1.
PepsiCo Turkey’s History and Strategy
PepsiCo, Inc. History
PepsiCo’s Turkish operations (“PepsiCo Turkey”) are part of PepsiCo, Inc., a
global company with more than $43 billion in annual revenues and 198,000 employees
worldwide. PepsiCo, Inc. was founded in 1965 by Donald Kendall, CEO and President
of Pepsi Cola and Herman W. Lay, Chairman and CEO of Frito-Lay. In 1966, PepsiCo
entered the eastern European market and has continued to drive into the worldwide
market throughout its history. Additionally, PepsiCo was the first western drink producer
to enter the U.S.S.R. PepsiCo has continued to push into new markets through
acquisition and the development of new products, the company has led expansion into
regions like China, India, and South America. In 1985, PepsiCo officially became the
largest company in the beverage industry with a total of $7.5 billion in total revenue at
that time.
Strategy
While expanding into new markets, PepsiCo has adopted a strategy focused on
becoming a leader in both environmental and social issues. In 1970, the company
introduced a lightweight recyclable plastic bottle; it also introduced the first hybrid
delivery trucks into Mexico in 2009. PepsiCo has encouraged health and fitness by
forming an agreement with Dr. Kenneth Cooper MPH of Cooper Concepts to promote
health, fitness, and wellness. The company has been a leader in human rights, women’s’
rights, and diversity. For example, the company sponsored the “Diversity@work“
program in 2000. PepsiCo also received a 100% rating by the Human Rights Campaign
Foundation in 2008 for the fifth year in a row, and was listed as the best company for
multi cultural women by Working Mother magazine in 2009. In fact, the current
Chairman and CEO of PepsiCo, Indra Nooyi, is a woman, as is the President of
PepsiCo’s South East Europe Region (which includes the company’s Turkey operations),
Ümran Beba.
PepsiCo has a worldwide code of conduct to promote ethical practices by all
PepsiCo employees in every business transaction. This drive to be a leader in the snack
and beverage industry while being sensitive to gender, culture, and human rights has
allowed PepsiCo to be successful around the globe.
Consolidation
On February 26, 2010, PepsiCo completed a merger with Pepsi Bottling Group
and PepsiAmericas, two independent bottling operations, to form a new operating unit,
Pepsi Bottling Company (“PBC”). PBC will serve the United States, Canadian and
Mexican markets. In March 2002, PepsiCo acquired its exclusive Pepsi bottler in
Turkey, Fruko A.(a). These transactions are part of a larger trend within the soft drink
industry to consolidate the manufacturing, bottling and distribution functions under one
“roof”.
2.
PepsiCo Turkey’s Mission and Major Goals
Mission
PepsiCo’s mission is to be the world’s premier consumer products company, focused on
convenient foods and beverages. Producing financial rewards for shareholders and
providing employees and partner’s opportunities for growth and success are key mission
components. PepsiCo strives to place honesty, fairness and integrity at the forefront of
everything the company does. PepsiCo takes a proactive approach to continually
improve all aspects of the world in which the company operates, environmentally,
socially and economically. The company is committed to delivering financial success
while leaving a positive imprint on society.
Performance with Purpose
“Performance with Purpose” is at the heart of every aspect of PepsiCo’s business. At
PepsiCo, financial achievement can and must go hand-in-hand with social and
environmental performance. This approach is comprised of three (3) platforms:
1. Human Sustainability – provide a broad range of great tasting food and drinks;
make the healthy choice easy.
2. Environmental Sustainability – conserve natural resources; operate in an
environmentally friendly fashion.
3. Talent Sustainability – create a diverse and inclusive culture; attract the world’s
best people.
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Performance Drivers
PepsiCo Europe, the PepsiCo division that includes Turkey, has specifically established
and maintains focus on four specific performance drivers:
1. Differentiated Value
2. Revenue Management
3. Strong Cost Control
4. Cash Flow Generation
The execution of this strategy enabled PepsiCo Europe to achieve a 10% Net Revenue
increase and a 13% operating profit increase in fiscal year 2009. The company currently
maintains a 35% market share in Turkey. Its long-term goal in Turkey is to overtake
Coca-Cola as the country’s soft drink market leader. Continued focus on its mission and
key performance drivers should help the company’s continued progress toward its goals,
even through tough economic conditions in Europe generally and Turkey in particular.
3.
PepsiCo Turkey’s Current CEO
PepsiCo Turkey is led by Ümran Beba, who became President of the South East
Europe Region of PepsiCo Europe in January 2009. Ms. Beba holds a degree in
Industrial Engineering and an MBA from Bosphorus University (Istanbul). She has had a
very successful tenure with PepsiCo since joining Frito Lay as marketing director in
1994. After serving roles in marketing, human resources and sales, she became General
Manager for PepsiCo’s Turkey operations in 2001. In 2004, Ms. Beba was named
General Manager for PepsiCo’s East Mediterranean Business Unit, which consisted of
Turkey, Lebanon, Jordan, Syria and Iraq. She was elevated to her current position of
South East Europe Region President following PepsiCo’s realignment of its European
and Middle Eastern divisions in 2009. In addition to Turkey, Ms. Beba, who is based in
Istanbul, is responsible for PepsiCo’s operations in Greece, Cyprus, Serbia, Bosnia and
Herzegovina, Kosovo, Macedonia, Croatia, Slovenia, Montenegro, Romania, Bulgaria,
Moldova and Israel.
As noted above, under Ms. Beba’s leadership, PepsiCo’s market share has grown
to thirty-five percent and PepsiCo Turkey acquired its exclusive Turkish bottler, which
will grant the company greater control of its bottlers in Turkey and other growing
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markets in South East Europe. Additionally, during Ms. Beba’s tenure PepsiCo Turkey
has been recognized as a good corporate citizen as well. For example, in 2009, Frito-Lay
Turkey, a division of PepsiCo Turkey, was honored with the “Environment-Friendly
Industrial Plant” award from the Kocaeli (Turkish Province) Chamber of Industry. Also
in 2009, Frito-Lay Turkey launched its second “better for you” snack offering, Cheetos
Rings, as part of the company’s strategic initiative to make healthy snack choices more
easily available to its customers.
In February 2010, PepsiCo announced that Ms. Beba will be relocating from
Istanbul to Hong Kong, where she will take over management of PepsiCo’s Asia-Pacific
Division. This Division, comprised of 18 countries, includes such diverse countries as
Australia, Indonesia, Japan, New Zealand, Pakistan, and Singapore, as well as two of
PepsiCo’s fastest-growing markets, China and India.
4.
PepsiCo’s Global Operations
PepsiCo’s Operational Structure
PepsiCo’s worldwide operations are organized into three individual business
units:
(1) PepsiCo Americas Foods (PAF), which includes Frito-Lay North America (FLNA),
Quaker Foods North America (QFNA) and all of PepsiCo’s Latin American food and
snack businesses (LAF), including PepsiCo’s Sabritas and Gamesa businesses in Mexico;
(2) PepsiCo Americas Beverages (PAB), which includes PepsiCo Beverages North
America and all of PepsiCo’s Latin American beverage businesses; and
(3) PepsiCo International (PI), which includes all PepsiCo businesses in the United
Kingdom, Europe, Asia, Middle East and Africa.
These three business units are comprised of six reportable segments (or divisions):
• FLNA
• QFNA
• LAF
• PAB
• Europe Division
• Asia, Middle East & Africa Division
New PI Structure
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Beginning in 2009, Pepsi realigned certain countries within PI to be consistent
with changes in geographic responsibility. As a result, PepsiCo’s businesses in Turkey
and certain Central Asia markets became part of the Europe Division. These countries
were formerly part of the Asia, Middle East & Africa division. The changes did not
impact the other existing reportable segments.
Europe Division; PepsiCo Turkey
The Europe Division (ED) of PI, of which the South East Europe Region
(including Turkey) is a part, covers 880 million consumers across Western and Eastern
Europe, including Russia. ED manufactures, markets and sells through consolidated
businesses as well as through non-controlled affiliates, a number of leading salty and
sweet snack brands, including Lay’s, Walkers, Doritos, Cheetos and Ruffles. Further, ED
manufactures (or uses contract manufacturers), markets and sells many Quaker brand
cereals and snacks. ED also manufactures, markets and sells beverage concentrates,
fountain syrups and finished goods, under various beverage brands including Pepsi, 7UP
and Tropicana. In addition, through its acquisition of Lebedyansky, Pepsi acquired
Russia’s leading juice brands.
In Turkey, PepsiCo distributes certain global brands, i.e., Pepsi, Pepsi Light (the
European name for Diet Pepsi), Pepsi Twist, Aquafina, and 7UP. Additionally, the
company distributes several brands designed specifically for the Turkish market or that
were well known domestic brands that PepsiCo has acquired, namely, namely, the soft
drink brand Fruko, the fruit juice and food brand Tamek, and the orange soda brand
Yedigün.
These brands are sold to authorized bottlers, independent distributors and
retailers. However, in certain markets, ED operates its own bottling plants and
distribution facilities. ED licenses the Aquafina water brand to certain of its authorized
bottlers rather than bottling Aquafina through its owned facilities. ED also manufactures
or uses contract manufacturers, markets and sells ready-to-drink tea products through an
international joint venture with Unilever (under the Lipton brand name).
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SOURCES
PepsiCo, Inc. website, at www.pepsico.com
PepsiCo, Inc. 2008 Annual Report
PepsiCo, Inc. 2009 Form 10-K
Pepsi Bottling Group, Inc. (now Pepsi Bottling Company) website, at www.pbg.com
“Pepsi Targets Top Position, Deals in Turkey”, July 4, 2006, FlexNews website, at
http://www.flex-news-food.com/pages/2420/Coca/Pepsi/Turkey/pepsi-targets-topposition-deals-turkey.html.
“Turkey to Become Regional Headquarter for Pepsi Bottling Operations”, October 8,
2009, Packaging Europe website, at
http://www.packagingeurope.com/NewsDetails.aspx?nNewsID=31447.
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