PepsiCo, Inc.
Industry Overview
The carbonated drink industry has been growing steadily over the past years and is projected to
continue to improve. The projected growth rate over the next five years is 1.3%. The industry consists of
four geography segmentations, which are the Americas (46%), Europe (35%), Asia-Pacific (16%), and
Middle East and Africa (2%). Market distribution is 55% in supermarkets. Following far behind is ontrade (19%), other (12%), independent retailers (8%), and convenience stores (5%). The market is
supposed to increase 206,143.5 million liters sold in 2014 to 222,240.3 million liters in 2019.
Geography Segmentation
Market Distribution
12%
Supermarkets
5%
Americas
16%
On-trade
8%
Europe
46%
55%
19%
2%
Independent
Retailers
Convenience
Stores
Asia-Pacific
35%
Middle East &
Africa
REVENUE IN BILLIONS
Company Overview
PepsiCo, Inc. has a number of
well-known brands in its portfolio that
Soda Industry Revenue
are recognizable all across the globe.
They specialize in products under the
225
categories of foods, snacks, and
220
beverages. Some of these well-known
215
products include Lays potato chips,
210
Mountain Dew, Rice-a-Roni. Most of
these products are made readily
205
available at any major grocery store, gas
200
station, supermarkets, and vending
195
machines. This lets PepsiCo’s products
to get into the hands of any consumer at
190
2008
2010
2012
2014
2016
2018
2020
any time. This also allows their products
YEARS
to be convenient and easily accessible to
consumers. PepsiCo’s revenue and
profit both started low in 2010 (57.84 billion in revenue, 31.21 billion in profit). Then in 2011 PepsiCo’s
numbers for both revenue and profit jumped the most out of all 5 years (66.5 billion in revenue, 34.77
billion in profit). PepsiCo should continue to invest in areas that they are profitable in but they should
also spend more money into areas they are lacking revenue.
Smart Objectives
1. Increase net income to $215 billion over the next year.
2. Increase Asia-Pacific market share by 5% by next year.
3. Expand into 20% more convenience stores over the next two years.
SWOT Analysis
Strengths
 Strong position in market.
 Diverse product portfolio and strong
brand equity.
 Widening presence in emerging markets.
Opportunities
 Increased spending on food and beverages
in emerging markets.
 Increasing local-focus.
 Changing consumer preferences creating
opportunities in the health and nutrition
space.
Weaknesses
 Market controversies could hamper consumer
confidence.
Threats
 Consumers are becoming more interested in a
healthier option.
 Rising competition in private labels.
 Water scarcity and poor quality could impact
production costs.
 Rising labor wages in the US.
Market Attractiveness Matrix
PepsiCo Inc.
Industry Attractiveness
4.99
GREEN
1.66
PepsiCo
YELLOW
PEPSI
-1.67
-5
-5
-1.67
1.66
4.99
Competitive Position
Pepsi is a global consumer goods company, primarily engaged in production, marketing and sales
of a variety of food, snacks and beverage products. The company's diverse product portfolio and strong
brand equity are helping it in sustaining a competitive positioning in the market. However, rising
competition from private labels in the food and beverage industry could have a negative impact on the
company's market share.
The company has a strong market position in the markets it operates in as well as in the product
categories it offers. Across its largest markets, Pepsi has the dominant position among top brands.
Although the company is prone to such controversies like most other food companies, allegations like
these can adversely impact the company's results in future. As the global economic shift towards the
emerging economies continues, opportunities for several industries including the food and beveragemanufacturing sector are created. With increasing consumer income levels and purchasing power among
the middle class population, the emerging countries in Asia such as India and China are registering strong
growth rates. This, in turn, helps companies like Pepsi to gain immense growth opportunities. Growing
concerns over lifestyle-related health issues like obesity, diabetes, hypertension and chronic heart
disease are encouraging consumers to make a shift in their food preferences. In the recent past,
consumers have consciously made a preference shift towards healthy, fat-free and no-sugar options in
processed foods.
The tightening economic conditions, especially in the developed and matured markets in the West
are prompting consumers to increasingly choose lower-priced private label food products, over the
established national brands. The food and beverage segment that Pepsi operates in is largely considered
the non-essential food or convenience foods segment. Water is one of key ingredients used by Pepsi to
manufacture its beverage products. Rapid population growth and continued pollution of existing
freshwater sources have created water shortages in nearly every country
Market/Product Strategies
Strategies
Examples
Costs
Benefits
Market
Development
- Expansion of
Tropicana,
Gatorade, and
Quaker Foods lines
to reach health
conscious
consumers
- PepsiCo’s R&D
department is
currently working
on CSD that tastes
the same as
regular colas, is
sweetened
naturally, and
calorie free
- Due to expansion
of healthier
options, product
portfolio is larger
than competitors
- Research and
development
dollars
- Ad costs to
promote new
products
- Competitive
advantage
- New sales
- Extensive R&D
dollars dedicated
to this project
- Man hours costs
- Competitive
advantage over
competitors such
as Coke if
successful
- Ad costs higher in
order to promote
larger product
portfolio
- Relying on FritoLay growth in
Developing
markets
- Investment in
new location costs
- New advertising
costs and
government
regulations
-Competitive
advantages in new
market
- New sales among
health conscious
consumers
- New Sales in
other markets
- Benefit of
operating in other
countries and
expanding brand
recognition
Product
Development
Diversification
Market
Penetration
Stakeholder’s
Impact
- Will result in
bigger customer
base and brand
awareness.
Revenue increase
will be beneficial
for stakeholders
- Will insure
continued
commitment from
customers and
viability of
stakeholders
dividends
- Additional
revenue sources
will increase
company
profitability
- Will be costly at
first but will
develop into new
highly profitable
revenue sources
Strategy Recommendations
There are eight different Market/Product strategies that companies use. Each one is used to
accomplish certain things in certain phases of a products life cycle. For where Pepsi is the most logical
strategy to use would be the market development strategy. This is where you try and bring a known
product and introduce it to new groups of buyers. This would work for Pepsi because they already have a
known product, and introducing the products into new markets and new buyers would only benefit the
company. Market Penetration would also be a good one for Pepsi to use. They could use this strategy to
try and tap into some different markets where their competitors are better and try and improve which
will take customers from competitors. Product development wouldn’t be as good because that is for
companies trying to a new product to a market, and Pepsi already has that accomplished. Diversification
would also not be as good of a strategy for Pepsi. This deals with entering into a new market that the
company is not currently in. In the search for downsize strategies, we could not find any current
examples of Harvest Revitalization, Pruning, Retrenchments, and Divest liquidation that would be
relevant to Pepsi.
References
Marketline Company Profile: PepsiCo (2015 June 1). Retrieved August 28, 2015, from
http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=2ffca1cf-623e-4b45-94dec88c3d537711%40sessionmgr114&vid=3&hid=115
PepsiCo, Inc. (2015). PepsiCo, Inc. SWOT Analysis, 1-10.
PepsiCo Website (2015). Retrieved August 28, 2015, from http://www.pepsico.com/company