Pepsi

“We are a leading global food and beverage company with a complementary portfolio of
enjoyable brands, including Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana.

Through our operations, authorized bottlers, contract manufacturers and other third parties, we
make, market, distribute and sell a wide variety of convenient and enjoyable beverages, foods and
snacks, serving customers and consumers in more than 200 countries and territories.

Performance with Purpose is our goal to deliver sustained value by providing a wide range of
beverages, foods and snacks, from treats to healthy eats; finding innovative ways to minimize our
impact on the environment and lower our costs through energy and water conservation as well as
reduce our use of packaging material; providing a safe and inclusive workplace for our employees
globally; and respecting, supporting and investing in the local communities in which we operate.

In 2017, sales to Walmart Stores, Inc., including Sam’s Club (Sam’s), represented approximately
13% of our total net revenue. Our top five retail customers represented approximately 37% of our
2017 net revenue in North America, with Walmart (including Sam’s) representing approximately
19%.

In many countries in which our products are sold, including the United States, The Coca-Cola
Company is our primary beverage competitor.

Other beverage, food and snack competitors include, but are not limited to, DPSG, Kellogg
Company, The Kraft Heinz Company, Mondelez International, Inc., Monster Beverage
Corporation, Nestlé S.A., Red Bull GmbH and Snyder’s-Lance, Inc.

Many of our food and snack products hold significant leadership positions in the food and snack
industry in the United States and worldwide. In 2017, we and The Coca-Cola Company
represented approximately 23% and 20%, respectively, of the U.S. liquid refreshment beverage
category by estimated retail sales in measured channels.”
 PepsiCo SWOT Analysis

Strengths

1. Comprehensive product portfolio with 100 brands serving nearly every niche in the beverage,
food and snack industries.

Commencing operations in 1965, PepsiCo has become the second largest food and beverage
company in the world today.

The company earned US$63.525 billion in 2017, second only to Nestlé S.A. PepsiCo was able to
achieve this via strengthening its product portfolio and offering as many different beverages and
foods as possible.

The company sells nearly 100 different brands, of which 22 have each generated more than US$1
billion dollars in 2017. In addition, more than 10 brands have generated between US$500 million
and US$1 billion in revenue.

PepsiCo’s brand portfolio is highly diversified. No competitor has as many high earning brands as
PepsiCo. They each rely on a few main products to earn the majority of their revenue. This makes
them very vulnerable to any changes in their core products’ markets.

PepsiCo is better equipped to satisfy the needs of its customers with its wide variety of successful
products. The company offers nearly every type beverage or snack and its brands can often be
substituted for each other.

For example, Lays can be replaced with Doritos, Cheetos, Ruffles, Tostitos or Fritos, so if one
product doesn’t satisfy a consumer’s needs, PepsiCo can offer many more choices. Therefore,
changes in customer tastes do not affect the company as severely as they would other companies.

2. Brand recognition and reputation

 PepsiCo owns and markets some of the most recognizable global brands, including Pepsi,
Tropicana, Gatorade, Mountain Dew, Aquafina, Lay’s, Doritos, Cheetos and many other popular
brands.

According to Interbrand and Forbes, the Pepsi brand is the 22nd and 30th most valuable brand in
the world, worth US$20.491 billion and US$18.2 billion, respectively. Forbes also identified Frito-
Lay as the 40th most valuable brand in the world, worth US$13.6 billion.

Except for Coca-Cola and Sprite, no other non-alcoholic beverage brand besides Pepsi has been
recognized as being one of the top 100 most valuable brands in the world.

The company sells its products in more than 200 countries, so consumers are aware of PepsiCo’s
brands all over the world. Owning and selling popular brands also helps PepsiCo to cross-sell its
other brands or introduce new products to the market much more easily.

PepsiCo’s continued global growth and prominence reflects the company’s strengths. This aspect
of the SWOT analysis framework outlines internal strategic factors that enable firms to fulfil their
business goals.

1. Strong brand image

2. Broad product mix
3. Extensive global production network
4. Extensive global distribution network

As a successful global company, PepsiCo has one of the strongest brands in the market. This
strength enables the firm to attract consumers to its new products. In addition, the broad product
mix represents PepsiCo’s increasing ability to reach various markets and segments, such as
through Frito-Lay products, Quaker products, and Pepsi products. PepsiCo’s extensive global
production and distribution networks are strengths that support the company’s international growth
and expansion strategies. In this aspect of the SWOT analysis, PepsiCo’s strengths are sufficient
to support its global growth strategy

Weaknesses in the SWOT analysis of Pepsi :

  Competition: It has heavy competition from Coca-Cola in their soft drinks category. They
are always neck to neck with each other. This competition thereby provides a room for not
so loyal customer base to switch brands quickly.
 Products perceived as unhealthy: Most of the soft drinks of the PepsiCo is perceived as
unhealthy.
 Product Dependence: They are only present in the food and beverage industry which may
be harmful in the longer run. They need to diversify their business to other product segments
to become a global leader.
 Failed Products: Many failed products such as ‘Crystal Pepsi’ which hurts the image of the
PepsiCo and thereby giving room to the competitors to grow.
 Brand Ambassadors: Wrong remarks or ill performance by the famous
personalities/celebrities, in turn, might damage the brand image of PepsiCo as they are the
face of the organization on. Over dependence on celebrities for endorsements is a huge risk.
 Value addition: Pepsi is known to have advertisements which are targeted towards
youngsters. However, it is not known to display Value advertising which is a characteristic
of Coca cola. Coca cola has time and again focused on the positive values of life, something
which Pepsi can learn from them.

PepsiCo suffers from a number of weaknesses that act as barriers to international growth.

1. Low penetration outside the Americas

2. Limited business portfolio
3. Weak marketing to health-conscious consumers

PepsiCo derives about 70% of its revenues from markets in North America and South America.
This weakness indicates that the company has not yet maximized potential revenues outside the
Americas. In addition, PepsiCo operates primarily in the food and beverage industry. This is a
weakness because it maximizes the company’s vulnerability to risks in the food-and-beverage
market. Also, PepsiCo fails to effectively market many of its products to health-conscious
consumers. This aspect of the SWOT analysis highlights weaknesses that PepsiCo must address
through changes in its growth strategy.
 Opportunities in the SWOT analysis of Pepsi:

 Healthy Options: It should work more on improving the health implications of their
products and make the customer aware of the same. Diet Pepsi is a positive move towards
that direction.
 Diversification: Business diversification into different market segments is a
huge opportunity. They have the talent, resources and financial backing to do the same. This
can also be done by acquisitions.
 CSR: They can do more CSR activities to tackle the negative remarks that hurt the brand
image of the organisation and benefit the local people.
 R&D: Recently PepsiCo came out with healthier options in a soft drink. To make 7Up by
using the substitute of sugar called Stevia. This can prove to be a game changer. More such
research needs to be done. Focus more on the diet drinks category. They have recently
released a variant of their cola sweetened with Stevia and sugar called Pepsi Next.
 Flavors: A brand which has risen strongly in the recent years is Paperboat. Paperboat is
known for its various flavors such as watermelon, raw mango etc. Bringing in such flavors
even in carbonated beverage form can help Pepsi attract a larger market.

PepsiCo has opportunities for continued global growth. In this aspect of the SWOT analysis
framework, external strategic factors that provide options for business improvement are identified.

1. Business diversification
2. Market penetration in developing countries
3. Global alliances with complementary businesses

PepsiCo has the opportunity to diversify its businesses, such as by acquiring a complementary firm
that is not in the food and beverage industry. Another opportunity is for PepsiCo to increase its
penetration in developing countries to generate more revenues from markets outside the Americas.
In addition, PepsiCo can create alliances with complementary business to increase its market
presence. Based on this aspect of the SWOT analysis, PepsiCo has significant opportunities to
strengthen its business resilience.
 Threats in the SWOT analysis of PepsiCo :

 Competitors: PepsiCo’s main competitors are Coca-Cola, Kraft foods, Nestle, Dr Peppers
Snapple Group and Mondelez.
 Health Factor: The unhealthy factor associated with its products can take a toll on the health
conscious customers and might lose them. This can be clearly seen by the fall of soft drinks
sale.
 Economic Slowdown: With the recent reforms in the country PepsiCo might see a drop in
its sales due to a cash crunch in the economy. Other factors such as recession and inflation
may also impact sales of the company.
 Government Norms: Different norms of different countries might prove difficult to handle
and compliance with it as well.

The food and beverage industry experience a variety of threats. External strategic factors that could
reduce business performance are considered in this aspect of the SWOT analysis framework. In
PepsiCo’s case, the following are the most significant threats:

1. Aggressive competition
2. Healthy lifestyles trend
3. Environmentalism

Aggressive competition is a major threat against the company. The influence of the Coca-Cola
Company is especially significant against PepsiCo. In addition, the healthy lifestyles trend is a
threat against PepsiCo’s products, many of which are seen as unhealthful because of their sugar,
salt, or fat content. Also, environmentalism threatens the company in how consumers negatively
respond to product waste and lifecycle issues. This aspect of the SWOT analysis indicates that
PepsiCo must reform its strategies to overcome the threats to business.