Soft Drink Case Study
Title: PepsiCo.
Authors: Purdy, Elizabeth Rholetter, PhD
Source: Salem Press Encyclopedia, January, 2017. 2p.
Document Type: Article
Subject Terms: PEPSICO Inc.
BEVERAGE industry
FOOD industry
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Abstract: PepsiCo is known throughout the world for soft drinks
such as Pepsi and Mountain Dew and for salty snacks such as Fritos,
Lay’s potato chips, and Doritos. PepsiCo also produces Quaker Oats
products, Tropicana juices, Gatorade, and Aquafina bottled water. In
2013, despite weather-related setbacks and an increase in payroll taxes,
PepsiCo reported revenues of $66.42 billion. At that time, the company
had become the second largest transnational company in the world, and
one half of its revenues were earned outside the United States. PepsiCo
boasts twenty-two one-billion dollar brands. Over one billion PepsiCo
products are consumed around the world on any given day. Even though it
is constantly being challenged by rival Coca-Cola, PepsiCo prides itself
on being the largest food and beverage company in the United States,
Russia, India, and the Middle East. Globally, PepsiCo has 274,000
employees, with the early years of the twenty-first century
characterized by massive global growth and the development of a social
consciousness under the leadership of CEO Indra Nooyi, who is
consistently ranked as one of the most powerful businesswomen in the
world.
Full Text Word Count: 1404
Accession Number: 87996580
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PepsiCo is known throughout the world for soft drinks such as Pepsi and
Mountain Dew and for salty snacks such as Fritos, Lay’s potato chips,
and Doritos. PepsiCo also produces Quaker Oats products, Tropicana
juices, Gatorade, and Aquafina bottled water. In 2013, despite
weather-related setbacks and an increase in payroll taxes, PepsiCo
reported revenues of $66.42 billion. At that time, the company had
become the second largest transnational company in the world, and one
half of its revenues were earned outside the United States. PepsiCo
boasts twenty-two one-billion dollar brands. Over one billion PepsiCo
products are consumed around the world on any given day. Even though it
is constantly being challenged by rival Coca-Cola, PepsiCo prides itself
on being the largest food and beverage company in the United States,
Russia, India, and the Middle East. Globally, PepsiCo has 274,000
employees, with the early years of the twenty-first century
characterized by massive global growth and the development of a social
consciousness under the leadership of CEO Indra Nooyi, who is
consistently ranked as one of the most powerful businesswomen in the
world.
87996580-92943.jpg<http://largecontent.ebsco-content.com/embimages/1271d
abae0168dbd2dfc09d1e0888713/58f945e8/ers/sp/embedded/87996580-92943.jpg>
PepsiCo Inc. is an American multinational food and beverage corporation
headquartered in Purchase, New York, United States, with interests in
the manufacturing, marketing and distribution of grain-based snack
foods, beverages, and other products. By EEIM (Own work) [CC-BY-SA-3.0
(http://creativecommons.org/licenses/by-sa/3.0) or Public domain], via
Wikimedia Commons
87996580-92944.jpg<http://largecontent.ebsco-content.com/embimages/71e6c
4b0b732b69ba93c1f467d9d2fb9/58f945e8/ers/sp/embedded/87996580-92944.jpg>
PepsiCo world headquarters By Peter Bond from Philadelphia, USA
(IMG_3987) [CC-BY-SA-2.0
(http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
Brief History
In 1902, Caleb Davis Bradham, a pharmacist living in New Bern, North
Carolina, established the Pepsi-Cola Company after selling his pepsin
and cola concoction as a fountain drink at his drug store for several
years. In 1932, Charles Elmer Doolin founded the Frito Company, and H.
W. Lay established the H.W. Lay Company. The two snack companies merged
into Frito-Lay in 1961. Four years later, the Pepsi-Cola Company merged
with Frito-Lay to form PepsiCo. Donald M. Kendall, then-head of
Pepsi-Cola, became president and chief executive officer, and Herman
Lay, then-head of Frito-Lay, became chairman of PepsiCo’s board of
directors. At the time, PepsiCo employed nineteen thousand people and
had reported annual revenues of $510 million.
Until the mid-twentieth century, Pepsi-Cola was the chief product of the
Pepsi-Cola Company. In 1948, Mountain Dew was introduced, and Diet Pepsi
followed in 1964. Frito-Lay went from producing only Fritos corn chips
and Lay’s potato chips to adding Cheetos cheese puff snacks in 1948,
Ruffles potato chips in 1958, Red Gold pretzels in 1961, and Doritos
tortilla chips in 1966. In the mid-sixties, new facilities were opened
in Europe and Japan, and by 1970, Pepsi became the first American
consumer product offered for sale in the Soviet Union. That same year,
PepsiCo’s headquarters were relocated from New York City to Purchase,
New York, where the 144-acre PepsiCo campus remains.
In the late 1970s, PepsiCo expanded its scope and acquired national
fast-food restaurant chains Pizza Hut (1977) and Taco Bell (1978).
Kentucky Fried Chicken (KFC) became part of PepsiCo in 1986. By 1995,
PepsiCo’s food franchise accounted for 37 percent of the company’s
overall revenues.
By the mid-1980s, PepsiCo had expanded to 150 countries and territories.
At the end of the decade, PepsiCo acquired British-based Walker’s Crisps
and Smith, and expansions continued into the following decade with
PepsiCo forming partnerships with Dutch company Unilever to sell
tea-based drinks and Seattle, Washington, based Starbucks to sell coffee
products. Cracker Jack snack was acquired in 1997 and Tropicana drink
company in 1998. By the late 1990s, in addition to its continued North
American popularity, Frito-Lay had become the top-selling producer of
snack chips in South and Central America.
Topic Today
PepsiCo is divided into four business units: PepsiCo Americas Foods
(PAF); PepsiCo Americas Beverages (PAB); PepsiCo Europe; and PepsiCo
Asia, Middle East, and Africa (AMEA). The head of PepsiCo is Indian-born
Nooyi, who became chief executive officer in 2006. She is credited with
doubling PepsiCo’s global sales each year from 2007 to 2014, and in
2014, Fortune magazine named her the third most powerful businesswoman
in the world.
PepsiCo began the twenty-first century by acquiring a major stake in
South Beach Beverage, the maker of SoBe products. In 2001, PepsiCo and
Quaker Oats merged, providing PepsiCo with a line of products that had
already been accepted by health-conscious consumers. In 2003, the
carbonated soft drink Sierra Mist was introduced, and Frito-Lay
announced that it was removing all trans-fat from its snack line. Izze
fruit drinks, Naked Juice, Bluebird Foods, and Stacy’s Pita Chips were
added to PepsiCo’s line of products in 2006. Two years later, PepsiCo
announced that it was investing $1 billion in expanding its brands in
China and formed a partnership with the Japanese company Calbee Foods.
In 2010, PepsiCo acquired Wimm-Bill-Dann, Russia’s leading beverage
company, and a year later bought the Brazilian snack company Mabel. By
that time, PepsiCo had also developed a presence in twenty-nine Middle
Eastern markets.
Advertising has always been a major component of PepsiCo’s success with
the company introducing the world’s first advertising jingle in 1939. In
2010, PepsiCo’s first global advertising campaign was shot featuring
American rapper Nicki Minaj, who became a spokesperson for the company.
PepsiCo spends hundreds of millions of dollars annually on sponsoring
entertainment venues such as the Super Bowl and has forged strong
relationships with professional baseball, football, and basketball
organizations. PepsiCo also sponsors the Pepsi Refresh Project, which
awards grants to individuals and groups that work to improve communities
around the world.
In the early twenty-first century, PepsiCo’s North American market
beverage sales suffered in response to greater consumer emphasis on
health and demands for sustainable practices. In addition to increasing
automation in its manufacturing facilities and closing one hundred
facilities, PepsiCo began placing greater emphasis on making healthier
beverage products through the use of alternative sweeteners, offering
7.5-ounce mini cans and 12-ounce glass bottles, improving packaging, and
introducing a range of new products such as Pepsi Throwback, Wild Cherry
Pepsi, and Pepsi Vanilla, which are all made with sugar rather than
high-fructose corn syrup. In October 2014, the company announced its
newest cola product, Pepsi True, which boasts 30 percent less sugar than
regular Pepsi and no artificial sweeteners. Instead, the drink contains
some sugar and stevia, a Paraguayan plant used for many years as a
sweetener and found to have therapeutic uses as well, such as helping to
control hypertension.
Innovation consistently plays a key role in PepsiCo’s marketing tactics.
In May 2014 at the National Restaurant Association Show, PepsiCo
introduced the Pepsi Spire, a state-of-the-art beverage dispenser that
uses a touch screen to combine from 40 (Pepsi Spire 1.1) to 1,000 (Pepsi
Spire 5.0) beverage shots into a single selection.
Bibliography
Balakrishnan, Melodena Stephens, et al., eds. Actions and
Insights—Middle East, North Africa: East Meets West. Bingley: Emerald
Group, 2013. Print.
Capparell, Stephanie. The Real Pepsi Challenge: The Inspirational Story
of Breaking the Color Barrier in American Business. New York: Wall
Street Jour. Books, 2007. Print.
Colvin, Geoff. "Indra Nooyi’s Pepsi Challenge." Fortune. Time, 29 May
2012. Web. 29 Aug. 2014.
Esterl, Mike, and Valerie Bauerline. "PepsiCo Wakes Up and Smells the
Cola." Wall Street Jour. Dow Jones, 28 June 2011. Web. 29 Aug. 2014.
Jacobsen, Jessica. "Making Ideas a Reality." Beverage Industry 105.7
(July 2014): 18–29. Print.
"Global Food Products." Fast Market Research. Fast Market Research, 30
Apr. 2014. Web. 29 Aug. 2014.
"Owned by PepsiCo." Behind the Brands. Oxfam, America, n.d. Web. 15 Aug.
2014.
Strom, Stephanie. "For Pepsi, a Business Decision with Social Benefit."
New York Times. New York Times, 21 Feb. 2011. Web. 29 Aug. 2014.
Stuckler, David, and Karen Siegel, eds. Sick Societies: Responding to
the Global Challenge of Chronic Disease. New York: Oxford UP, 2011.
Print.
Van den Bergh, Joeri, and Mattias Behrer. How Cool Brands Stay Hot:
Branding to Generation Y. 2nd ed. London: Kogan Page, 2013. Print.
Derived from: "PepsiCo." Salem Press Encyclopedia. Salem Press. 2014.
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Item: 87996580