Pepsi: Repairing A Poisoned Reputation In India
How the soda giant fought charges of tainted products in a country fixated on its polluted water
Indra K. Nooyi says she still feels guilty filling a bathtub with water. It sounds far-fetched coming from the chief executive of a major multinational corporation, until you consider her early years. Nooyi, the chief executive of PepsiCo Inc. (PEP ), didn't get much water growing up during the 1960s in the Indian coastal city of Chennai. Although she describes her family as "very middle class," they still had to rise every morning between three and five—the only hours that the valves to the municipal water supply were turned on—and fill every bucket in the house. Two buckets were set aside for cooking, and two each would go to Nooyi, her older sister, and her younger brother. "You had to think about whether to take a bath," says Nooyi, matter-of-factly. "You learned to live your life off those two buckets."

Nooyi left Chennai, propelled by a dream to build a career in the U.S. She headed to the prestigious Indian Institute of Management and later Yale University before moving into the corporate sphere, eventually settling at PepsiCo in 1994. When she was named CEO in October of last year, India's water again became a focus of her life.

This time Nooyi was cast as part of the problem. Villagers charged that PepsiCo—which has named India as a top strategic priority—consumes excessive groundwater in their parched communities. Even worse was the repeated claim that the snack and beverage company, along with rival Coca-Cola Co. (KO ), were allowing pesticide residue from groundwater to get into locally made soda. The charges, first leveled in 2003, emerged again two months before Nooyi took over the top job. Pepsi's soda sales, which fell by double digits in India when the scandal first broke, took another big hit last