

more of that? INDRA NOOYI: In the food and beverage industry? SARA EISEN: Sure. INDRA NOOYI: Probably.Because, you know, if you look at the food and beverage industry, there are three groups

of companies. There's large cap, medium cap, and small cap companies. I think the medium cap companies are sitting in sort of no man's land because as retailers consolidate, the

large cap companies can actually provide heft and, you know, growth for the retailers. NOOYI ON NFL RATINGS WEAKNESS I don't know. Let's wait until the election season is over,

Sara, because I think right now, there's so much sensationalism in the election season. I mean, there's news – breaking news every hour. So I think the football audience is being

drawn to that. After four weeks, let's talk about football again. It's still one of the greatest sports. And it's so much fun to watch. And I think football is as apple pie as

anything to the United States. So let's just wait. ABOUT CNBC: With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD, CNBC is the

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