TERM PAPER

PEPSICO
SUBMITTED TO:

In the partial fulfillment of

Master of Business Administration

SUBMITTED TO: - SUBMITTED BY:

Mr. Amit Kumar Lal JYOTI KOHLI
STRATEGIC MANAGEMENT 10807494
ROLL
NO:RT1801A12
MBA-IV
 ACKNOWLEDGEMENT
I take this opportunity to offer my deep gratitude to all those who have extended their
valued support and advice to complete this term paper. I cannot in full measure,
reciprocate the kindness showed and contribution made by various persons in this
endeavor.

I acknowledge my sincere thanks to Mr. Amit Kumar Lal (Faculty Member) who stood
by me as a pillar of strength through out the course of work and under whose mature
guidance the term paper arrives out successfully. I am grateful to his valuable
suggestions.

Jyoti kohli
 Table of contents

S. No. Particulars

1. INTRODUCTION

2. Executive summary;

3. Vision, Mission, Values and Objectives

4. Organization structure and Board of Directors

5. Organization Analysis

6. COMPETITORS

7. Michael Porter’s Five Forces Model

8. BCG Matrix

9. SWOT ANALYSIS

10. Company’s Strategic Practices

11. News

12. RECOMMENDATIONS

13. CONCLUSION

14. BIBLIOGRAPHY

PEPSICO
Pepsi is a soft drink produced and manufactured by PepsiCo. The drink was first made in

the 1880s by pharmacist Caleb Bradham in New Bern, North Carolina. The brand was

trademarked on June 16, 1903. There have been many Pepsi variants produced over the

years since 1898.PepsiCo entered India in 1989 and has grown to become one of the

country’s leading food and beverage companies. One of the largest multinational

investors in the country, PepsiCo has established a business which aims to serve the long

term dynamic needs of consumers in India. PepsiCo India and its partners have invested

more than U.S.$1 billion since the company was established in the country. PepsiCo

provides direct and indirect employment to 150,000 people including suppliers and

distributors. PepsiCo India’s expansive portfolio includes iconic refreshment beverages

Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options such as Diet

Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic

sports drinks - Gatorade, Tropicana100% fruit juices, and juice based drinks – Tropicana

Nectars, Tropicana Twister and Slice. Local brands – Lehar Evervess Soda, Dukes

Lemonade and Mangola add to the diverse range of brands.

 Brands

PepsiCo is home to hundreds of brands around the globe. Listed here are some of
our most recognized.

Pepsi-Cola Brands [-]

Pepsi Mountain Dew Mug Root Beer

• Pepsi • Mountain Dew • Mug Root Beer

• Caffeine Free Pepsi • Diet Mountain Dew • Diet Mug Root Beer
• Diet Pepsi • Caffeine Free • Mug Cream Soda
• Caffeine Free Diet Mountain Dew • Diet Mug Cream
Pepsi • Mountain Dew Code Soda
• Diet Pepsi Max Red
• Jazz Diet Pepsi • Diet Mountain Dew No Fear
• Diet Pepsi Lime Code Red
• Diet Pepsi Vanilla • Mountain Dew • No Fear
• Pepsi Wild Cherry LiveWire • No Fear Motherload
• Diet Pepsi Wild • Mountain Dew • Sugar Free No Fear
Cherry Voltage Motherload
• Pepsi ONE
AMP Energy Dole (License)
Sierra Mist
• AMP Energy • Dole juices and juice
• Sierra Mist • AMP Energy Sugar drinks
• Diet Sierra Mist Free • Dole Plus fortified
• Sierra Mist • AMP Energy juices
Cranberry Splash Overdrive
• Sierra Mist Free • AMP Energy Outside North America
Cranberry Splash Relaunch
• AMP Energy • Mirinda
Tropicana Traction • 7UP (International)
• AMP Energy • Pepsi Limón
• Tropicana lemonade Elevate • Kas
and punches • Teem
 • AMP Energy Shot

SoBe

• SoBe juice drinks,

dairy, and teas
• SoBe Lean diet juice
• Tropicana Light drinks, dairy, and
lemonade and teas
punches • SoBe Life Water
• Tropicana Twister • SoBe Adrenaline
sodas Rush
• Pepsi Max
Ocean Spray (License) Aquafina • Pepsi Light
• Manzanita Sol
• Ocean Spray juices • Aquafina • Paso de los Toros
• Ocean Spray juice • Aquafina • Fruko
drinks FlavorSplash • Evervess
• Aquafina Sparkling • Yedigun
More • Shani
Starbucks (Partnership) • Fiesta
• TAVA • D&G (License)
• Ethos Water • Frappuccino ready- • Mandarin (License)
(License) to-drink coffee
• Manzanita Sol • Starbucks • Radical Fruit
• Slice Doubleshot
• FruitWorks juice • Starbucks
drinks Doubleshot Energy
• Starbucks Iced
• Mirinda Coffee

Lipton (Partnership)

• Lipton Brisk
• Lipton Iced Tea

• Lipton Pure Leaf

Frito-Lay Brands [-]

• Lay's potato chips • Grandma's cookies
• Lay's Kettle Cooked • Munchos potato Outside North America
potato chips crisps
• Wavy Lay's potato • Smartfood popcorn • Bocabits wheat
chips • Baken-ets fried pork snacks
• Baked Lay's potato skins • Crujitos corn snacks
crisps • Oberto meat snacks • Fandangos corn
• Maui Style potato
chips snacks
• Ruffles potato chips • Hamka's snacks
• Rustler's meat
• Baked Ruffles potato • Niknaks cheese
snacks
crisps snacks
• Churrumais fried
• Ruffles Flavor Rush • Quavers potato
corn strips
potato chips snacks
• Frito-Lay nuts
• Doritos tortilla chips • Sabritas potato chips
• Frito-Lay, Ruffles,
• Baked Doritos • Smiths potato chips
Fritos and Tostitos
tortilla chips • Walkers potato
dips & salsas
• 3D's snacks crisps
• Frito-Lay, Doritos
• Tostitos tortilla • Walkers Square
and Cheetos snack
chips potato snacks
crackers
• Baked Tostitos • Walkers French
• Fritos, Tostitos,
tortilla chips Fries potato sticks
Ruffles and Doritos
• Santitas tortilla • Walkers Monster
snack kits
chips Munch corn snacks
• Hickory Sticks
• Fritos corn chips • Gamesa cookies
• Hostess Potato
• Cheetos cheese • Doritos Dippas
• Lay's Stax potato
flavored snacks • Sonric's sweet
crisps
• Rold Gold pretzels snacks
• Doritos Rollitos
& snack mix • Wotsits corn snacks
• Lay's Fries
• Funyuns onion • Walkers Sensations
• Natural Lays
flavored rings • Doritos A La Turca
• Natural Ruffles
• Go Snacks • Lay's Mediteranneas
• Natural Cheetos
• Sunchips multigrain • Red Rock Deli
• Natural Tostitos
snacks • Kurkure
• Miss Vickie's potato
• Sabritones puffed • Smiths Sensations
chips
wheat snacks • Lays Artesanas PC
• Cracker Jack candy • Cheetos Shots
• Munchies snack mix
coated popcorn
• Quavers Snacks
• Chester's popcorn
Executive summary
Created in 1965 through the merger of Pepsi-Cola and Frito-Lay, PepsiCo is one of the
strongest beverage and convenient food companies in the world. Originally started in
1898, Pepsi Cola became the first branded soft drink in the world. Its brand is available
in over 200 countries around the world and generated sales in excess of $92 billion last
year. Headquartered in Purchase, New York, PepsiCo is the number two beverage
company in the world behind the Coca-Cola Company.
Financially, 2006 was a year of progress with an overall growth of 5.5%, revenue
of nearly 36 billion USD and a return on investment of 26%. These numbers are all well
above the industry average, with their main competitor still being the Coca-Cola
Company. PepsiCo has continued their brand image by appealing to Generation Y and
becoming synonymous with music, entertainment and sports. In addition to their
financial success, PepsiCo is also dedicated to ethics and social responsibility in the
community. They have invested heavily in recycling programs and in developing nations
in Africa. PepsiCo even has a sustainability mission that states “PepsiCo’s responsibility
is to continually improve all aspects of the world in which we operate- environmental,
social, economic- creating a better tomorrow than today.”
They believe that they have the competitive, sustainable advantage in the industry
because of three things: big brands, proven innovation and differentiated products, and
powerful go-to markets. With their strong brand, socially responsible employees and
corporate beliefs and focus on the younger generation, PepsiCo will continue its stance as
one of the most powerful companies in the world.
 Company’s intent:-

Our Mission

Our mission is to be the world's premier consumer products company focused on

convenient foods and beverages. We seek to produce financial rewards to investors as we
provide opportunities for growth and enrichment to our employees, our business partners
and the communities in which we operate. And in everything we do, we strive for
honesty, fairness and integrity.

Our Vision

"PepsiCo's responsibility is to continually improve all aspects of the world in which we

operate - environment, social, economic - creating a better tomorrow than today."

Our vision is put into action through programs and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making
PepsiCo a truly sustainable company.

Performance with Purpose

At PepsiCo, we're committed to achieving business and financial success while leaving a
positive imprint on society - delivering what we call Performance with Purpose.

Our approach to superior financial performance is straightforward - drive shareholder

value. By addressing social and environmental issues, we also deliver on our purpose
agenda, which consists of human, environmental, and talent sustainability.
PepsiCo Board of Directors

Board of Directors (left to right): Victor J. Dzau, Arthur C. Martinez,

Sharon Percy Rockefeller, Daniel Vasella, Alberto Ibargüen, Lloyd G. Trotter,
Dina Dublon, Michael D. White, Ray L. Hunt, Indra K. Nooyi, Ian M. Cook, James J.
Schiro
Ian M. Cook
Chairman and Chief Executive Officer

Colgate-Palmolive Company

56. Elected 2008.

Dina Dublon
Consultant, Former Executive Vice

President and Chief Financial Officer

JPMorgan Chase & Co.

55. Elected 2005.

Victor J. Dzau, M.D.

Chancellor for Health Affairs

Duke University and

President and Chief Executive Officer

Duke University Health Systems

63. Elected 2005.

Ray L. Hunt
Chairman and Chief Executive Officer

Hunt Oil Company and

Chairman, Chief Executive Officer

and President

Hunt Consolidated, Inc.

65. Elected 1996.

Alberto Ibargüen
President and Chief Executive Officer

John S. and James L. Knight Foundation

65. Elected 2005.

Arthur C. Martinez
Former Chairman of the Board,

President and Chief Executive Officer

Sears, Roebuck and Co.

69. Elected 1999.

Indra K. Nooyi
Chairman of the Board and

Chief Executive Officer

PepsiCo

53. Elected 2001.

Sharon Percy Rockefeller
President and Chief Executive Officer

WETA Public Stations

64. Elected 1986.

James J. Schiro
Chief Executive Officer

Zurich Financial Services

63. Elected 2003.

Lloyd G. Trotter
Partner

GenNx360 Capital Partners

62. Elected 2008.

Daniel Vasella
Chairman of the Board and

Chief Executive Officer

Novartis AG

55. Elected 2002.

Michael D. White
Chief Executive Officer

PepsiCo International and

Vice Chairman

PepsiCo
57. Elected 2006.
Areas covered in Franchise zones

Jai Drinks Pvt Ltd

-JAMIA NAGAR

-CHIRAG DELHI

-BHARAT NAGAR

-ALAKNANDA

-GAUTAM NAGAR

Peral drinks limited

-AZADPUR

-ASHOK VIHAR PHASE 1

-ASHOK VIHAR PHASE 2

-ASHOK VIHAR PHASE 3

-ASHOK VIHAR PHASE 4

-WAZIRPURTrans Yamuna

-JAFFRABAAD

-MAUJPUR

ZONE- JDPL

AREA- JAMIA NAGAR, CHIRAG DELHI, GAUTAM NAGAR, ALAKNAN

 Organization Analysis

THE ORGANISATIONAL VALUE OF PEPSI:

PepsiCo values reflect its aspirations - the kind of company they want Pepsico to be.

Pepsi express their values in the form of a commitment. Pepsi’s commitment is :

Sustained Growth is fundamental to motivating and measuring our success. Our quest

for sustained growth stimulates innovation, places a value on results, and helps us

understand whether today's actions will contribute to our future. It is about growth of

people and company performance. It prioritizes making a difference and getting things

done.
  BCG MATRIX

STARS: - High growth business competing in market where they are relatively strong
compared with the competition. They have a high point shares and are the ideal
businesses.

CASH: - Low-growth business with a relatively high point shares. These businesses were
stars but now have lost their attractiveness.
QUESTION MARK: - Businesses with low point share but which may have a high
growth rate. This suggests that they have potential but may require huge ever, a
competing force extraordinary effort in order to grow point share.

DOGS: - Businesses that have low relative share and low expected growth rate. Dogs
may generate enough points to sustain but they are rarely, if ever, a competing force.
  PORTER’S FIVE FORCES MODEL OF
COMPETITION
1. Soft Drink Industry Five Forces Analysis:

Soft drink industry is very profitable, more so for the concentrate producers than the
bottler’s. This is surprising considering the fact that product sold is a commodity which
can even be produced easily. There are several reasons for this, using the five forces
analysis we can clearly demonstrate how each force contributes the profitability of the
industry.

 Barriers to Entry:

The several factors that make it very difficult for the competition to enter the soft drink
market include:

• Bottling Network: Both Coke and PepsiCo have franchisee agreements with their
existing bottler’s who have rights in a certain geographic area in perpetuity. These
agreements prohibit bottler’s from taking on new competing brands for similar
products. Also with the recent consolidation among the bottler’s and the backward
integration with both Coke and Pepsi buying significant percent of bottling
companies, it is very difficult for a firm entering to find bottler’s willing to
distribute their product.

The other approach to try and build their bottling plants would be very capital-intensive
effort with new efficient plant capital requirements in 1998 being $75 million.

• Advertising Spend: The advertising and marketing spend (Case Exhibit 5 & 6) in
the industry is in 2000 was around $ 2.6 billion (0.40 per case * 6.6 billion cases)
mainly by Coke, Pepsi and their bottler’s. The average advertisement spending
per point of market share in 2000 was 8.3 million (Exhibit 2). This makes it
extremely difficult for an entrant to compete with the incumbents and gain any
visibility.

• Brand Image / Loyalty: Coke and Pepsi have a long history of heavy advertising
and this has earned them huge amount of brand equity and loyal customer’s all
over the world. This makes it virtually impossible for a new entrant to match this
scale in this market place.

• Retailer Shelf Space (Retail Distribution): Retailers enjoy significant margins

of 15-20% on these soft drinks for the shelf space they offer. These margins are
quite significant for their bottom-line. This makes it tough for the new entrants
to convince retailers to carry/substitute their new products for Coke and Pepsi.
 • Fear of Retaliation: To enter into a market with entrenched rival behemoths like
Pepsi and Coke is not easy as it could lead to price wars which affect the new
comer.

 Suppliers:

• Commodity Ingredients: Most of the raw materials needed to produce

concentrate are basic commodities like Color, flavor, caffeine or additives, sugar,
packaging. Essentially these are basic commodities. The producers of these
products have no power over the pricing hence the suppliers in this industry are
weak.

 Buyers:

The major channels for the Soft Drink industry (Exhibit 6) are food stores, Fast food
fountain, vending, convenience stores and others in the order of market share. The
profitability in each of these segments clearly illustrate the buyer power and how
different buyers pay different prices based on their power to negotiate.

• Food Stores: These buyers in this segment are some what consolidated with
several chain stores and few local supermarkets, since they offer premium shelf
space they command lower prices, the net operating profit before tax (NOPBT)
for concentrate producer’s in this segment is $0.23/case

• Convenience Stores: This segment of buyer’s is extremely fragmented and hence

have to pay higher prices, NOPBT here is $0.69 /case.

• Fountain: This segment of buyer’s are the least profitable because of their large
amount of purchases hey make, It allows them to have freedom to negotiate. Coke
and Pepsi primarily consider this segment “Paid Sampling” with low margins.
NOPBT in this segment is $0.09 /case.

• Vending: This channel serves the customer’s directly with absolutely no power
with the buyer, hence NOPBT of $0.97/case.
  Substitutes:

Large numbers of substitutes like water, beer, coffee, juices etc are available to the end
consumers but this countered by concentrate providers by huge advertising, brand equity,
and making their product easily available for consumers, which most substitutes cannot
match. Also soft drink companies diversify business by offering substitutes themselves to
shield themselves from competition.

 Rivalry:

The Concentrate Producer industry can be classified as a Duopoly with Pepsi and Coke as
the firms competing. The market share of the rest of the competition is too small to cause
any upheaval of pricing or industry structure. Pepsi and Coke mainly over the years
competed on differentiation and advertising rather than on pricing except for a period in
the 1990’s. This prevented a huge dent in profits. Pricing wars are however a feature in
their international expansion strategies.

2. Economics of Bottling vs Concentrate Business

Factor Bottling Business Concentrate Business

(Data from Exhibit 5)

As the above table indicates concentrate business is highly profitable compared to the
bottling business. The reasons for this are:

• Higher number of bottler’s when compared to the concentrate producer’s which

fosters competition and reduces margins in the bottling business
• Huge capital costs to set up an efficient plant for the bottlers while the capital
costs in concentrate business are minimal
• Costs for distribution and production account for around 65% of sales for bottler’s
while in the concentrate business its around 17%
• Most of the brand equity created in the business remains with concentrate
producer’s

Possible Reasons for Vertical Integration:

• With the decrease in the number of bottler’s from 2000 in 1970 to less than 300 in
2000, the concentrate producers were concerned about the bottler’s clout and
started acquiring stakes in the bottling business.
• They could offer attractive packaging to the end consumer.
 • To preempt new competition from entering business if they control the bottling.

3. Effect of competition between Coke and Pepsi on industry profits:

During the 1960’s and 70’s Coke and Pepsi concentrated on a differentiation and
advertising strategy. The “Pepsi Challenge” in 1974 was a prime example of this strategy
where blind taste tests were hosted by Pepsi in order to differentiate itself as a better
tasting product from Coke.
However during the early 1990’s bottler’s of Coke and Pepsi employed low priced
strategies in the supermarket channel in order to compete with store brands, This had a
negative effect on the profitability of the bottlers. Net profit as a percentage of sales for
bottlers during this period was in the low single digits (-2.1-2.9% Exhibit 4) Pepsi and
Coke were however able to maintain the profitability through sustained growth in Frito
Lay and International sales respectively. The bottling companies however in the late 90’s
decided to abandon the price war, which was not doing industry any good by raising the
prices.
Coke was more successful internationally compared to Pepsi due to its early lead as Pepsi
had failed to concentrate on its international business after the world war and prior to the
70’s. Pepsi however sought to correct this mistake by entering emerging markets where it
was not at a competitive disadvantage with respect to Coke as it failed to make any heady
way in the European market.

4. Can Coke and Pepsi sustain their profits in the wake of flattening demand and
growing popularity of non-carbonated drinks?
Yes Coke can Pepsi can sustain their profits in the industry because of the following
reasons:

• The industry structure for several decades has been kept intact with no new
threats from new competition and no major changes appear on the radar line

• This industry does not have a great deal of threat from disruptive forces in
technology.

• Coke and Pepsi have been in the business long enough to accumulate great
amount of brand equity which can sustain them for a long time and allow them to
use the brand equity when they diversify their business more easily by leveraging
the brand.

• Globalization has provided a boost to the people from the emerging economies to
move up the economic ladder. This opens up huge opportunity for these firms

• Per capita consumption in the emerging economies is very small compared to the
US market so there is huge potential for growth.
 • Coke and Pepsi can diversify into non–carbonated drinks to counter the flattening
demand in the carbonated drinks. This will provide diversification options and
provide an opportunity to grow.

5.Impact of globalization on Industry structure:

Globalization provides Coke and Pepsi with both unique challenges as well as
opportunities at the same time. To certain extent globalization has changed the industry
structure because of the following factors.

• Rivalry Intensity: Coke has been more dominant (53% of market share in 1999).
in the international market compared to Pepsi (21% of market share in 1999) This
can be attributed to the fact that it took advantage of Pepsi entering the markets
late and has set up its bottler’s and distribution networks especially in developed
markets. This has put Pepsi at a significant disadvantage compared to the US
Market.

Pepsi is however trying to counter this by competing more aggressively in the

emerging economies where the dominance of Coke is not as pronounced, With
the growth in emerging markets significantly expected to exceed the developed
markets the rivalry internationally is going to be more pronounced.

• Barriers to Entry: Barriers to entry are not as strong in emerging markets and it
will be more challenging to Coke and Pepsi, where they would have to deal with
regulatory challenges, cultural and any existing competition who have their
distribution networks already setup. The will lack the clout that have with the
bottler’s in the US.

• Suppliers: Since the raw material’s are commodities there should be no problems
on this front this is not any different

• Customers: Internationally retailers and fountain sales are going to be weaker as

they are not consolidated, like in the US Market. This will provide Coke and
Pepsi more clout and pricing power with the buyers

• Substitutes: Since many of the markets are culturally very different and vast
numbers of substitutes are available, added to the fact that carbonated products
are not the first choices to quench thirst in these cultures present additional
significant challenges.

The consumption is very low in the emerging markets is miniscule

compared to the US market. A lot more money would have to be spent on
advertising to get
 FINANCIAL AYALYSIS
PepsiCo, Inc. and subsidiaries
(in millions except per share data; all per share amounts
assume dilution) 2008 2007 Chg (a)
Summary of Operations
43,25 39,47
Total net revenue $ 1 $4 10 %
Core division operating profit(b) $ 8,475 $8,025 6 %
Core total operating profit(c) $ 7,824 $7,253 8 %
Core net income(d) $ 5,887 $5,587 5 %
Core earnings per share(d) $ 3.68 $3.37 9 %
Other Data
Management operating cash flow(e) $ 4,651 $4,551 2 %
Net cash provided by operating activities $ 6,999 $6,934 1 %
Capital spending $ 2,446 $2,430 1 %
Common share repurchases $ 4,720 $4,300 10 %
Dividends paid $ 2,541 $2,204 15 %
Long-term debt $ 7,858 $4,203 87 %
Percentage changes are based on ungrounded amounts.
(b) Excludes corporate unallocated expenses and restructuring and impairment charges. See
“Reconciliation of GAAP and Non-GAAP Information” for reconciliation to the most
directly comparable financial measure in accordance with GAAP.
(c) Excludes restructuring and impairment charges and the net mark-to-market impact of our
commodity hedges. See “Reconciliation of GAAP and Non-GAAP Information” for
reconciliation to the most directly comparable financial measure in accordance with
GAAP.
(d) Excludes restructuring and impairment charges, our share of The Pepsi Bottling Group’s
restructuring and impairment charge, the net mark-to-market impact of our commodity
hedges and certain tax items. See “Reconciliation of GAAP and Non-GAAP
Information” for reconciliation to the most directly comparable financial measure in
accordance with GAAP.
(e) Includes the impact of net capital spending. Also, see “Our Liquidity and Capital
Resources” in Management’s Discussion and Analysis.
 Performance Charts
Cumulative Total Shareholder Return
Return on PepsiCo stock investment (including dividends), the S&P 500 and the S&P
Average of Industry Groups.***

***The S&P Average of Industry Groups is derived by weighting the returns of two
applicable S&P Industry Groups (Non-Alcoholic Beverages and Food) by PepsiCo’s
sales in its beverage and foods businesses. The returns for PepsiCo, the S&P 500, and
the S&P Average indices are calculated through December 31, 2008.

Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08

PepsiCo, Inc. $100 $114 $131 $141 $175 $130
S&P 500® $100 $111 $116 $135 $142 $ 90
S&P® Avg of Industry Groups*** $100 $110 $107 $124 $138 $113
  COMPETITOR
DIRECT COMPETITOR COMPARISON

PEP KO DPS KFT Industry

Market Cap: 101.59B 124.25B 8.54B 44.51B 428.39M
Employees: 203,000 92,800 19,000 97,000 1.50K
Qtrly Rev Growth (yoy): 4.50% 5.00% -1.50% 3.20% 10.50%
Revenue (ttm): 43.23B 31.35B 5.53B 40.39B 431.02M
Gross Margin (ttm): 53.51% 64.78% 59.61% 36.15% 30.03%
EBITDA (ttm): 9.60B 10.11B 1.24B 6.50B 43.97M
Oper Margins (ttm): 18.69% 28.27% 18.91% 13.80% 7.94%
Net Income (ttm): 5.94B 7.09B 555.00M 3.02B N/A
EPS (ttm): 3.77 3.042 2.175 2.033 0.54
P/E (ttm): 17.16 17.71 15.44 14.80 17.34
PEG (5 yr expected): 1.39 1.84 1.8 1.93 1.56
P/S (ttm): 2.35 4.00 1.53 1.11 0.89

KO = The Coca-Cola Company

DPS = Dr Pepper Snapple Group, Inc.
KFT = Kraft Foods Inc.
Industry = Processed & Packaged Goods

 TABLE SHOWING OVERALL MARKET SHARE OF

PEPSI AND COCA-COLA

PRODUCT MARKET SHARE

PEPSI 53.6

COCA-COLA 46.4

46.4 PEPSI
53.6 COCA-COLA
  SWOT ANALYSIS

STRENGTHS

 COOLERS IN JDPL & TY- There are more coolers of Pepsi in the area of JDPL

and TRANS YAMUNA. Which provides a very better chance to enhance the

market share of Pepsi in these areas.

 > 50% - MAXIMUM NUMBER- In all areas Pepsi market share is all most 50%

or more than that, which shows that Pepsi is giving very tough competition to its

competitors.

 PRESELL METHOD- It is one of the important tool that Pepsi is having for

increasing its market share, this system is beneficiary for both customer and

business, it helps business to provide effective delivery and less time consuming,

where as it provides long hours for small vendors to arrange cash.

 AQUAFINA- This is the worlds Largest selling water, which gives a strong

backup to other beverages of Pepsico.

  PRICE DIFFERENCE- The price difference between 500ml pet bottles of Pepsi

provides a strong edge to Pepsico.

WEAKNESSES

 DAMAGED COOLERS- Maximum coolers used by retailers which belong to

Pepsi are very old and not in the Proper condition, Which create a sense of

negligence in the mind of retailers, due to which retailers wants to switch to coca-

cola.

 FLAVOUR- According to customers Pepsi does not have flavors like coca-cola.

 NO CUSTOMER RELATIONSHIP MANAGEMENT- Customers highly

believes that there is no customer relationship management in Pepsi.

 CARET DESIGN- The caret design of Pepsi does not protect the whole bottle

like coca-cola caret, which results in damaged bottles and increased number of

replacements

 DIFFERENCE IN COMPANY’S RATE AND WHOLESALER’S RATE- This is

a common problem in any FMCG sector, but in the case of Pepsi the rates differs

more

 NO FIX SCHEME- Pepsi company does not provides a fix scheme in a single

market, due to which they are loosing customer loyalty towards Pepsi
  NO SERVICE IN INNER STREATS- Pepsi does not provides service in inner

street like coca-cola, which is one of the important reason of fall in market share

of Pepsi.

OPPORTUNITIES

 OUTLETS USING OWN COOLERS- .There is a big chance for Pepsi to reenter

market with coolers to increase the market share as more than 50% outlets are

using their own coolers.

 7UP NIMBOOZ- It is the one of the highly demanded cold drinks, which has

capacity to enhance the market share of Pepsi by double.

 ROADSIDE MOBILE BOOTH- Though Pepsi has mobile booths but they should

increase the numbers, which will help the Pepsi a lot, in increasing its market

share.
THREATS

 COKE PENETRATION IN MARKET WITH COOLERS- Coke is penetrating

the market with high number of coolers, by which they can pressurized the

retailers for not keeping Pepsi product.

 SCARCITY OF PRODUCT- There is a high scarcity of product in warehouse of

Pepsi , which always creates a image of vanishing company in the mind of

retailers.

 SMALL AGENCIES- coca-cola is doing tie-ups with small agency, which helps

Coca-cola to reach untouched places.

 DUPLICITY OF PEPSI- Duplicity of Pepsi in comparison coca-cola is very high

and it just only spoiling the name of Pepsi.

 IMPURE DISTRIBUTORS- The Pepsi have very few number of pure distributor

due to large number of demand of limca in the Delhi market.

Company’s Strategic Practices

 Strategies for Growth

To achieve our financial objectives, we consistently focus on initiatives to improve our

results and increase returns for our shareholders. For 2009, we have identified the
following key challenges and related competitive strategies for growth that we believe
will enable us to achieve our financial objectives:

Revitalizing our North American Beverage Business

In 2008, the U.S. liquid refreshment beverage category declined on a year-over-year
basis. During 2009, we intend to invest to keep our total beverage portfolio relevant to
consumers of all ages. We plan to capitalize on our new “Refresh Everything” campaign,
which features new brand identities for trademarks Gatorade, Pepsi, Sierra Mist and
Mountain Dew, as well as key product innovations like new SoBe Lifewater, sweetened
with PureVia, an all-natural, zero-calorie sweetener recently approved by the U.S. Food
and Drug Administration. In non-carbonated beverages, we will work to identify
untapped thirst occasions and to deliver even more functional benefits.

Broadening our Diverse Portfolio of Global Products

Consumer tastes and preferences are constantly changing. The increasingly on-the-go
lifestyles of consumers and their desire for healthier choices means that it is more
important than ever for us to continue to broaden our diverse portfolio of global products.
We remain committed to offering consumers a broad range of choices to satisfy their
diverse lifestyles and desires. For example, in 2008, we broadened the beverage portfolio
by partnering with The Pepsi Bottling Group (PBG) to acquire JSC Lebedyansky
(Lebedyansky), Russia’s leading juice company, by acquiring V Water in the United
Kingdom and by expanding our successful Lipton Tea partnership with Unilever. We
expanded into adjacent snack categories by introducing TrueNorth nut snacks and
forming a joint venture that offers Sabra refrigerated dips. During 2009, through a
combination of tuck-in acquisitions and innovation, we plan to continue to broaden the
range of products we offer in our existing categories and expand into adjacent ones. We
are also committed to securing our innovation pipeline, and have coordinated our
research and development departments across the Company into one global innovation
team.

Successfully Navigating the Global Economic Crisis

We and our customers, suppliers and distributors have all been impacted by the
continuing global economic crisis. Global economic conditions have resulted in
decreased consumer purchasing power, volatile fluctuations in the prices of key
commodities such as oil, corn, sugar and oats and adverse foreign currency exchange
rates. To navigate through these conditions we plan to continue to focus on fundamentals,
such as ensuring that we offer products with the right price to value proposition and
managing cash flow, interest expense and commodity costs. We have also implemented
our Productivity for Growth program which is expected to cumulatively generate more
than $1.2 billion in pre-tax savings over the next three years and that will also allow us to
increase investments in long-term research and development, innovation, brand building
and market-specific growth initiatives.

Expanding in International Markets

Our operations outside of the United States contribute significantly to our revenue and
profitability. Because per capita consumption of our products is still relatively low in
many of these markets, we believe there is a significant opportunity to grow
internationally by expanding our existing businesses and through acquisitions,
particularly in emerging markets. During 2008, we announced significant capital
investments in Brazil, India, Mexico and China. We also strengthened our international
presence through acquisitions such as Marbo, a snacks company in Serbia, by expanding
our successful Lipton Tea partnership with Unilever, and by partnering with PBG to
acquire Russia’s largest juice company. We plan to seek opportunities to make similar
investments to drive international growth in 2009 and beyond. We also plan to continue
developing products that leverage our existing brands but appeal to local tastes.

Maintaining our Commitment to Sustainable Growth

Consumers and government officials are increasingly focused on the impact companies
have on the environment. We are committed to maintaining high standards for product
quality, safety and integrity and to reducing our impact on the environment through
water, energy and packaging initiatives. We plan to continue to invest in programs that
help us reduce energy costs, conserve more energy and use clean energy sources, such as
our wind turbine project in India which supplies more than two-thirds of the power used
by our Mamandur beverage plant each year. We are also actively working on new
packaging initiatives to further reduce the amount of plastic used in our beverage
containers, and we continue to partner with community organizations to increase
recycling efforts.

PepsiCo Reaches Merger Agreements with Pepsi Bottling Group

and PepsiAmericas
PURCHASE, N.Y. and SOMERS, N.Y. and MINNEAPOLIS Aug. 4 /PRNewswire-
FirstCall/ -- PepsiCo (NYSE: PEP) today announced that it has entered into definitive
merger agreements with The Pepsi Bottling Group, Inc. (NYSE: PBG) and
PepsiAmericas, Inc. (NYSE: PAS) under which PepsiCo will acquire all of the
outstanding shares of common stock it does not already own in its two largest anchor
bottlers.

Under the agreements, PBG shareholders will have the option to elect either $36.50 in
cash or 0.6432 shares of PepsiCo common stock (which had a value of $36.50 based on
PepsiCo closing share price of $56.75 on July 31, 2009) for each share of PBG, subject to
proration such that the aggregate consideration to be paid to PBG shareholders shall be
50 percent cash and 50 percent PepsiCo common stock. Similarly, PAS shareholders will
have the option to elect either $28.50 in cash or 0.5022 shares of PepsiCo common stock
for each share of PAS (which had a value of $28.50 based on PepsiCo closing share price
of $56.75 on July 31, 2009), subject to proration such that the aggregate consideration to
be paid to PAS shareholders shall be 50 percent cash and 50 percent PepsiCo common
stock.

The total value of the shares that PepsiCo will be acquiring is about $7.8 billion, and the
acquisitions will create one of the largest food and beverage companies globally. Based
on the recommendations of the Special Committee of PBG and the Transactions
Committee of PAS, the boards of directors of PBG and PAS, respectively, have approved
the transactions.

This transaction is expected to create annual pre-tax synergies of $300 million by 2012
largely due to greater cost efficiency and also improved revenue opportunities. The
acquisitions are expected to be accretive to PepsiCo's earnings by about 15 cents per
share when synergies are fully realized in 2012.

PepsiCo Chairman and Chief Executive Officer Indra Nooyi said, "PepsiCo has had a
constructive partnership with PBG and PAS over the past 10 years. While the existing
model has served the system very well, it is clear that the changing dynamics of the North
American liquid refreshment beverage business demand that we create a more flexible,
efficient and competitive system that can drive growth across the full range of PepsiCo
beverage brands. Our shared culture, strong operational leadership and ability to
successfully integrate operations - in this case operations we know very well - should
allow us to bring the businesses together quickly and seamlessly.

"The fully integrated beverage business will enable us to bring innovative products and
packages to market faster, streamline our manufacturing and distribution systems and
react more quickly to changes in the marketplace, much like we do with our food
business," Nooyi said. "It will also make it easier to leverage 'Power of One'
opportunities that involve both our beverage and food offerings, and for PepsiCo to
present one face to retail customers. Ultimately it will put us in a much better position to
compete and to grow both now and in the years ahead."

"This transaction provides outstanding value for PBG shareholders, offers new and
expanded opportunities for PBG employees and positions the combined company to
accelerate growth going forward," said Eric Foss, Chairman and CEO of PBG. "PBG has
a proven track record of success driven by best-in-class execution, consistently exceeding
customer expectations and creating superior shareholder value. After a thorough
evaluation process, the PBG Board concluded that this transaction represents full and fair
value and is the best outcome for PBG shareholders, employees and customers.
Ultimately, the transaction positions the entire Pepsi system to continue to win in the
marketplace."

PepsiAmericas Chairman and Chief Executive Officer Robert C. Pohlad said, "Over the
past nine years, PepsiAmericas and each of our employees have helped build a
remarkable organization. The success we have achieved is reflected in the agreement
reached with PepsiCo. This agreement provides great value to our shareholders and an
opportunity for them to participate in the unique potential of this combination. Bringing
together these three great companies is bold and strategically innovative, and will create a
system unmatched in our industry."

Combination will drive future growth

PepsiCo expects the transaction to directly complement the transformation efforts already
underway in its North American beverage business. Those efforts have included
refreshing such brands as Pepsi and Gatorade and introducing an array of new products,
ranging from the naturally sweetened zero-calorie SoBe Lifewater to low-calorie Trop50.
At the same time PepsiCo has taken steps to fundamentally improve its cost structure.

PepsiCo cited a number of specific benefits it expects to realize by consolidating its two
largest bottlers:

• Consolidation of 80 percent of the North American beverage volume will speed

the decision-making process and eliminate friction points
• Offering more compelling bundles across food and beverage and providing
enhanced customer service nationally, taking the "Power of One" to the next level
 • Consolidation of manufacturing networks will provide cost benefits and also
optimize our investments in growth and innovation
• Greater flexibility in deploying multiple go-to-market systems to tailor
distribution by channel
• Elimination of redundant costs to leverage scale efficiencies

Additional Information

The acquisitions are not subject to financing contingencies, but they are subject to
customary approvals, including regulatory approvals and approval of the transaction by
stockholders of PBG and PAS. The parties expect the transactions to close in late 2009 or
early 2010. Debt financing commitments were provided by BofA Merrill Lynch and Citi.

Centerview Partners and BofA Merrill Lynch are acting as lead financial advisors to
PepsiCo. Citi is also acting as financial advisor to PepsiCo. Davis Polk & Wardwell LLP
is acting as legal counsel to PepsiCo. Morgan Stanley is acting as financial advisor to
PBG, Perella Weinberg Partners provided a fairness opinion and Cravath, Swaine &
Moore is acting as legal counsel to PBG. Goldman Sachs is acting as financial advisor to
PAS, and Sullivan & Cromwell and Briggs and Morgan are acting as legal counsel.

Package as Strategy; or, Why Pepsi is Smarter than

Coke

Pepsi’s new packaging strategy - launching 35 separate graphic designs on their flagship
product - is, in a word, BRILLIANT. Why?

1. The human brain craves novelty. It was built that way. We search for things that are
new and ignore things that are old. Pepsi (and Coke) have more linear feet of product per
store than any other brand. With the same graphics day in and day out, it’s just wallpaper.
It goes unnoticed. New designs will capture the consumers eye and draw people into the
product.
2. Packaging is your most cost effective advertising. It’s working media. It’s treated as
a cost of goods, but in reality, it’s an opportunity to reinforce the brand with every sale. It
should be used more strategically, as a way to say who the brand is, to reaffirm
personality. Right now, most every manufacturer wastes it.

3. Pepsi’s consumer is young and energetic. They look for things that are dynamic, fun,
and different. This strategy is perfectly in tune.

4. A visual image is worth a thousand words. Rather than say who they are, Pepsi is
showing it. Too many manufacturers clutter their packages with words, not images or
stories. It’s lazy and design firms should do better. These packages say more about the
brand - wordlessly - than any copy driven verbal strategy could.

Bravo Pepsi. Brilliant!

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Recent articles or news about company (since
2009-10 to till date);

PepsiCo looks to add below-the-line fizz

23 Feb 2010, 0237 hrs IST,Ratna Bhushan,ET Bureau
NEW DELHI: PepsiCo India is spreading the word on the nutritional benefits of its
products among discerning consumers to sustain robust volume jumps as the beverage
and snacks maker looks to stem the potential fallout of a price hike necessitated by
boiling rates of sugar, a key soft drink ingredient.

In a first, the company recently set up kiosks at retail outlets and invited shoppers to
sample its Tropicana juice. The move, which took off in Mumbai, was complemented by
nutritionists appointed by the company. In the Delhi-NCR region, the effort was
replicated by roping in resident welfare associations (RWAs).

PepsiCo, which deems this as unconventional marketing, says it reached out to 15,000
consumers directly with the pilot RWA project and more such efforts are in the works.
“We plan to spend over 8% of our overall advertising and promotional spends on below-
the-line media other than television, like digital media and in-store activities,” said
PepsiCo executive director, marketing Punita Lal, adding that the expenditure on
unconventional media will grow in the coming days.

Like rival Coca-Cola, Pepsi too raised the prices of some beverages by up to 20%, giving
in to surging sugar costs.

The move could stain the growth of beverages and foods companies, especially PepsiCo
India, whose beverage business grew 32% last year, the highest in a decade. Indeed,
Pepsi has become accustomed to a 20-30% volume growth in recent quarters.
Maintaining the growth momentum is vital to PepsiCo India as the country has been
identified by its New York-based parent as a key emerging market along with China.

Analysts said the rationale behind PepsiCo’s marketing bustle across media is illuminated
when viewed against this backdrop. Though she had no comment on absolute numbers,
Ms Lal said PepsiCo’s marketing costs would rise this year in line with addressing the
growing beverages category. The company’s annual ad and promotions budget is learnt
to be around Rs 120 crore. It is also among the country’s top 10 ad spenders, according to
media tracking firm TAM. For its flagship cola, Pepsi, the company kicked off a
campaign late last year linked to social networking sites such as Facebook, Orkut and
Twitter. The ‘What’s Your Way’ campaign invited consumers to co-create ways to
communicate to consumers. This was also Pepsi’s first major campaign that kept out
television.

PepsiCo’s fresh marketing moves come as rival consumer goods companies too are
waking up to the importance of digital media, though Indian examples are few and far
between. While Unilever has jumped onto social networking to push the sales of Close-
up, its toothpaste brand, in Vietnam, Coca-Cola recently kicked off a campaign on
Facebook inviting consumers to create flavours of its vitamin water Glaceau in the US.

PepsiCo, Adobe Systems among world's most ethical cos list

26 Mar 2010, 2054 hrs IST,PTI
EW YORK: Food and beverages maker PepsiCo and software manufacturer Adobe
Systems have made it to the list of world's most ethical companies for this year which are
led by CEOs of Indian origin.

PepsiCo and Adobe Systems are headed by Indian origin chief executives Indra Nooyi
and Shantanu Narayen, respectively. Both the companies have cornered a place in the list
of 100 most ethical companies for 2010, as per the report by a research-based Ethisphere
Institute.

Besides, debt-ridden Hartford Financial Services have also made it to the list, which was
earlier headed by India-origin chief Ramani Ayer. He left Hartford Financial Services in
June last year after serving for 12 years.

According to the report, the world's most ethical company designation is awarded to
those firms that have leading ethics and compliance programmes, compared to their
industry peers.

Interestingly, the companies that have secured a berth on the list are from wide range of
industries, right from banking to consumer goods to auto, retail and media.

The list also includes search engine giant Google, global lender Standard Chartered Bank,
hardware maker Hewlett-Packard, consumer products manufacturer L'Oreal, diversified
industries General Electric, telecom company Vodafone and media and entertainment
firm Time Warner.

PepsiCo, Heinz locked in tag of war

21 Apr 2010, 0017 hrs IST,Paramita Chatterjee & Ratna Bhushan,ET
Bureau
EW DELHI: PepsiCo and Heinz India are entangled in a legal battle over similar taglines
that both use for different products.

Soft drinks and snacks firm PepsiCo India filed a lawsuit against the makers of Complan
and Glucon-D in Delhi High Court because Heinz’s Glucon-D Isotonik uses similar
tagline as PepsiCo’s Gatorade sports drink, a person familiar with the development told
ET.

Gatorade uses the tagline ‘rehydrate, replenish, refuel’, while Heinz advertisements say
‘Glucon-D Isotonik rehydrates fluids, replenishes vital salts and recharges glucose’.

The matter is coming up for hearing later this week, the person said.

PepsiCo has been selling Gatorade sports drink in India since 2004 with the advertising
proposition ‘rehydrate, replenish, refuel’. It got the three words registered as its
trademark around the same time.

“It (PepsiCo) has alleged that the same words are now being used by Heinz to market its
glucose drink,” said another person privy to the ongoing battle.

When contacted, Heinz spokesperson said, “The matter is sub judice but we are strong on
our facts and conviction.”

PepsiCo too refused to comment as the case is under investigation.

A person close to Heinz said the words are generic and have been used by the company
“to describe the entire concept of energy drinks”.

Technically, Gatorade and Glucon-D compete in two different categories. While

Gatorade is a premium ‘sports’ drink positioned at adults, the powder-based Glucon-D
targets families and children. Apart from Heinz’s Glucon-D, the other significant brand in
the glucose-powder-based category is Dabur’s Glucose-D.

Though a small category estimated at close to Rs 350 crore, it has been growing in
double digits of about 22-25%. While Heinz leads the powder-based glucose market with
a share of over 60%, Dabur has share of about 28%.

We're moving towards healthier refreshment: PepsiCo India

8 Mar 2010, 0257 hrs IST,Ratna Bhushan,ET Bureau

As the New York-based beverages giant PepsiCo looks to markets like India to keep the
growth momentum ticking, the Indian arm is trying to pull out all stops to keep its recent
track record intact – high double-digit growth. PepsiCo India executive director
(marketing) for beverages Punita Lal spoke to Ratna Bhushan about challenges like
higher pricing and keeping consumers engaged, as the season kicks in. Excerpts:

PepsiCo took up pricing after a long gap in the beginning of this year. Won’t the growth
momentum be impacted? What are you doing to ensure consumers keep coming?

Beverages had a great year but since we have taken up pricing now, we need to ensure we
keep consumer demand robust. We are attempting this in several ways. Enhancing value
is one. Our one-litre pack for carbonated drinks which we rolled out a month back —
priced at Rs 32 each —is a good value proposition.

We are positioning it as a small celebration for the family, and we’ve called it the home
pack. Our slim can at Rs 15 again offers great value. Then there are glass bottles and 600-
ml PET packs. So value, affordability, penetration – we are addressing all these. We are
also looking at new channels to reach the consumer.

The one big learning is that you just can’t do a monologue ... consumer engagement is
key. A clear shift is happening in brand communication, and consumers should not just
be recipients of marketing messages but partner us in creating content. As for pricing, in
the Indian context, the penetration of our category is still so low that we would want to do
everything we could to hold prices. We have taken up prices reluctantly this year; we did
not last year when most other FMCG companies did. The way inflation costs are these
days, I don’t see a roll back of prices soon.

The company’s US headquarters announced last month that it would list detailed
calorie content on beverage container front packs. Are you looking at similar plans
for India?

We are in the process of evaluating the benefits front-pack labeling would give
consumers in India. While we are totally committed to offer the consumer transparency,
we also need to understand how much he/ she understands and relates to such
information. It’s a dialogue we are having currently. We are trying to factor in the
consumer’s relative awareness to nutritional information into the labeling initiative.

The company often talks about portfolio transformation to ‘good for you’ and
‘better for you’ products. How relevant is that for India?

We are certainly addressing healthier needs of consumers. As you know, we are working
on a bottom-of-pyramid product which is in progress, though I don’t think the timeline
for launch is formalised yet. Then we have the Tropicana 100% juices, Gatorade with
specific functional benefits, Nimbooz (nimbu pani) which is known to be a hydration
product. So we are certainly driving the change to, as you say, ‘healthier’ refreshment.

Also, we will be looking at more sugar-free products and we hope regulatory approvals
for alternate sweeteners come soon. But at the same time, while the consumer is showing
more trends of being health and wellness conscious and there certainly is a lot of talk, she
is not walking the talk that much. Even when we do have no-sugar variants or low-sugar
variants, it’s not as if that becomes the first choice of all consumers.

I don’t think that change has happened as yet, and between intention and behaviour, there
exists a gap. There is also a taste challenge that one needs to deal with when non-natural
sweeteners are used. And consumers clearly do not want to compromise on taste.

Any plans to include social messaging in the advertising?

Our water-balance initiative is one which we are communicating on Aquafina packs

(water balance, as in we are saving and replenishing more water than what we are using).
We already focus a lot on performance with purpose.
PepsiCo to triple health drink biz in 10 years
13 Apr 2010, 0046 hrs IST,PTI

CHICAGO: Global cola major PepsiCo aims to triple its USD 10 billion health drink
business over the next 10 years as it sees "huge growth areas" for its 'Good for You'
drinks, the company's Chairman and CEO Indra Nooyi said.

"There is a tremendous growth in the health drinks segment. Right now we have a USD
10 billion business for 'Good for You' products.

"We think over the next 10 years, the business will be worth USD 30 billion," Nooyi said
at an event organised by the Economic Club of Chicago on Monday.

She said going forward, the USD 60-billion PepsiCo would focus on geographic
development as well as expansion of its 'Good for you' category of snacks and drinks.

While the company would expand footprint of its existing products, there are several
markets where the per capita consumption of Pepsi's products is low.

There are tremendous geographic growth opportunities especially in the fruits, vegetables
and grains category.

Nooyi said while Pepsi already has a sizeable business in the health drinks segment, there
are huge growth areas for the future.

PepsiCo commands significant market share with its portfolio of health and wellness
drinks.
About 80 per cent of the company's portfolio is made up of 'Fun for you' products such as
Pepsi, Diet Pepsi, Lays, Doritos and Fritos.

The other 20 per cent is made up of 'Good for you' health drinks such as Tropicana,
Quaker Oats and Gatorade.

Last week PepsiCo announced that it was exploring possibility of a joint venture in non-
fizzy soft drinks like juices with Tata Tea, which has under its belt natural mineral water
brand Himalayan and energy drink 'T!ON'.

Nooyi, however, refused to comment on the JV. On her outlook for the American
economy, Nooyi said the US would continue to be the "single largest economy" over the
next 20-30 years.

Contrary to popular sentiments that in the coming years, balance of power would shift to
Asia, which will become home to some of the largest economies, "US will remain the
most powerful economy," she said.

"The country still is a hotbed of creativity. Don't write off the US. I don't think the world
can be successful if the US is not successful," she added.

Tata Tea-PepsiCo JV may look at low-cost beverages

12 Apr 2010, 0139 hrs IST,Ratna Bhushan,ET Bureau
NEW DELHI: The proposed Tata Tea-PepsiCo joint venture for non-carbonated, health
and wellness beverages is believed to be exploring the low-cost, bottom-of-pyramid
segment of beverages.

Two officials close to the development told ET that the JV is considering leveraging the
Tata brand and expertise in low-cost consumer products and coupling it with PepsiCo’s
distribution muscle, go-to-market expertise and R&D strength in beverages.

“Launching beverages in the low-cost, bottom-of-pyramid segment is under

consideration,” one of the officials said, requesting not to be named. The alliance is likely
to be a 50:50 joint venture floated as a special purpose vehicle, another official said. “But
talks are at a very preliminary stage and it will take two-three months to finalise plans,”
the official added. Officials of both Tata Tea and PepsiCo refused to comment on this
story.
The proposed joint venture may consider wellness packaged water initially, followed by
other beverages.

Its likely focus on the lower end of the market will ensure that PepsiCo’s existing global
alliance with Unilever to sell Lipton ice tea, which focuses on the mid- to-premium
segment, will not be impacted. The new tieup will give PepsiCo the opportunity to be
perceived as a wholesome beverages company, not just as a company making fizzy
drinks. Tata Tea will get a larger foothold in the wellness beverages segment after an
earlier attempt to foray in the category had to be aborted within a year.

Tata Tea, through its indirect UK subsidiary, Tata Tea (GB) Investments, had picked up
30% stake in the US-based maker of vitamin water Glaceau in mid-’06 for $677 million.
But in 2007, Tata Tea had to sell off its 30% stake in Energy Brands Inc — which owns
Glaceau — to beverage giant Coca-Cola for $1.2 billion, less than a year after it acquired
the stake.

And though Tata Tea has been aggressive in acquiring companies in the beverages sector
including Tetley, Eight O’clock Coffee and Good Earth, its wellness and health
beverages portfolio in India so far is limited to Himalayan packaged water and Ti!ON, an
energy drink made from fruit juice and tea extracts. Ti!ON is not a national brand yet.
It must be pointed out here that PepsiCo’s partnership with Hindustan Unilever for
distributing Lipton iced tea in India did not take off in the way both companies expected
to.

In a joint statement released last Friday, both PepsiCo and Tata Tea maintained: “The
proposed joint venture is not intended to conflict with any existing arrangements of either
party.” Though the Rs 7,000-crore aerated soft drink market has been growing at a
healthy 20%-plus in India, PepsiCo has been expanding its portfolio in the health and
wellness space aggressively globally as well as in the domestic market, in line with its
ambition of being a global leader in the ‘good for you’ beverages segment.

PepsiCo’s existing health and wellness brands include packaged water Aquafina,
Tropicana juices, Nimbooz nimbu pani and sports drink Gatorade.
PepsiCo India clocks highest volume growth in a decade
12 Feb 2010, 0022 hrs IST,ET Bureau
NEW DELHI: Beverage and snack foods maker PepsiCo India clocked its highest
volume growth in a decade – with its beverage business growing over 32% in calendar
year ’09. India topped beverage volume growth in the Asia, Mid-East and Africa region,
at 32% in the year. In the October-December quarter too, India was the highest-growing
market in terms of volumes – at 21%.

PepsiCo India Chairman Sanjeev Chadha attributed the growth to a combination of

factors including category momentum, easy accessibility of products, greater value for
money and significant investments through the year. “We feel extremely positive about
the long term growth potential of our country, and PepsiCo is committed to being a
model development partner for India,” Mr Chadha said.

“The company’s portfolio of carbonated and non carbonated brands witnessed robust
growth, with Mountain Dew emerging as the fastest growing beverage brand in the
industry for the third successive year,” the company said in a statement.

Apart from the flagship cola brand Pepsi, the company’s beverage portfolio includes
lemon-based 7-Up and Mountain Dew, orange-based Mirinda, nimbu pani Nimbooz,
Tropicana juice, mango-based Slice and Aquafina water.

India is a top priority market for the New York-headquartered PepsiCo, and the country
was allocated ‘region’ status two year back — which meant more room for decision-
making and higher resource allocation. Last year, PepsiCo integrated beverages and
snacks businesses under the common leadership of Mr Chadha, in line with its ‘power of
one’ strategy followed in many world markets. PepsCo India recently secured clearance
from FIPB to inject fresh equity of $200 million over the next two years.
Results from new PepsiCo disappoint; shares slip
23 Apr 2010, 0646 hrs IST, REUTERS

NEW YORK: PepsiCo Inc posted disappointing results as its home turf rivalry with
Coca-Cola Co heated up and the benefits of a deal to buy its largest bottlers was yet to
kick in fully.

The maker of Pepsi-Cola and Frito-Lay snacks said first-quarter revenue missed Wall
Street estimates as sales volume in its Americas beverage business fell 4 percent.

Chief Executive Indra Nooyi said the year started off well, with the company "gaining
share" and "doing great" for the first eight weeks or so.

The period included promotions tied to the Super Bowl and two months when bottlers
Pepsi Bottling Group and PepsiAmericas were independent before their Feb. 26
acquisition by PepsiCo.

"All of a sudden we see a competitor dropping their pants in the last couple weeks when
the volume is missing," Nooyi said on a conference call, referring to increased
promotions by some rivals. "We see this behavior on and off...but we live with it."

In the first quarter that ended on March 20, net income was $1.43 billion, or 89 cents a
share, up from $1.14 billion, or 72 cents a share, a year earlier.

Excluding one-time items, earnings were 76 cents a share.

Revenue rose 13 percent to $9.37 billion. Analysts on average expected earnings of 75

cents per share on revenue of $9.57 billion, according to Thomson Reuters I/B/E/S.

PepsiCo shares closed down 1.9 percent at $64.76 on the New York Stock Exchange.
Shares of Coke, which earlier this week reported a 2 percent drop in North American
volume and also cited "some pretty deep" price reductions, slipped 0.2 percent.

WINDOW OF OPPORTUNITY
According to Consumer Edge Research, prices for Pepsi's carbonated soft drinks were
down 1.3 percent in January and 4.2 percent in February, but rose 3 percent in March. By
contrast, Coke's prices were up slightly in January, down slightly in February and up 3.2
percent in March.

Pepsi's aggressive stance on pricing in January and February may have been fueled by the
fact that the bottlers were not yet part of PepsiCo and their results were not yet included
in its financial statements, analysts said.

"They had a window of opportunity there, to act pretty much any way they wanted to
competitively ... and not really have any financial ramifications on any quarterly earnings
results," said Victory Capital Management analyst Dave Kolpak.

Consumer Edge's analysis is based on IRI scanner data and does not include
noncarbonated drinks like sports drinks and bottled teas.

Nooyi said North American beverage volume trends were improving across the board and
noted the company was also facing tougher comparisons with a strong first half of 2009.

Still, the company affirmed its 2010 profit target, which calls for earnings per share to
grow 11 percent to 13 percent, excluding currency fluctuations.

The forecast assumes 6 percent earnings growth in the first half of the year and mid-teens
growth in the second half. The first half includes a charge of about $40 million related to
the U.S. healthcare reform bill.

PepsiCo to enter carbon trading business

18 Nov 2009, 0110 hrs IST,ET Bureau
PAITHAN: PepsiCo India, the wholly-owned subsidiary of the US beverages and snack
food major, is looking at monitoring its carbon footprint and entering the carbon trading
business.

This follows its initiative to increase the use of renewable energy sources, like biomass,
solar and wind power, at its beverage and snacks plants.

Having recently inaugurated a community water conservation programme at its plant in

Paithan, near Aurangabad, it has identified its plant at Panipat in Haryana for the next
project. It has already installed similar projects near its plants in Kerala, Karnataka and
Maharashtra.

Each project is determined by the needs of the community hence each is different,
Pepsico India region chairman Sanjeev Chadha told reporters after inaugurating the
Paithan project.

Added Vivek Bharati, executive director, PepsiCo India Holdings, “We are eventually
looking at getting carbon credits through greater use of renewable energy. Nearly 37 per
cent of energy used at our beverages plants is from renewable sources and 14 per cent at
our snacks plants. For the future, we will increase the use of renewable energy at our
snacks plants.”

Mr Bharati pointed to the snacks plant at Ranjangaon, near Pune, where they have
eliminated the use of crude oil by using biomass. While potato waste powers the
Ranjangaon plant, rice husk is used at their largest snacks plant at Kolkata.

By one estimate, Pepsico will recover its investment in two years by using biomass and
its franchisee bottlers are also part of the programme.

Ex-PepsiCo India boss Rajeev Bakshi to head Metro India ops

20 Apr 2010, 2046 hrs IST,PTI
NEW DELHI: Retail giant Metro Cash & Carry on Tuesday said it has appointed former
PepsiCo India head Rajeev Bakshi as the vice-president and managing director of its
subsidiary in the country.

Bakshi will assume his new positions from June 1 and will be replacing Sylweriusz
Faruga, who is taking up some other senior position in the company, Metro Cash & Carry
India said in a statement.

"We are glad to have Bakshi, a veteran in the consumer goods industry with over 30
years of international experience, on board. This is a clear sign of our long-term
commitment to the Indian market and our determination to tap the potential of the sub-
continent," Metro Cash & Carry international regional operating officer (Asia) James
Scott said.

Bakshi served as chairman of PepsiCo Holdings India from 2002 to 2007, before moving
to the beverage giant's Asia headquarters in Hong Kong.
Having started his career in FMCG firm Lakme, Bakshi also worked with chocolate
major Cadbury and ICICI Venture.

Metro Cash & Carry started operations in India in 2003 with two distribution centres in
Bangalore. Operating under the cash-and-carry format, it has over 1.5 lakh members and
offers over 18,000 articles across food and non food segments to business customers
including hotels and restaurants, food and non-food traders and institutional buyers.

It has a total of five outlets India, including two in Bangalore, and one each in Kolkata,
Hyderabad and Mumbai.

Metro Cash & Carry is the largest sales division of the Germ

PepsiCo launches non-carbonated lemon juice, 'Nimbooz'

26 Feb 2009, 1850 hrs IST,PTI
NEW DELHI: Lauching its non-carbonated lemon juice 'Nimbooz' across the country,
soft drink major PepsiCo on Thursday said it expects to post good growth in the Indian
juice market and plans to add more flavours to its cart in the coming months.

Under its brand 7Up, PepsiCo introduced 'Nimbooz, which is targeted at the mass market
and is priced at Rs 10 for a 200 ml bottle and and Rs 15 for 350 ml bottle.

"The total size of the Indian juice market would be around one billion cases, including
the unorganised. However, the packaged branded juice market would be very
insignificant. Our focus would be to drive the market as well as gain momentum of our
growth with the launch of this product," PepsiCo India Executive Director (Marketing)
Punita Lal told reporters here.

She also said the company will more flavours in the coming months depending upon the
growth of 'Nimbooz'.

"There is a large opportunity in this juice market. We have just started out with this
launch. Depending on the market and as when the opportunity arises, we will introduce
more flavours in the coming months," Lal added.

When asked about having contract farmers for lemon, she said "We already have contract
farmers for other citrus products, like orange. We are in talks of starting for lemon as
well."
RECOMMENDATION

 STOP DUPLICITY- The very first thing on which Pepsi should work upon is it

should try to stop duplicity, because it does not only decreases the company’s

sales it also spoils the health of customers and Pepsi gets blamed for the damage.

 BETTER CUSTOMER RELATIONSHIP MANAGEMENT- Pepsi customers

reports about misbehavior and misconduct by company, according to survey

Pepsi does not care about customers, so increase the market share Pepsi have to

strengthen its relation with customers and fix a better customer relationship

management.

 DISTRBUTOR SHOULD HAVE PROPER INFORMATION OF AREA- To

increase the market share Pepsi distributors should have the proper knowledge

about the areas in which they have to work, maximum distributors of Pepsi do not

know there area only.

 PROPER AUDIT OF DISTRIBUTORS- As it is earlier mentioned in the report

that Pepsi have very few pure distributors, impure distributors not only spoils the

Pepsi image but they also increases the market share of coca-cola.

 SOME DIRECT DISCOUNTS TO RETAILERS INSTEADE OF

WHOLESALERS- To increase the market share Pepsi should provide a little

discount to the retailers, who directly takes the product from company. The

retailers which takes Pepsi product from wholesaler gets some discount, but in

direct operation retailers do not enjoy any type of discount, which de motivates

the retailers and they start buying from wholesaler who compels retailers to take

coca-cola product also , which directly decreases the market share of Pepsi.

 ONE AREA ONE SCHEME- There should be one scheme in one area, In

different scheme one retailers enjoy heavy scheme and another suffers with low

scheme or do not get only, for good market share there should be one scheme in

one area.

 SPECIAL BRANCH FOR COOLER MAINTENANCE- Though Pepsi has more

coolers in some areas but customers not happy with the performance of coolers;

maximum number of coolers is old and not working properly, so to increase the

market share Pepsi should establish a special branch for cooler maintenance.
 SPECIAL GIFTS FOR RETAILERS WHO BUYS SOME EXTRA- To

encourage the market share Pepsi should encourage customers first; it can be done

through appraisal of customers with some special gifts who buys large amount.

 COVER THE SINGLE SHOP- As it is mentioned in report that Pepsi is failing to

cover the inner streets shops, so to increase the market share Pepsi have to cover

the single shop present in the market.

 NEW SHAPED CARETS- The half covered carets of Pepsi results in damaged

bottles, so Pepsi should also launch a new caret like coca-cola, which helps in

decreasing the number of replacements.

 BRINGING NIMBOOZ AS SOON AS POSSIBLE- According to survey Pepsi

do not have flavors like coca-cola, but the 7up nimbooz is highly demanded in

the market, so proper supply of nimbooz in market will certainly increase the

market share of Pepsi.

CONCLUSION
Market research is an important tool in development of an organization .Every

organization conducts market research for development of its share in the market. The

market survey done for Pepsi clears the scenario going in the market. According to the

survey Pepsi is loosing its Market share due to bad service, lack of stock, bad customer

relationship management, old flavors, poor maintenance of equipments in market which

belongs to Pepsi and duplicity. Though Pepsi is loosing its Market share in some markets

but still it has various strengths which will help Pepsi to recover, there is lots of

opportunity available in the market, which Pepsi should utilize in a proper manner to gain

its market share back. Pepsi should work on some sectors like customer relationship

management, duplicity, adding new flavors, availability of stock, proper service and

market audit.
BIBLIOGRAPHY:

1. www.pepsi.com

2. www.pepsi.co.in

3. www.wikipedia.org