Company Report On

PEPSICO

Submitted by
Aastha Jain
MBA (G)
Roll No. A0101913141




Under The Supervision Of
Prof.(Dr.) JK Sharma





AMITY BUSINESS SCHOOL
AMITY UNIVERSITY UTTAR PRADESH
NOIDA


C ONTENTS

Declaration 4
Certificate 5
Acknowledgement 6
Food and beverage industry: an overview
Beverage industry
7
PepsiCo Inc: company under study
Operating segments
PepsiCo is structured into four business units
Business statistics of PepsiCo
8
PepsiCos SWOT analysis 2013
Strengths
Weaknesses
Opportunities
Threats
13
Acquisitions and divestments 14
PepsiCos growth in India 14
Export and Import
Area of business
PepsiCo Americas food
PepsiCos Latin America foods
16
Trends and Forces
Commodity costs are pressuring margins
Declining demand for carbonated soft drinks
18
Comparative analysis of PepsiCo and its competitors
Beverages
Snacks and convenient foods
Global footprint
Diversified product offering
A history of dividend growth and stock buybacks
20
Products of PepsiCo 24
Learning outcomes 25


DECLARATION



Company report on PepsiCo.

I declare that (a) the work presented for assessment in this company report is my own, that it has
not previously been presented for another assessment and that my debts (for words, data,
arguments & ideas) have been appropriately acknowledged,(b) the work conforms to the
guidelines for presentation & style set out in the relevant documentation, and (c)The plagiarism
for this report has been checked using _________________software & is ______%. The detailed
report is attached along with for reference.



Date: Aastha Jain
A0101913141
MBA (G)
Class 2013-2015


CERTIFICATE
This is to certify that Aastha Jain student of Masters of Business Administration (G) at Amity
Business School, Amity University Uttar Pradesh has completed the Dissertation/ Company
Report/ Minor Project on PepsiCo, in Partial Fulfillment of the Requirements for the Degree of
Master of Business Administration (G) under my guidance.
The report has been checked for the plagiarism and it is acceptable.
Prof.(Dr.) J K Sharma
Professor
Department of Operations
































ACKNOWLEDGEMENT


It is indeed a great pleasure to express my sincere gratitude to the faculty in-charge and guide,
Prof. J.K. Sharma for his valuable inputs and support throughout the research process. He had
devoted his valuable time and efforts in patiently guiding me to complete this project. His wide
knowledge and logical way of thinking have created a great value to me.
Lastly, I would like to specially thank the ones who have helped me during the progress of the
research project. It has been surely a great time working on it. I express my sincere gratitude to
those who have directly and indirectly assisted me to bring this company report to completion.


Aastha Jain
FOOD AND BEVERAGE INDUSTRY: AN OVERVIEW

The food industry is a complex, global collective of diverse businesses that supply much of
the food energy consumed by the world population. Only subsistence farmers, those who survive
on what they grow, can be considered outside of the scope of the modern food industry. In 2004
processed food sales worldwide were approximately US$3.2 trillion. In
2012, U.S. consumers spent approximately US$1.8 trillion annually on food, or nearly 10 percent
of the Gross Domestic Product (GDP). Over 16.5 million people are employed in the food
industry. Whereas in the United Kingdom, the food industry is extensive. It employs 500,000
people and has a turnover in excess of 70bn. It is the largest manufacturing sector in the UK
and represents around 15% of the total manufacturing sector in the UK. Around 13% of the
people working in manufacturing in the UK work in the food and drink industry. The food
industry includes:
Regulation: local, regional, national and international rules and regulations for food
production and sale, including food quality and food safety, and
industry lobbying activities.
Education: academic, vocational, consultancy
Research and development: food technology
Financial services insurance, credit
Manufacturing: agrichemicals, seed, farm machinery and supplies,
agricultural construction, etc.
Agriculture: raising of crops and livestock, seafood
Food processing: preparation of fresh products for market, manufacture of prepared food
products
Marketing: promotion of generic products (e.g. milk board), new products, public
opinion, through advertising, packaging, public relations, etc
Wholesale and distribution: warehousing, transportation, logistics Retailing

Top four companies associated with food industry are as under:
Nestl: world's largest food and Beverage Company.
PepsiCo: largest U.S.-based food and Beverage Company.
C&S Wholesale Grocers: lead supply Chain Company in the food industry today and
largest wholesale grocery Supply Company in the U.S.
Unilever: Anglo-Dutch Company that owns many of the world's consumer product
brands in foods and beverages.

Beverage Industry
The beverage industry refers to the industry that produces drinks. Beverage production can vary
greatly depending on which beverage is being made. Innovations in the beverage industry,
catalyzed by requests for non-alcoholic beverages, include: beverage plants, beverage
processing, and beverage packing. The estimates are based on an assumed GDP growth of 7%, which
is much higher than the 5% growth several economists are forecasting. And the growth rate is 16.5-19%.

PEPSICO INC.: COMPANY UNDER STUDY

PepsiCo Inc. is a global food and beverage company and was established through the merger of
Pepsi-Cola and Frito-Lay in 1965. Incorporated on 13
th
November, 1986, it is basically an
American multinational corporation headquartered in Purchase, New York, United States.
PepsiCo manufactures, markets, sells and distributes a range of grain-based snack foods,
beverages and other products in more than 200 countries and territories. The net revenues of the
company are more than $65 billion and the product portfolio includes 22 brands that generate
more than $1 billion each in annual retail sales. PepsiCo is the second largest food & beverage
business in the world (based on net revenue,). And within North America, PepsiCo is ranked (by
net revenue) as the largest food and beverage business. Since 2006, Indra Krishnamurthy Nooyi
has been the chief executive of PepsiCo. It has employed approximately 297,000 people
worldwide as of 2011.The Companys beverage distribution and bottling is conducted by
PepsiCo as well as by licensed bottlers in certain regions. PepsiCo is a SIC 2080 (beverage)
company. Unlike its major competitor, the Coca-Cola Company (KO), the majority of PepsiCo's
revenues do not come from carbonated soft drinks. Beverages account for less than 50% of total
revenue and over 60% of PepsiCo's beverage sales come from its key noncarbonated brands like
Gatorade and Tropicana. PepsiCo's diverse portfolio can alleviate the impact of poor conditions
in any one of its markets. The company serves 86% of the world's population and international
sales account for 48% of revenue. PepsiCo is highly exposed to raw materials costs. Prices for
the most important input materials, aluminum, PET plastic, corn, sugar, and juice concentrates
fluctuate widely. PepsiCo is the largest snack and non-alcoholic drink producer in the United
States, with 39% and 25% of the respective market shares. PepsiCo's beverage division
manufactures concentrated syrup forms for all of Pepsi's beverage brands. PEP sells these
concentrates to bottlers for production, packaging, and distribution of the final products. PepsiCo
grants bottlers the use of Pepsi trademarks and other brand rights within certain geographic
regions. Three companies distribute 60% of PepsiCo's North American beverage volume:
The Pepsi Bottling Group (PBG) is the largest of PepsiCo's bottlers. PepsiCo has a 33% stake in
Pepsi Bottling Group (PBG), and claims its share of income under the equity method of
accounting. PepsiAmericas (PAS) is the second-largest bottler in the Pepsi system. PepsiCo has a
43% stake in Pepsi Americas (PAS), and claims its share of income under the equity method of
accounting. Pepsi Bottling Ventures is the third-largest domestic bottling company within the
Pepsi system. The company was formed in 1999 when five of Pepsis bottling companies
consolidated to form PBV.

Operating Segments
PepsiCo operates in six divisions:
Frito-Lay North America (29% of Revenue, 43% of Operating Income) manufactures,
markets and sells branded snacks. Popular products include Lay's Potato Chips, Doritos
Tortilla Chips, Cheetos, Rold Gold Pretzels, and SunChips. Following the company's
purchase of Pepsi Bottling Group (PBG) and Whitman (PAS), company executives have
said that it will lead to increased joint marketing, bundling the company's snack and
beverage offerings.
Quaker Foods North America (4% of Revenue, 8% of Operating Income) manufactures,
markets and sells cereals, rice, pasta and other branded products. Popular products
include Quaker Oatmeal, Aunt Jemima mixes and syrups, Cap n' Crunch cereal, Rice-A-
Roni, and Life cereal.
Latin America Foods (14% of Revenue, 13% of Operating Income) manufactures,
markets and sells a number of leading salty and sweet snack brands. Popular products
include Gamesa, Doritos, Cheetos, and Ruffles.
PepsiCo Americas Beverages (25% of Revenue, 29% of Operating
Income) manufactures, markets and sells beverage concentrates, fountain syrups and
finished goods, under various beverage brands. Popular products include Pepsi, Mountain
Dew, Gatorade, Tropicana, and Izze.
United Kingdom & Europe (15% of Revenue, 10% of Operating Income) manufactures,
markets and sells a number of leading salty and sweet snack brands. Popular products
include Lay's, Walker's, Doritos, and Cheetos.
Middle East, Africa, and Asia (13% of Revenue, 8% of Operating Income) manufactures,
markets and sells a number of leading salty and sweet snack brands. Popular products
include Lay's, Smith's, Doritos, and Cheetos.

PepsiCo is structured into four business units:

PepsiCo Americas Foods (PAF), which includes Frito-Lay North America (FLNA),
Quaker Foods North America (QFNA) and all of its Latin American food and snack
businesses (LAF);
PepsiCo Americas Beverages (PAB), which includes all of its North American and Latin
American beverage businesses;
PepsiCo Europe, which includes all beverage, food and snack businesses in Europe as
well as South Africa, and
PepsiCo Asia, Middle East and Africa (AMEA), which includes all beverage, food and
snack businesses in AMEA, excluding South Africa.









Fig.1: Segmentation in PepsiCo.





In this fig.1, we can see that PepsiCo has been divided into segments based on the revenues in
the world market. The maximum portion is covered by its Frito-Lay North America(29%) and
then followed by PepsiCo American Beverages(25%). The smallest segment is covered by
Quaker Foods North America which is just 4%.

Business Statistics of PepsiCo

Fig. 2: Growth of PepsiCo in 1,5 and 10 years
Annual rates(per
share)
10yrs 5yrs 12months(2012-2013)
Revenue growth(%) 11.70 10.80 2.40
EBITDA growth(%) 8.80 6.60 5.90
EBIT growth(%) 8.10 5.30 7.40
Free cash flow
growth(%)
7.50 9.80 20.40


*12-month growth rate is calculated with the per share revenue (EBITDA, FCF, earnings) of the
last 12 months over the per share revenue (EBITDA, FCF, earnings) over the previous 12
months. 5-year and 10-year growth rates are calculated with least-square regression based on the
5-year and 10-year numbers.

Fig.3: Growth of PepsiCo over the years



In this graph, we can see that the free cash flow of the company is decreasing while the revenues
are increasing which is a good sign for the company. Also, there is not much difference in the
EBITDA and EBIT.





0
5
10
15
20
25
30
35
40
12 months 5 years 10 years
Free cash flow growth
EBIT growth
EBITDA growth
Revenue growth

PEPSICOS SWOT ANALYSIS 2013


Strengths

Product diversity
Extensive distribution channel
Corporate social responsibility
projects
Competency in mergers and
acquisitions
22 brands earning more than $1 billion
in a year
Successful marketing and advertising
campaigns
Complementary product sales
Proactive and progressive

Weaknesses

Overdependence on Wal-Mart
Low pricing
Questionable practices (using tap
water but labeling it as mountain
spring water)
Much weaker brand awareness and
market share in the world beverage
market compared to Coca-Cola
Too low net profit margin

Opportunities
Growing beverages and snacks
consumption in emerging markets
(especially BRIC)
Increasing demand for healthy food
and beverages
Further expansion through
acquisitions
Bottled water consumption growth


Threats
Changes in consumer tastes
Water scarcity
Decreasing gross profit margin
Legal requirements to disclose
negative information on product labels
Strong dollar
Increased competition from Snyders
ACQUISITIONS AND DIVESTMENTS

PepsiCo expanded through acquisition of businesses outside of its core business of packaged
food and beverage brands between the late-1970s and the mid-1990s.On the other hand it exited
these non-core business lines mostly in 1997, selling some and spinning off others into a new
company named Tricon Global Restaurants which later on was known as Yum! Brand. Also, it
owned several other brands earlier that it later sold so it could focus on its most important snack
food and beverage lines. Brands formerly owned by PepsiCo include: Pizza Hut, Taco
Bell, KFC, Hot 'n Now, East Side Mario's, D'Angelo Sandwich Shops, Chevys Fresh
Mex, California Pizza Kitchen, Stolichnaya via licensed agreement, Wilson Sporting
Goods and North American Van Lines.
The divestments finishing in 1997 were followed by multiple large-scale acquisitions, as
PepsiCo began to extend its operations beyond soft drinks and snack foods into other lines of
foods and beverages. In 1998 PepsiCo purchased the orange juice company Tropicana Products
and in 2001 merged with Quaker Oats Company , accumulating with it the Gatorade sports
drink line and other Quaker Oats brands such as Chewy Granola Bars and Aunt Jemima.
In August 2009, PepsiCo acquired the two largest bottlers of its products in North
America: Pepsi Bottling Group and Pepsi Americas. But the acquisition was completed in 2010
resulting in the creation of a newly owned subsidiary of PepsiCo, Pepsi Beverages
Company. The company made its largest international acquisition in February 2011 by
purchasing a majority stake in Wimm-Bill-Dann Foods, a Russian food company that produces
milk, yogurt, fruit juices, and dairy products. When it acquired the remaining 23% stake of
Wimm-Bill-Dann Foods in October 2011, PepsiCo became the largest food and Beverage
Company in Russia.

PEPSICOS GROWTH IN INDIA

PepsiCo entered India in 1989 and in a short period has grown into one of the largest food and
beverage businesses in the country. PepsiCos growth in India has been guided by its global
vision of Performance with Purpose which means maximizing shareholder value with a
responsibility to all the stakeholders, including the communities in which they operate, the
consumers they serve and the environment whose resources they use.
Large investor and one of the largest food & beverage businesses in India: One of the largest US
multinational investors in the country, PepsiCo has been consistently investing in India and has
built an expansive beverage and snack food business supported by 38 beverage plants and 3 food
plants. PepsiCo Indias diverse portfolio includes iconic brands like Pepsi, Lays, Kurkure,
Tropicana, Gatorade and Quaker. In two decades, the company has been able to organically grow
eight brands that generate Rs. 1000 crores or more in estimated annual retails sales and are
household names, trusted across the country.

A growing portfolio of enjoyable and wholesome snacks and beverages: PepsiCo Indias
portfolio reflects its commitment to nourish consumers with a diverse range of fun and healthier
products. The portfolio includes several healthier treats like Quaker Oats, Tropicana juices,
Tropicana fruit powders, rehydrator Gatorade, Tata Water plus, Lays baked range, Quaker
flavoured oats and Quaker Nutri Upma & Nutri Poha breakfast range with the power of
wholegrain.

PepsiCo India has pioneered and established a model of partnership with farmers and now works
with over 24,000 happy farmers across nine states. More than 45 percent of these are small and
marginal farmers with a land holding of one acre or less. PepsiCo provides 360-degree support to
the farmer through assured buy back of their produce at pre-agreed prices, quality seeds,
extension services, disease control packages, bank loans, weather insurance, and the latest
technological practices. The association with PepsiCo India has not only raised the incomes of
small and marginal farmers, but also their social standing.

In 2009, PepsiCo India achieved a significant milestone, by becoming the first business to
achieve Positive Water Balance in the beverage world, and has been Water Positive since then.
This fact has been independently assured by Deloitte Touch Tohmatsu India Pvt. Ltd. In 2012,
PepsiCo India saved 8.2 billion litres more that it consumed in its manufacturing operations. The
company made this possible through innovative irrigation practices like direct seeding,
community water recharging initiatives, and by reducing the consumption of water in its
manufacturing facilities. PepsiCo is lauded for its efforts for water conservation and has received
numerous awards such as CII National award for water management, Water Digest award for
water practices and Golden Peacock award for water conservation amongst others.
PepsiCo India is now focused on reducing its carbon footprint. More than 40 per cent of its
energy is today generated from renewable sources such as bio mass & rice husk boilers and wind
turbines. Initiatives such as reduction in use of chemicals, eco-friendly packaging initiatives and
efficient waste management help reduce load on the environment. PepsiCo in partnership with
the NGO Exnora and local municipalities has also been working on a unique waste collection
and treatment program called Waste-to-Wealth.
PepsiCo India provides direct and indirect employment to almost 2,00,000 people. The company
believes in providing employment and growth opportunities to local talent. Its College of
Leadership, ensures early identification of talent, and employees focused development through
critical experiences. PepsiCo firmly believes that encouraging diversity means encouraging
policies and systems that respect peoples special needs.

EXPORT AND IMPORT

Area of business

The structure of PepsiCo's global operations has shifted multiple times in its history as a result of
international expansion, and as of 2010 it is separated into four main divisions: PepsiCo
Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe, and PepsiCo Asia, Middle East
and Africa. As of 2009, 71 percent of the company's net revenues came from North and South
America, 16 percent from Europe and 13 percent from Asia, the Middle East and
Africa. Approximately 285,000 people are employed by PepsiCo worldwide as of 2010.

PepsiCo Americas Food

PepsiCo Americas Foods consists of the company's food and snack operations in North and
South America. This operating division is further segmented into Frito-Lay North America,
Quaker Foods & Snacks, Sabritas, Gamesa, and Latin America Foods. Food and snack sales in
North and South America combined contributed 48 percent of PepsiCo's net revenue in 2009.

Frito-Lay North America, the result of a merger in 1961 between the Frito Company and the
H.W. Lay Company, produces the top selling line of snack foods in the U.S. Its main brands in
the U.S., Canada and Mexico and include 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. Products made by this division are sold to
independent distributors and retailers, and are transported from Frito-Lay's manufacturing plants
to distribution centers, principally in vehicles owned and operated by the company.
Quaker Foods North America, created following PepsiCo's acquisition of the Quaker Oats
Company in 2001, manufactures, markets and sells Quaker Oatmeal, Rice-A-Roni, Cap'n
Crunch and Life cereals, as well as Near East side dishes within North America. This division
also owns and produces theAunt Jemima brand, which as of 2009 was the top selling line
of syrups and pancake mixes within this region.

Sabritas and Gamesa are two of PepsiCo's food and snack business lines headquartered in
Mexico, and they were acquired by PepsiCo in 1966 and 1990, respectively. Sabritas markets
Frito-Lay products in Mexico, including local brands such as Poffets, Rancheritos, Crujitos and
Sabritones. Gamesa is the largest manufacturer of cookies in Mexico, distributing brands such as
Emperador, Arcoiris and Maras Gamesa.


PepsiCo's Latin America Foods

(Spanish: Snacks Amrica Latina) operations market and sell primarily Quaker- and Frito-Lay-
branded snack foods within Central and South America, including Argentina, Brazil, Peru and
other countries in this region. Snacks Amrica Latina purchased Peruvian company Karinto
S.A.C. including its production company Bocaditas Nacionales (with three production facilities
in Peru) from the Hayashida family of Lima in 2009, adding the Karito brand to its product line,
including Cuates, Fripapas, and Papi Frits.



TRENDS AND FORCES

Emerging markets such as China, India, Eastern Europe and Latin America present strong
growth opportunities for Pepsico. Pepsi purchased Wimm-Bill-Dann Foods, a Russian food and
beverage company, for $5.4 billion Wimm-Bill-Dan is the leading producer of dairy products in
Russia and they also have a large market share for juice; the purchase significantly expands
Pepsi's presence in Eastern Europe and Central Asia.

In addition to making international acquisitions, PepsiCo is investing significant resources in
expanding their manufacturing capabilities in developing markets. The company has pledged to
invest $3.5 billion in China through 2013, mainly through the construction of 10 to 12 new
manufacturing facilities (in addition to the 27 it currently operates). In China, Pepsi is also
pursuing a strategy of buying back stakes in its Chinese operations from local partners. These
acquisitions will give the company greater control over its operations while increasing profits.
Unlike the saturated North American market, China's carbonated drink market is growing at
almost 20% annually. In the past two years, the company invested in two other manufacturing
plants in Vietnam, and it currently operates five plants in the country. In Latin America, the
company has pledged $3 million over the next three years to create an agriculture research center
in Peru, which will focus on the discovery of new potato and other vegetable varieties. Pepsi's
expects their global nutrition business will be worth $20 billion by 2020.

Commodity Costs are Pressuring Margins

PepsiCo's profitability can be affected directly and indirectly by the costs of various production
inputs. PEP is responsible for purchasing the raw materials used to make its products in all its
markets and also acts as an agent for the purchase of its bottlers' raw materials. Some of the raw
materials used by PEP include grains such as corn, wheat flour, oats and rice; fruit and vegetable
products like oranges, potatoes, and juice concentrates; sugar; and vegetable and essential oils.
Changes in the prices of such raw materials could impact total production costs and the
companys profit margins. Changes in bottlers' production input costs can also indirectly impact
PEP's profits. If a bottler's raw materials become more expensive, it might pass on the increase to
customers, which could lead to a loss of market share as customers switch to more affordable
alternatives. The primary raw materials used by bottlers are high fructose corn syrup, which is
used as a sweetener, aluminum, used to make cans, and PET Resin, used for plastic bottles.
In an effort to insulate itself from market forces, PepsiCo has invested $29.3 million in five
farms in China, making it one of the country's largest agricultural companies. The farms
primarily produce potatoes for the company's potato chip brands
.
In addition to its farms in
China, Pepsi has 12,000 contract farmers in India growing potatoes on 16,000 acres of land. In
addition to potatoes, the company is hoping to expand its contract farming initiative to include
oats in the near future.

Declining Demand for Carbonated Soft Drinks

Consumer demand for CSD has been negatively affected by concerns about health and wellness.
Carbonated soft drinks have dropped from 60% to 35% of total US beverage volume. Rising
health and wellness concerns can be attributed to increasing concern for obesity as well as
education campaigns on the part of the FDA as well as non-profit groups. Public campaigns to
ban sales of soft drinks and fatty snacks in schools have also negatively impacted demand for
sugary sodas. These factors have driven a shift in consumption away from CSD to healthier
alternatives, such as tea, juices, and water. Even within the CSD segment, consumers have been
moving away from the sugared drinks, opting instead for diet beverages, which do not generally
contain any sugar or calories. In response to this shift in consumer demand, PEP has increased its
development of both diet CSD and non-CSD beverages. With its popular Tropicana and
Gatorade brands, PepsiCo is much better situated than Coca-Cola Company (KO) to react to
these changing trends. Facing lower Gatorade sales, Pepsi developed a social marketing
department to track the brand's performance and online reputation. By tracking user discussions
online and Gatorade groups on Facebook, the company has been able to quickly respond to
consumer demands.

PepsiCo hopes to streamline manufacturing and distribution through the acquisitions, allowing it
to bring new products to market more quickly and efficiently. The company expects to gain full
control of 80% of its North American market and increase pre-tax profit by $300 million,
increasing eps by $.15. The deal adds $4 billion in debt to PepsiCo's balance sheet. According to
PepsiCo CEO Indra Nooyi, the acquisition is necessary to consolidate profit as there is not
enough total profit in the North American beverage industry to support investments in several
different companies.

COMPARATIVE ANALYSIS OF PEPSICO AND ITS COMPETITORS

The Coca-Cola Company has historically been considered PepsiCo's primary competitor in the
beverage market. In 2005, PepsiCo surpassed The Coca-Cola Company in market value for the
first time in 112 years since both companies began to compete. The Coca-Cola Company held a
higher market share in carbonated soft drink sales within the U.S. in 2009 and in the same year,
PepsiCo sustained a higher share of the U.S. refreshment beverage market, however, revealing
the differences in product lines between the two companies. In 1990s and 2000s PepsiCos
business began to include a broader product base, including foods, snacks and beverages. Hence,
the greater part of PepsiCo's revenues no longer come from the production and sale of
carbonated soft drinks. Beverages just accounted for less than 50 percent of its total revenue in
2009 and in the same year, slightly more than 60 percent of PepsiCo's beverage sales came from
non-carbonated brands( Gatorade and Tropicana).

PepsiCo's Frito-Lay and Quaker Oats brands hold a considerable share of the U.S. snack food
market, accounting for approximately 39 percent of U.S. snack food sales in 2009. Kraft Foods
is one of its primary competitors in the snack food market, which in the same year held 11
percent of the U.S. snack market share. Some other competitors for soda are RC Cola, Cola
Turka, Kola Real, Inca Kola, Zam Zam Cola, Mecca-Cola, Virgin Cola, Parsi Cola, Qibla
Cola, Evoca Cola, Corsica Cola, Breizh Cola, Afri Cola.
PepsiCo's product mix according to 2012 (based on worldwide net revenue) consists of 63
percent foods and 37 percent beverages. The company's current products lines include several
brands that in 2009 were estimated to have generated approximately $108 billion in cumulative
annual retail sales.


Beverages

In the domestic beverage market, the Coca-Cola Company (KO) is PepsiCo's main
competitor. Coca-Cola Company (KO) has a higher worldwide share of carbonated soda
beverages, but PepsiCo has a more diverse product line and leads the industry in non-carbonated
soft drink innovations. PepsiCo's revenues are also significantly higher than Coca-Cola's, due to
its snack and convenient foods business, a market in which KO does not contribute. PepsiCo's
presence in the snack and convenient food industries, as well as its industry-leading innovations
in the non-carbonated soft drink segment, gives it a somewhat more balanced portfolio than
Coca-Cola and provides the company with some protection against further declining demand for
CSD. Pepsi also pays the Dr Pepper Snapple Group (DPS) for the rights to sell its products,
along with Coca-Cola Company (KO).


Snacks and Convenient Foods

PepsiCo's Frito-Lay and Quaker brands compete in various parts of the larger food industry. Its
snack foods manufactured by the Frito-Lay segment hold a commanding share of the U.S.
market, accounting for around 39% of domestic snack food sales. PepsiCo's main competitor in
the food market overall is Kraft Foods (KFT). Kraft's products include snacks, cheese, diary, and
cereal products, which puts it in competition both with Frito-Lay and Quaker products. Much
like the Coca-Cola Company (KO), Kraft does not participate in both the food and soft drink
markets, giving PEP the advantage of having a more diverse offering of products.
For decades now, Coke and Pepsi have battled for our hearts and minds... but what about our
capital? Which company will add the best flavor to your investment portfolio? Although both
companies share powerful brand names and global franchises, there are two important
distinctions between Pepsico and Coca-Cola that any investor should consider before choosing
between these comestible titans.

Global Footprint

When it comes to international presence, Coca-Cola easily trumps Pepsico. Coca-Cola's
impressive global footprint puts it in a better position to benefit from strong growth across the
globe, particularly in the developing world. Furthermore, because Coke generates so much of its
revenue abroad, it stands to benefit greatly from the continuing weakening of the dollar as sales
denominated in foreign currencies are suddenly worth more dollars back home. At the same
time, Pepsico's heavy dependence on North America makes it much more susceptible to
a slowing US economy.

Diversified Product Offering

Another important distinction between the two companies is their product offering. While KO is
essentially a one-product company that focuses on beverages, Pepsico has a much broader
product base that includes beverages, foods and snacks. Coca-Cola's heavy dependence on
beverages, particularly carbonated beverages, makes it more susceptible than Pepsico to a
growing aversion to soda which is perceived as fattening and unhealthy. On the other hand,
Pepsico's extensive portfolio of beverages, foods and snacks puts it in a better position from the
trend to healthier eating.

A History of Dividend Growth and Stock Buybacks

The Coca-Cola Company (KO) and PepsiCo (PEP) have enviable histories of dividend increases.
While I number among the minority of the population that seldom drinks their beverages, I will
admit to a thirst for the dividends offered by these companies, a record few corporations match.
Pepsi's average dividend increase since 2000 is 11.01%. The smallest of those dividend increases
occurred in 2000 at 3.77% while their most recent dividend increase was a respectable 4.99%.
Coca-Cola's dividend increases have averaged 9.38% during the same time period; however, the
magnitude of their increases has been a bit more predictable. Their smallest increase was in 2001
at 5.88%, while their last dividend increase totaled 9.80%.Since 2002, Pepsi reduced their shares
outstanding from 1.79 billion to 1.60 billion (roughly 12%).During the same period, Coke
reduced their shares outstanding from 2.48 billion to 2.32 billion (nearly 7%)

Fig.4 Market share



In fig.4 the market share of PepsiCo is 47% based on the annual sales of the year 2006 compared
to Coco Cola which is 34% and Cadbury which is just 19%. Hence we can see that PepsiCo is
the leader in this market.




PRODUCTS OF PEPSICO

The recipe for Pepsi (the soft drink), was first developed in the 1880s by a pharmacist and
industrialist from New Bern, North Carolina, named Caleb Bradham who called it "Pepsi-
Cola" in 1898. As the cola developed in popularity, he created the Pepsi-Cola Company in 1902
and registered a patent for his recipe in 1903. The Pepsi-Cola Company was first incorporated in
the state of Delaware in 1919. The company went bankrupt in 1931 and on June 8 of that year,
the trademark and syrup recipe was bought by Charles Guth who owned a syrup manufacturing
business in Baltimore, Maryland. Guth was also the president of Loft, Incorporated, a leading
candy manufacturer, and he used the company's labs and chemists to reformulate the syrup. He
further contracted to stock the soda in Loft's large chain of candy shops and restaurants, which
were known for their soda fountains, used Loft resources to promote Pepsi, and moved the soda
company to a location close by Loft's own facilities in New York City. In 1935, the shareholders
of Loft sued Guth for his 91% stake of Pepsi-Cola Company in the landmark Guth v. Loft
Inc. Loft won the suit and on May 29, 1941 formally absorbed Pepsi into Loft, which was then
rebranded as Pepsi-Cola Company that same year. (Loft restaurants and candy stores were spun
off at this time.) In the early 1960s, the company product line expanded with the creation of Diet
Pepsi and purchase of Mountain Dew.

In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc., the
company it is known as at present. At the time of its foundation, PepsiCo was incorporated in the
state of Delaware and headquartered in Manhattan, New York. The company's headquarters were
relocated to its still-current location of Purchase, New York in 1970, and in 1986 PepsiCo was
reincorporated in the state of North Carolina. PepsiCo was the first company to stamp expiration
dates, starting in March 1994.



LEARNING OUTCOMES

The food and beverage industry has grown over the yearshe progress has been in
increasing order as per table 2. This industry contributes around 10% in the GDP where
PepsiCo is the second largest food & beverage business in the world.
The net revenue of the company are more than $65 billion.Unlike its major competitor,
Coca-Cola Company (KO), the majority of PepsiCo's revenue does not come from
carbonated soft drinks. In fact, beverages account for less than 50% of total
revenue. Additionally, over 60% of PepsiCo's beverage sales come from its key
noncarbonated brands like Gatorade and Tropicana.
Even though PepsiCos main challenges is in the global environment, there is a strong
demand growth in international markets as the company serves 86% of the world's
population and international sales account for 48% of revenue is helping to offset a
sluggish domestic market and provided the company with opportunities for continued
expansion.
The brand awareness and market share in the world beverage market compared to Coca-
Cola is much weaker.
Emerging markets such as China, India, Eastern Europe and Latin America present strong
growth opportunities for PepsiCo.
Demand for CSD has been negatively affected by concerns about health and wellness.
Therefore,carbonated soft drinks have dropped from 60% to 35% of total US beverage
volume.
PepsiCo's product mix of 2012 (based on worldwide net revenue) consists of 63 percent
foods, and 37 percent beverages. On a worldwide basis, the company's current products
lines include several hundred brands that in 2009 were estimated to have generated
approximately $108 billion in cumulative annual retail sales.

References
(http://www.pepsi.com/PepsiLegacy_Book.pdf)
(http://www.reuters.com/finance/stocks/companyProfile?symbol=PEP)
(http://pepsicoindia.co.in/)
(http://en.wikipedia.org/wiki/PepsiCo)
(http://www.advfn.com/exchanges/NYSE/PEP/financials) (http://www.pepsico.com/annual12/)
(http://csimarket.com/stocks/singleEfficiencyet.php?code=PEP)
(http://www.pepsico.com/Story/PepsiCo-India-A-High-Priority-Market-for-
PepsiCo111820131227.html)