PepsiCo: A Fortune 500 Company
PepsiCo: A Fortune 500 Company
Prepared for
Professor Keller
COM 338/ENG 338 Instructor
Prepared by
Sarah McMillan, Ryley Oben, Averi Skop,
John Halpin, James Etheridge
University of Michigan- Flint
April 5, 2015
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
Professor Keller, COM 338
Group 2: McMillan, Skop, Oben, Etheridge, Halpin
March 28, 2015
PepsiCo: A Fortune 500 Company
Here is the research report that you requested of the Fortune 500 Company, PepsiCo.
While conducting our research we learned a great deal about the company. We gained
more insight about their competitors and what they do in order to continue to increase
their consumer base. We also learned more about the make-up of the company itself.
Based on what we have learned from our research we are able to understand why
PepsiCo is a successful business and why it will continue to be successful. PepsiCo is
very competitive which gives them an edge over the other companies that it is competing
against. Certain aspects of the company, such as their environmental consciousness and
their involvement in the food industry, are part of the reason they continue to be so
successful over other companies. The continuing competition helps the company improve
and remain successful.
We were able to learn more about the company’s values, history, and competition. By
collecting information individually and then later bringing it altogether for discussion,
our group was able to successfully work together in conducting our research.
Thank you for providing us with this opportunity to research a well-known Fortune 500
Company and work on our team skills. Our greater insight on how PepsiCo runs and
competes with its competitors will help us in making any business we work for in the
future more successful. If you have any questions or would like to discuss PepsiCo
further, please feel free to contact us.
Table of Contents
Page
Introduction……………………………………………………………………………......1
PepsiCo History………………………………………………………………..….1
PepsiCo Today……………………………………………………………..……...1
Revenue and Profitability………………………………………….……...1
Mergers and Acquisitions…………………………….……………….…..2
Products……………………………………………………………………………...……2
Original products…………………………………….……………………………2
New Products…………...…………………………………………………………3
Competition……………………………………………………………………………..…4
PepsiCo vs. Coca-Cola Company………………………….……………………...4
PepsiCo Vs. Dr. Pepper Snapple INC………………...…………………………...5
Agenda………………………………………………………………………………….....6
Advertisements……………………………………………………………………6
Strategic Planning…………………………………………..……………………..6
Organization……………………………………………………………………………….6
Original Founder…………………………………………………………………..7
Current Executives…………………………………………..…………………….7
Customer Service……………………………………….…………………………7
Conclusion………………………………………………………………………………...7
Works Cited…………………………………….…………………………………………8
Illustrations
Figures
Page
1. Profits Generated from Top 5 Products …………………………...…………………..3
2. Product Comparisons………………….……………………………………………..…5
iii
PepsiCo: A Fortune 500 Company
INTRODUCTION
We have chosen PepsiCo because they are such a big company with many ins and outs
that many would not expect and it's diverse holdings.
Researching in areas like products they use, other famous companies they either work
with or own, and popular trends to beat competitors. This report will focus on specific
key topics like revenue, strategic planning, customer service, and the actual ethics of
PepsiCo and how they treat their employees. Also covering areas like products they use,
other famous companies they either work with or own, and popular trends to beat
competitors. Specific key topics like revenue, strategic planning, customer service, and
the actual ethics of PepsiCo and how they treat their employees.
PEPSICO HISTORY
Caleb Davis Bradham invented Pepsi syrup; Bradham opened a drug store (in which the
drink was invented) (PepsiCo, 2015). He first named the beverage “Brad’s Drink”
(PepsiCo, 2015). The Ingredients are a mix of sugar, water, caramel, lemon oil, nutmeg
and other natural additives (PepsiCo, 2015). Although to popular belief Pepsin was never
an ingredient (PepsiCo, 2015). On August 28, 1898, the drink was renamed “Pepsi-Cola”,
Bradham believed the drink was more than a refreshment but a healthy cola that aiding in
digestion (roots from the word dyspepsia, meaning indigestion) (PepsiCo, 2015). In Late
1902, the Pepsi-Cola Company was formed due to high popularity and demand with
Bradham as the first president (PepsiCo, 2015). In June 1903, “Pepsi-Cola” became an
official trademark (PepsiCo, 2015). By 1910, there were 240 franchises in 24 states
(PepsiCo, 2015). The company was hit hard during WWI causing the company to
bankrupt (PepsiCo, 2015). In May of 1923, all assets were sold to Craven Holding
Corporation for $30,000 (PepsiCo, 2015).
PEPSICO TODAY
PepsiCo Has acquired several companies since 1978 including: KFC, 7UP,
Tropicana/Dole Juice. PepsiCo Merged with Quaker Oats in 2001 (PepsiCo, 2015). In
2012, Pepsi’s portfolio of billion dollar brands reached 22 brands (PepsiCo, 2015).
PepsiCo is also a very trending company. PepsiCo has hosted many big time shows like
the super bowl.
REVENUE AND PROFITABILITY
PepsiCo had revenue for 2014 of approximately 6 billion dollars (PepsiCo, 2015).
Revenue growth for last year was up by 0.40 percent (PepsiCo, 2015). Stock market
share ranges between 93.94 and 95.59 dollars (PepsiCo, 2015). Earnings growth for last
1
year was approximately -1.16 percent (PepsiCo, 2015). Projected earnings growth for this
year is estimated at 1.00 percent (PepsiCo, 2015). The projected earnings growth for the
next 5 years is approximately 7.30 percent (PepsiCo, 2015).
MERGERS AND ACQUISITIONS
PepsiCo is the second largest food and Beverage Company in the world, grossing 65
billion in revenue (PepsiCo, 2015). PepsiCo acquired two of their largest bottlers in
North America. The company also acquired Wimm-Bill-Dann Foods, a Russian food
company that produces dairy products, fruit juices and yogurt (PepsiCo, 2015). Since
losing market share to Coke, CEO Nooyi faces pressure to split the food and beverage
company (PepsiCo, 2015). PepsiCo benefits from cross category where snack and
beverage items can be purchased together. New and healthier products are having an
impact to the market. In 2013, the company reduced the workforce by 3% and increased
marketing by 500 million (PepsiCo, 2015). In 2014, the company announced a 10 billion
share repurchase plan over the next 3 years and increased dividend 5.6 percent (PepsiCo,
2015). There has been Talk of an Anheuser-Busch InBev and PepsiCo merger (PepsiCo,
2015). The two have been collaborating in advertisement and joint procurements since
2009 (PepsiCo, 2015). Ambev has also distributed Pepsi soft drinks in Brazil, Argentina
and much of Central America (PepsiCo, 2015). The contract between these two expires in
2017, this means that Ambev could use contract renegotiations as leverage in merger and
acquisition talks (PepsiCo, 2015).
PRODUCTS
ORIGINAL PRODUCTS

















Pepsi – 1898
Frito-Lay 1898
Frito-Lay corn chips -1932
Lay’s brand potato chips - 1938
Mountain Dew – 1948
Cheetos brand snacks - 1948
Ruffles – 1958
Rold gold pretzels - 1961
Diet Pepsi – 1964
Doritos - 1966
Pepsi Light – 1976
Pizza Hut acquisition – 1977
Taco Bell acquisition – 1978
Tostitos introduced - 1981
Pepsi Free and Diet Pepsi Free – 1982
Slice and Diet Slice – 1984
Kentucky Fried Chicken purchase - 1986
2








Mug Root Beer Acquisition – 1986
Walkers Crisps and Smiths Crisps acquisition 1989
Gamesa acquisition - 1990
Lipton Tea Joint Venture – 1991
Ready to Drink Coffee venture with Starbucks – 1994
Aquafina – 1997
Cracker Jack acquisition - 1997
Tropicana acquisition – 1998
NEW PRODUCTS












SOBE acquisition – 2000
Quaker Oats merger - 2001
Sierra Mist – 2003
IZZE acquisition – 2006
Naked Juice Company – 2006
Stacy’s Pita Chip Company acquisition - 2006
Sandora acquisition – 2007
AMP energy drink – 2010
Russia’s Wimm-Bill-Dan acquisition – 2010
Mabel acquisition – 2011
Pepsi Next relaunch – 2012
Muller Quaker Dairy joint venture – 2013
Figure 1: Profits Generated from Top 5 Products
Approximate Profit in Billions
From Top 5 Products
Pepsi-Cola
$6
$7,25
$21
$7.5
$8
Mountain Dew
Lay's Potato Chips
Gatorade
Tropicana Beverages
3
COMPETITION
Like every other fortune 500 companies, PepsiCo has been competing with other
companies since the Pepsi recipe was first created. PepsiCo’s two biggest competitors are
Coca-Cola and Dr. Pepper Snapple INC. Competing with these companies has helped
PepsiCo become the successful company that it is today.
PEPSICO vs. COCA-COLA COMPANY
It is worldwide knowledge that Coca-Cola and Pepsi have been at war with each other for
years, but how the war began is a lot less known. In 1886, the original Coke recipe was
created, followed by the creation of Pepsi 13 years later (Business Insider). In the mid60s Pepsi merged with Frito Lay, creating PepsiCo. This began the war between PepsiCo
and Coca-Cola.
Although people often believe that Coca-Cola is the more successful company, many
statistics show otherwise. Although Coca-Cola holds 42% in the cola market and PepsiCo
only holds 31%, PepsiCo is more successful in many other ways (Business Insider, 13).
Because of Pepsi’s merge with Frito Lay they bring in about $66.68 billion in annual
revenue, while Coca-Cola only brings in about $46 billion (Business Insider, 13). Pepsi’s
stock was up 14% in 2014, compared to Coca-Cola’s 7% gain (CNN Money). PepsiCo’s
earnings are also expected to grow about 7% annually for the next few years, while CocaCola’s are only expected to increase about 4.6% a year (CNN Money). PepsiCo is not
simply a beverage company, which gives them the edge over Coca-Cola in many ways.
Not only does have some greater financial success over Coca-Cola, but they also appear
to think more about helping their consumers. PepsiCo employs approximately 294,000
people, while Coca-Cola only employs 139,600 (Business Insider, 17).
Although PepsiCo appears to be more successful in many ways, and strives more to help
their consumers, Coca-Cola still appears to be the fan favorite. Coca-Cola has about
391,000 Twitter followers and 34.8 million Facebook fans. PepsiCo has only
approximately 143,000 Twitter Followers and 6 million Facebook fans (Business
Insider,17). This is likely because people often forget about PepsiCo’s merge with Frito
Lay. Unlike Coca-Cola, they are not simply a beverage company.
4
PEPSICO vs. DR. PEPPER SNAPPLE INC
The third largest non-alcoholic beverage maker is Dr. Pepper Snapple INC. PepsiCo,
Coca-Cola, and Dr. Pepper Snapple have all been competing against each other for years,
it is obvious to many however that PepsiCo is more successful than Dr. Pepper Snapple.
Dr. Pepper Snapple INC only brings in about $6.12 billion in yearly revenue (DPS
Competitors). This is a large difference when compared to the $66.68 billion of PepsiCo
and $46 billion of Coca-Cola. The greater success of PepsiCo and Coca-Cola over Dr.
Pepper Snapple INC may be because the company was founded much later than the
others, in 2003 (DPS Competitors).
These three companies have many beverage similarities. The chart below compares the
different flavors of drinks that the company provides. It also shows the differences in the
names that each company has for their main beverages.
Figure 2: Product Comparison
Beverage
Flavor/Type:
PepsiCo
Coca-Cola
Dr. Pepper
Snapple
Cola
Pepsi
Coca-Cola
RC Cola
Lemon-Lime
Teem, Slice, Sierra
Mist, 7UP(in
countries other
than US)
Sprite,
Lemon & Paeroa
7UP (in US)
Root Beer
Mug Root Beer
Barq’s Ramblin’
Root Beer (until
1995)
A&W Root Beer,
Stewart’s
Rootbeer, Hires
Root Beer
Iced Tea
Lipton, Brisk
Nestea, Gold Peak
Tea, Fuze
Snapple
Sports Drinks
Gatorade, Propel
Powerade,
Aquarius, Vitamin
Water
All Sport
Bottled Water
Aquafina
Dasani
Nestle Pure Life
5
AGENDA
PepsiCo has a goal to strive to deliver superior long-term financial performance and to
sustain shareholder value. Also to create a safe, healthy, diverse and inclusive workplace
that reflects the global views.
ADVERTISEMENTS
PepsiCo has taken several important steps to ensure they are employing
responsible advertising practices. They’ve found the International Food & Beverage
Alliance (IFBA), a Swiss-based NGO comprising multinational food and beverage
manufacturers, to adopt a worldwide voluntary commitment to advertise to children
under the age of 12 only those products that meet specific nutrition criteria (PepsiCo,
2015). PepsiCo also adopted a global company policy that is consistent with IFBA's
policy. (PepsiCo, 2015)
STRATEGIC PLANNING
PepsiCo wants to protect and conserve global water supplies, especially in waterstressed areas, and provide access to safe water (PepsiCo, 2015). By innovating their
packaging to make it increasingly sustainable, they will minimize their impact on the
environment (PepsiCo, 2015). PepsiCo also focuses on eliminating solid waste to
landfills from their production facilities. They work to achieve an absolute reduction in
greenhouse gas (GHG) emissions across their global businesses. PepsiCo promises to
continue to support sustainable agriculture by expanding best practices with their growers
and suppliers (PepsiCo, 2015).
ORGANIZATION
PepsiCo continues to refine their food and beverage choices to meet changing
consumer needs by reducing sodium, added sugars and saturated fat, and developing a
broader portfolio of product choices (PepsiCo, 2015). They also continue to provide clear
nutrition information on their products, and sell and market them appropriately to their
consumers, including children, in line with their global policies and accepted global
standards (PepsiCo, 2015).
6
ORIGINAL FOUNDER
Caleb Bradham was the original founder of Pepsi in the 1880’s. He was a pharmacist
from New Bern, North Carolina. He coined the name "Pepsi-Cola" in 1898 (PepsiCo,
2015). As the cola developed in popularity, he created the Pepsi-Cola Company in 1902
and registered a patent for his recipe in 1903 (PepsiCo, 2015). The Pepsi-Cola Company
was first incorporated in Delaware in 1919 (PepsiCo, 2015). The company went bankrupt
in 1931. On June 8 of that year the trademark and syrup recipe were purchased by
Charles Guth who owned a syrup manufacturing business in Baltimore, Maryland. Guth
was also the president of Loft, Incorporated, a leading candy manufacturer, and he used
the company's labs and chemists to reformulate the syrup (PepsiCo, 2015).
CURRENT EXECUTIVES
PepsiCo current CEO and president is Indra Nooyi. The vice president and head of
communications is Jon Banner. The president is Oswald Barckhahn.
CUSTOMER SERVICE
PepsiCo believes acting ethically and responsibly is not only the right thing to do, but
also the right thing to do for their business. All PepsiCo employees are expected to
embrace the principles of their Code and show respect in the workplace, act with integrity
in the marketplace, ensure ethics in our business activities, and perform work responsibly
for our shareholders (PepsiCo, 2015). PepsiCo strives for perfect customer services and is
always striving for better performance.
CONCLUSION
Since its inception, PepsiCo has grown dramatically. The company has not only survived
bankruptcy but it has grown to be the number two soft drink company in the world.
PepsiCo is not only a soft drink company; it has branched out into other areas as well.
They have acquired numerous well-known companies such as KFC, 7UP,
Tropicana/Dole juices and a merger with Quaker Oaks to name a few.
The company’s revenue is showing significant growth and their profitability is increasing
as well. Their projected earnings is positive and their market share in increasing.
Although PepsiCo’s market share is less than Coca Cola’s, their annual revenue far
exceeds Coca Cola. This is due mainly because PepsiCo continues to branch out into
different arenas whereas Coca Cola remains true to the software market.
Not only has PepsiCo made significant strides in the beverage industry, they are also very
environmentally conscience. They were the first soft drink company to produce
lightweight recyclable plastic bottles.
In short, PepsiCo employs more people and they are striving to not only become the
number one soft drink company, but also they want to do it responsibly.
7
WORKS CITED
DPS Competitors | Dr Pepper Snapple Group, Inc Dr Stock - Yahoo! Finance. (n.d.).
Retrieved March 25, 2015, from https://finance.yahoo.com/q/co?s=DPS
Mann, Jake. "Why Taking the PepsiCo-Anheuser-Busch InBev Relationship a Big Step
Further Makes Sense." N.p., n.d. Web. 25 Mar. 2015.
Soda Wars! Pepsi beats Coke on Wall Street. (n.d.). Retrieved March 25, 2015, from
http://money.cnn.com/2014/10/09/investing/pepsi-earnings-stock-coke/
"Pepsi Stock Quote." CNNMoney. N.p., n.d. Web. 25 Mar. 2015.
"Pepsi Store - History of the Birthplace of Pepsi." Pepsi Store - History of the
Birthplace of Pepsi. N.p., n.d. Web. 22 Mar. 2015.
"PepsiCo, Inc. | American Company." Encyclopedia Britannica Online. Encyclopedia
Britannica, n.d. Web. 24 Mar. 2015.
"PepsiCo Inc." Growth, Profitability, and Financial Ratios for (PEP) from
Morningstar.com. N.p., n.d. Web. 24 Mar. 2015.
"PepsiCo, Re-Energized." Forbes. Forbes Magazine, n.d. Web. 24 Mar. 2015.
(n.d.). Retrieved March 25, 2015, from http://www.businessinsider.com/coca-cola
vs-pepsi-timeline-2013-1#coke-and-pepsi-arent-the-only-brands-that-have
gone-at-it-for-decades-18
"Who We Are." Our History. N.p., n.d. Web. 24 Mar. 2015.
8