PepsiCo.

by
PepsiCo.

Introduction:

PepsiCo, Inc. is an American multinational food, snack, and beverage firm headquartered in Harrison, New York, in the town of Purchase. The operations of PepsiCo cover every facet of the food and beverage industry. It is in charge of the production, marketing, and distribution of its goods. The Pepsi-Cola Company and Frito-Lay, Inc. merged to become PepsiCo in 1965. Since then, the company has grown from its namesake product, Pepsi, to a vast array of food and beverage brands. Notable purchases include Pioneer Foods in 2020 for US$1.7 billion, Tropicana Products in 1998, and the Quaker Oats Company in 2001, which gave Pepsi the Gatorade brand.

The corporation has 23 brands as of January 2021, each with yearly revenues of above $1 billion. With operations in more than 200 countries and territories, PepsiCo generates approximately US$70 billion in net revenues annually from the distribution of its goods. In terms of net revenue, profit, and market capitalization, PepsiCo is the second-biggest food and beverage company globally, after Nestlé. The company ranked 82nd in the Forbes Global 2000 in 2023. The cola wars are the name given to the decades-long competition between PepsiCo’s flagship product, Pepsi Cola, and Coca-Cola. Although Coca-Cola outsells Pepsi Cola in the United States, By net revenue, PepsiCo is the biggest food and beverage corporation in the North American market. Since 2018, Ramon Laguarta has served as PepsiCo’s CEO. PepsiCo and, in some areas, licensed bottlers handle the company’s beverage distribution and bottling.

History and Evolution:

Caleb Bradham, a pharmacist, created Pepsi-Cola in New Bern, North Carolina, in 1898, marking the beginning of PepsiCo. The Pepsi-Cola Company was established in 1902 as a result of the drink’s rapid rise in popularity. Following financial difficulties, the business had several mergers and reorganizations.

When Pepsi-Cola and Frito-Lay combined to establish PepsiCo in 1965, the company moved beyond beverages and into the food sector. The company’s position as a worldwide powerhouse was cemented throughout the decades by its continual acquisition of significant food and beverage brands, such as Tropicana (1998), Quaker Oats (2001), and SodaStream (2018).

Business divisions:

Due to international expansion, PepsiCo’s global operations have undergone several changes in structure. As of December 2021, it is divided into seven major divisions: Asia Pacific, Australia/New Zealand, China (APAC), Latin America, Europe, Africa, Middle East, South Asia (AMESA), Quaker Foods North America (QFNA), PepsiCo Beverages North America (PBNA), and Frito-Lay North America (FLNA). In 2015, North and South America accounted for 73% of the company’s net revenues, followed by Europe and Sub-Saharan Africa at 17% and Asia, the Middle East, and Africa at 10%. As of December 2015, PepsiCo and its combined businesses employed about 263,000 people worldwide.

Business Model and Strategy:

PepsiCo operates through several key divisions:

  • PepsiCo Beverages North America – Pepsi, Mountain Dew, Gatorade, and other soft drinks are all part of PepsiCo Beverages North America (PBNA).
  • Frito-Lay North America – The top snack company in North America, Frito-Lay, makes Lay’s, Doritos, Cheetos, and Tostitos.
  • Quaker Foods North America – Health-conscious goods including Quaker Oats, Rice-A-Roni, and Life cereals are the main focus of Quaker Foods North America.
  • PepsiCo International – Divided into various areas, PepsiCo International serves markets outside of North America.

To keep its competitive advantage, PepsiCo’s strategy is centered on acquisitions, sustainability, and new product development. To improve consumer engagement, it consistently makes investments in eco-friendly packaging, healthier product substitutes, and digital transformation.

PepsiCo Beverages North America:


As of 2015, this division accounted for 35% of PepsiCo’s net revenue. It is responsible for the production (and occasionally licensing) of carbonated and non-carbonated beverages in North America as well as their marketing and sales. Pepsi, Mountain Dew, Gatorade, 7 Up (outside of the United States), Tropicana Pure Premium orange juice, Starry, SoBe Lifewater, Tropicana juice drinks, AMP Energy, Naked Juice, and Izze are the primary brands distributed under this division. North America Beverages also handles marketing and licensing for the company’s bottled water brand, Aquafina. PepsiCo also unveiled Stubborn Soda, a range of carbonated drinks devoid of high fructose corn syrup, in 2015.

Additionally, PepsiCo has partnered with a number of non-owned beverage brands to promote or distribute them alongside its own brands. As of 2010, its collaborations include Dole (licensed juices and drinks), Starbucks (Frappuccino, DoubleShot, and Iced Coffee), and LUnilever’s Lipton licensed brands (Lipton Brisk and Lipton Iced Tea).

Frito-Lay North America:

The Frito Company and the H.W. Lay Company merged in 1961 to form Frito-Lay North America, which now manufactures the best-selling snack food brand in the United States. Lay’s and Ruffles potato chips, Doritos tortilla chips, Tostitos tortilla chips and dips, Cheetos cheese-flavored snacks, Fritos corn chips, Rold Gold pretzels, Sun Chips, and Cracker Jack popcorn are some of its most well-known brands in the United States, Canada, and Mexico. Products produced by this division are shipped from Frito-Lay’s manufacturing facilities to distribution centers, primarily in company-owned and operated vehicles, and sold to independent distributors and retailers.

In 2015, the division accounted for 23% of PepsiCo’s total sales. Christopher Furman, President of Ventura Foods Inc., served as the CEO of Food Services until November 2009.

Frito-Lay plans to send over 700 electric cars (EV) to the United States in the second half of 2023 as part of the PepsiCo Positive program. According to the corporation, this action will result in a 7,000 metric ton reduction in greenhouse gas emissions. The company’s prior actions included ordering 100 Tesla Semi trucks, 30 of which have already arrived, 40 Ford eTransits trucks for the Dallas-Fort Worth region, and using renewable energy storage, electric yard tractors from BYD, Tesla semitrailers, and Peterbilt electric trucks at a Modesto, California, facility.

Quaker Foods North America:

Following PepsiCo’s 2001 acquisition of the Quaker Oats Company, Quaker Foods North America was established to produce, market, and distribute Quaker Oatmeal, Rice-A-Roni, Cap’n Crunch, and Life cereals as well as Near East side dishes in North America. The Pearl Milling Company brand, which was the best-selling line of syrups and pancake mixes in this area as of 2009, is also owned and produced by this division.

Key Brands and Products:

PepsiCo has a wide range of brands that bring in billions of dollars every year. Among its most recognizable brands are:

  • Pepsi – Pepsi, one of the most well-known cola drinks in the world, is a direct rival of Coca-Cola.
  • Mountain Dew – Mountain Dew is a well-known soft drink with a citrus flavor that is quite popular among gamers and fans of extreme sports.
  • Lay’s – The most popular potato chip brand in the world, Lay’s offers a wide variety of flavors to suit local preferences.
  • Gatorade – Gatorade is a market leader in sports drinks, going up against companies like Powerade.
  • Quaker Oats – Quaker Oats is well-known for its nutritious breakfast selection, which includes granola bars and quick oats.
  • Doritos – A well-known brand throughout the world, Doritos is renowned for its potent flavors and effective advertising efforts.
  • Tropicana – A significant force in the juice market, Tropicana provides a range of fruit-based drinks.
  • SodaStream – In order to capitalize on the expanding market for carbonated water and at-home beverage solutions, SodaStream was acquired.

Ownership:

The 10 largest shareholder of PepsiCo as of December 2023 were:

  • The Vanguard Group (9.35%)
  • BlackRock (7.96%)
  • State Street Corporation (4.20%)
  • Geode Capital Management (2.01%)
  • Morgan Stanley (1.78%)
  • Bank of America (1.66%)
  • JPMorgan Chase (1.52%)
  • Charles Schwab (1.35%)
  • Northern Trust (1.16%)
  • Norges Bank (1.13%)

Finances:

PepsiCo reported US$4.857 billion in earnings for the 2017 fiscal year, up 1.2% from the previous fiscal cycle, on US$62.525 billion in revenue. In September 2018, PepsiCo’s market capitalization was valued at over US$155.9 billion, with company shares trading at over US$109 per. According to total revenue, PepsiCo came in at number 45 on the 2018 Fortune 500 ranking of the biggest American companies.

NO.YearRevenue
in million USD		Net income
in million USD		Total Assets
in million USD		Employees
1200532,5624,06031,727
2200635,1375,63129,930
3200739,4745,64634,628
4200843,2515,13435,994
5200943,2325,94039,848
6201057,8386,31468,153
7201166,5046,43672,882
8201265,4926,17174,638
9201366,4156,74077,478274,000
10201466,6836,50370,509271,000
11201563,0565,45269,667263,000
12201662,7996,32973,490264,000
13201763,5254,85779,804263,000
14201864,66112,51577,648267,000
15201967,1617,31478,547267,000
16202070,3727,12092,918291,000
17202179,4747,61892,377309,000
18202286,3928,91092,187315,000
19202391,4719,074100,495318,000
20202391,8549,57899,467319,000

Market Position and Competition:

In the beverage industry, The Coca-Cola Company has long been seen as PepsiCo’s main rival. In December 2005, PepsiCo overtook The Coca-Cola Company in terms of market value for the first time in the twelve years since the two businesses started competing. The Coca-Cola Company had a larger market share in 2009 when it came to sales of carbonated soft drinks in the US. However, due to the disparities in their product lines, PepsiCo continued to hold a larger portion of the U.S. refreshment beverage market in the same year. Because of the partnerships, mergers, and acquisitions that In the 1990s and 2000s, PepsiCo’s operations changed to encompass a wider range of goods, such as snacks, drinks, and foods. The manufacture and distribution of carbonated soft drinks no longer account for the majority of PepsiCo’s earnings. In 2009, less than half of its entire revenue came from beverages. Gatorade and Tropicana, PepsiCo’s main non-carbonated brands, accounted for little over 60% of the company’s beverage sales in that same year.

About 39% of snack food sales in the United States in 2009 came from PepsiCo’s Quaker Oats and Frito-Lay brands, giving them a substantial market share. Kraft Foods (now Mondelez International), which controlled 11% of the snack market share in the United States that year, is one of PepsiCo’s main rivals in the snack food industry as a whole. Other soda rivals include Keurig Dr. Pepper, RC Cola, and regionally specific independent brands.

With both businesses controlling the global beverage market, PepsiCo and The Coca-Cola Company are direct rivals. But unlike Coca-Cola, PepsiCo offers a wider variety of products, such as cereals and snacks, which gives them a more varied source of income. In the food and snack industries, PepsiCo also faces competition from businesses like Nestlé, Mondelez International, and Kellogg’s.

Sustainability and Corporate Social Responsibility:

Pepsico has demonstrated its dedication to sustainability and corporate social responsibility through a number of initiatives under its strategy. Among the key sustainability goals are:

  • cutting back on plastic waste and using more recycled products.
  • Improving water conservation initiatives from production facilities.
  • Changing to renewable energy sources and reducing greenhouse gas emissions.
  • Increase the creation of food and beverages with low calorie and vegetables.

Pepsico has also participated in several community involvement projects, such as helping with diversity and inclusion, disasters assistance and education.

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