Research Paper on PepsiCo's Future Challenges, including SWOT Analysis. This paper has identified possible future challenges which companies like PepsiCo can face.

1. SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES
Research Paper
“Companies and Their Future Challenges”
Submitted to Prof. Mrs. Mala Sane
Submitted By,
Anjali Kumari, C 29
Meghna Sorut, C 36
Bharat Bhushan, C 39

2. P e p s i C o
Table of Contents
Table of Contents
Introduction.......................................................................................................................................1
Inception ............................................................................................................................................1
Pepsi Headquarters...........................................................................................................................2
Pepsi Products...................................................................................................................................3
Global Divisions ................................................................................................................................3
Pepsi in India.....................................................................................................................................3
Current Market Scenario.................................................................................................................4
Marketing strategies.........................................................................................................................5
Future challenges with changing consumer behaviours................................................................5
PepsiCo SWOT Analysis ..................................................................................................................7
Strengths in the SWOT analysis of PepsiCo...................................................................................7
Weaknesses in the SWOT analysis of PepsiCo: .............................................................................8
Opportunities in the SWOT analysis of PepsiCo:..........................................................................9
Threats in the SWOT analysis of PepsiCo: ....................................................................................9
Conclusion.........................................................................................................................................9
References .......................................................................................................................................10

3. A n j a l i K u m a r i , C 2 9 |1 |
Introduction
Introduction
PepsiCo one of the leading brands of the soft drinks. Started with one product Pepsi and now
expanded to wide range of products is commendable. Maintaining its position as global
beverages leader with the changing scenario of market and consumers. Withstanding like a
giant monster of several products PepsiCo enumerates the story of good leadership. Indra
Nooyi with her strong marketing strategies and leadership qualities has made PepsiCo survived
globally. Having revenue of around 63.35 billion Pepsi continuing the race to become. The
largest seller of beverages and other products by surpassing Coca-Cola. The policies and
strategies blend and continue to evolve for the future challenges.
Inception
The drink Pepsi was first presented as "Brad's Drink" in New Bern, North Carolina, Joined
States, in 1893 by Caleb Bradham, who made it at his drugstore where the drink was sold. It
was renamed Pepsi-Cola in 1898 after the base of "dyspepsia" and the kola nuts utilized as a
part of the formula. The first formula additionally included sugar and vanilla. Bradham tried to
make a wellspring drink that was engaging and would help in assimilation and lift vitality.
PepsiCo began in 1965 with the merger of Pepsi-Cola and Frito-Lay. Today, it's a global food
and beverage leader. Pepsi Cola is, just like Coca-Cola, a creation of an American pharmacist.
In 1893, 5 years after the introduction of Coca-Cola, Caleb Bradham began to serve his
customers ‘Brad’s Drink’ from his own soda machine. Because of the
positive reactions of his samplers he decided to begin advertising in
1898 and he named the drink Pepsi-Cola. He founded the Pepsi-Cola
Company in 1902. Pepsi-Cola is a big success in the United States and
the Pepsi-Cola Company decides to export the drink to Mexico in 1907,
other countries would follow soon.
The company invested in sugar and is declared bankrupt in 1923 due to the collapse of sugar
prices. After a couple of reorganizations, the Pepsi-Cola Company is bought by Loft Inc. in
1931. Because of the popularity of Pepsi, Loft changes its name to ‘Pepsi-Cola Company’ in
1941.
Pepsi-Cola is referred to as the ‘kitchen cola’ in the 1960’s because it’s much cheaper than
competing drinks. The company decides to focus their
advertising strategy on the post-war baby boom generation. One
of the new slogans is: “Now it’s Pepsi, for those who think
young”. Diet Pepsi is introduced in 1964 for people who would
like to live healthy.
The PepsiCo Company was founded in 1965 by the president of the Pepsi-Cola Company and
the chairman of Frito-Lay. It produces and sells not only soft drinks like Pepsi, 7-Up, Mountain
Dew, Miranda and Gatorade but also snacks like Lays, Doritos, Hamka’s and Quaker cereals
in 192 countries.

4. A n j a l i K u m a r i , C 2 9 |2 |
Introduction
1970-PepsiCo moves from New York City to its new world headquarters in Purchase, N.Y.
The new corporate headquarters features a building by one of America's foremost architects,
Edward Durrell Stone (1902-1978), set on a 144-acre campus amid an outdoor sculpture
garden. Frito-Lay begins a program of expansion. Over the next decade, the company opens,
on average, more than one new plant a year.
Pepsi is the first company to respond to consumer preference with lightweight, recyclable,
plastic bottles, and introduces the industry's first two-litre bottle. In 1974, Pepsi-Cola becomes
the first American consumer product to be produced, marketed and sold in the former Soviet
Union.
Famous people like Michael Jackson, Lionel Richie, Tina Turner, Shaquille O’Neal, the Spice
Girls, David Beckham, Britney Spears and Cindy Crawford appeared in Pepsi commercials in
the 1980’s and 1990’s to emphasize that Pepsi is the drink for ‘the new generation’.
Pepsi Headquarters
Corporate governance. Headquartered in Purchase, New York, with research and development
headquarters in Valhalla, New York.
Pepsi Top Management
Name Role
Indra Nooyi Chairman and Chief Executive Officer
Albert P.Carey Chief Executive Officer
Hugh F. Johnston Vice Chairman and Chief Financial Officer
Ramon Laguarta President
Jim Andrew Executive Vice President
Jon Banner Executive Vice President of Communications
Ruth Fattori Executive Vice President and Chief Human Resource Officer
Marie Galler Senior Vice President and Controller
Jody Davids Senior Vice President and Chief Information Officer
Founder
Caleb Davis Bradham (27 May 1867-9 February 1934) was an American pharmacist, best
known as the inventor of Pepsi. He dropped out of the University of Maryland School of
Medicine, attributable to his dad's business going bankrupt. In the wake of coming back to
North Carolina, he was a government funded teacher for about multi year, and before long

5. A n j a l i K u m a r i , C 2 9 |3 |
Introduction
opened a medication store in New Bern named the "Bradham Drug Company" that, in the same
way as other medication stores of the time, likewise housed a pop wellspring.
Center Street and Pollock Street in downtown New Bern, is the place Bradham, in 1893,
designed the formula—a mix of kola nut concentrate, vanilla, and "uncommon oils"— for what
was at first known as "Brad's Drink," yet on August 28, 1898 was renamed Pepsi-Cola.
Bradham named his drink after a blend of the expressions "pepsin" and "cola," as he trusted
that his drink helped absorption much like the pepsin chemical does, despite the fact that it was
not utilized as a fixing. His partner James Henry King was the first to taste the new drink.
Pepsi Products
Pepsi have a complementary food
and food portfolio that features twenty-
two brands that in 2017 every generated quite $1
billion in calculable annual retail sales.
PepsiCo's merchandise is oversubscribed in
additional than two hundred countries and
territories round the world. Meet the
worldwide divisions that build it all attainable.
Global Divisions
PepsiCo's food and liquid product area unit sold round the world. Their six world divisions,
either severally or in conjunction with third parties, make, market, distribute and sell a
good kind of food and beverages in our numerous product portfolio, drive innovation, and area
unit targeted on delivering Performance with Purpose - our goal to position PepsiCo for semi-
permanent, property growth by orientating what's sensible for our business
with what's sensible for society and also the planet.
1. North America Beverages (NAB)
2. Frito-Lay North America (FLNA)
3. Quaker Foods North America
4. Latin America (LA)
5. Europe Sub-Saharan Africa (ESSA)
6. Asia, Middle East & North Africa (AMENA)
Pepsi in India
PepsiCo entered India in 1989 and has grown to emerge as one in every of the
biggest meals and beverage agencies in India. PepsiCo India has been always investing in
the India of an and has built an expansive beverage and snack food enterprise supported by
means of 38 beverage bottling flora and three meals plants. PepsiCo India’s numerous
portfolio consists of iconic brands like Pepsi, Lay’s, Kurkure, Tropicana 100%, Gatorade and
Quaker. Within 2 decades, the agency has been capable of organically
grow eight INR 1000 crore plus manufacturers in India which are household names trusted
across the country

6. M e g h n a S o r u t , C 3 6 |4 |
Current Market Scenario, Strategy and Future Challenges
Current Market Scenario
Pepsi started as soft drink product of Pepsi-Cola company in 1890 is one of the successful soft
drink company of that century. In 1965, the Pepsi-Cola company merged with Frito-Lay Inc.,
to form PepsiCo Inc. Currently, the company owns a variety of well-known brands that with
about 60 percent dedicated to food products and about 40 percent to drink products. PepsiCo
is divided into four main divisions including Americas Foods, Americas Beverages, Europe,
Asia and Middle East and Africa. There is a huge number of products that have PepsiCo has
launched till now.
Soft drinks………………………………….7up, Mirinda, Nimbooz, Pepsi, Slice, Tropicana
Rice snacks……………………………………..Lays, Cheetos, Kurkure, Lehar, Uncle ships
Breakfast snacks…………………………………………………………………Quacker oats
Sports nutrition………………………………………………………………………Gatorade
Bottled water…………………………………………………………………………Aquafina
PepsiCo the second largest soft
drinks company has
implemented several smart
strategies in last decade to
improve its turnover. Since
these days people prefer
healthier drinks and hence with
the changing consumer
behaviour PepsiCo has launched new products like Tropicana, Quaker oats and Gatorade. This
has helped pepsiCo to maintain its marketshare and hence result of which its revenue increased
from 39.47 billion US dollar in 2006 to 63.53 billion US Dollar in 2017.
PepsiCo Revenue (2007-17)

7. M e g h n a S o r u t , C 3 6 |5 |
Current Market Scenario, Strategy and Future Challenges
Marketing strategies
PepsiCo is using various attractive tactics for marketing communication.They are using a
variety of mix methods for marketing. The company is popularly known for using celebrity
endorsers to promote its products on TV, radio, print media, and online media. The firm also
advertises through business signs it sponsors or gives to stores and other establishments.
PepsiCo occasionally applies sales promotions, such as package deals or discounts.
PepsiCo also promotes direct marketing selling their products to wholesalers or using public
relations and endorsing their products through sports events. On whole PepsiCo follows the
4Ps (Product, Place, Promotion & Price) marketing strategy.
Generic Strategy (Porter’s Model)
PepsiCo applies different generic competitive strategies, considering the company’s wide array
of products. However, the main generic strategies that contribute to PepsiCo’s competitive
advantage are as follows:
• Cost leadership
• Broad differentiation
• PepsiCo uses cost leadership as its primary generic competitive strategy. This generic
strategy focuses on cost minimization to improve PepsiCo’s financial performance and
overall competitiveness. For example, to compete against Coca-Cola products, PepsiCo
offers low prices based on low operating costs.
The company also sometimes has special promotional offers with discounted prices. On the
other hand, PepsiCo uses broad differentiation as its secondary generic competitive strategy.
This generic strategy enables business competitive advantage by attracting consumers to some
unique features of the firm’s products.
For example, PepsiCo’s Lay’s potato chips are marketed as a healthful snack product because
of reduced saturated fat content. A strategic objective for the cost leadership generic strategy
is to automate production processes to minimize PepsiCo’s operating costs. In relation,
PepsiCo’s strategic objective for the broad differentiation generic strategy is to innovate
products to address concerns about their health effects.
Future challenges with changing consumer behaviours
1. Increased Marketing Spend for Core Beverages: While PepsiCo has moderately
increased media spend over the past three years, its biggest competitor – Coca-Cola – has done
so by a substantial margin. While this has benefited the latter, PepsiCo has struggled as a result.
In response to this, the company has allocated increased media to trademark Pepsi. It has also
launched a new “Pepsi Generations” campaign, with PepsiCo expecting improving sales and
market share as an outcome.

8. M e g h n a S o r u t , C 3 6 |6 |
Current Market Scenario, Strategy and Future Challenges
On the other hand, this step could also pressure the operating margins of the company,
offsetting any benefit received from the productivity initiatives implemented by the company
to induce cost savings.
2. Growth of Healthier Beverages: PepsiCo’s tea portfolio, with brands including Lipton and
Pure Leaf, has grown retail sales in the range of mid-single digits to as high as 21% over the
past 17 quarters. In enhanced water, both LIFWTR and newly launched Bubly have grown
nicely. KeVita, PepsiCo’s line of premium organic live probiotic beverages, grew retail sales
50% in Q1, following 66% growth for the full year 2017. The growth of these brands is highly
important for the company, as significant growth here may help to offset some of the weakness
in the core portfolio.
3. Importance of Frito-Lay: Frito-Lay North America grew revenues by 3% in the quarter,
driven by 2 percentage point growth of price, and one of volume. While Frito-Lay North
America contributes to roughly a quarter of the company’s revenues, its share of the total
operating profit is about 42%. We expect the strong growth rates of FLNA to continue in the
future, boosted by the segment’s foray into new products and healthy snacks. For example, due
to the success of Lay’s Poppables, launched in 2017, FLNA extended the Poppables product
line-up with the introduction of new Lay’s Poppables Honey Barbecue and a 12-count
multipack of Poppables Sea Salt. The company has also extended the Simply sub-line (which
offers natural and organic versions of popular snack brands) by introducing new package
varieties with the Simple variety pack and a three-flavour line-up of single-serve packages for
Simply Lay’s, Cheetos, and Doritos offerings.
4. Possibility of Refranchising Bottling Operations: CEO Indra Nooyi mentioned the
company is evaluating the bottling operations, and whether it would make more sense for it to
be part of PepsiCo, a stand-alone entity, or for it to be refranchised. PepsiCo’s biggest
competitor, Coca-Cola, is in the midst of a multiple-year process of refranchising its bottling
operations, which has plagued its top-line, but has had a positive impact on its bottom-line.

9. B h a r a t B h u s h a n , C 3 9 |7 |
PepsiCo SWOT Analysis
PepsiCo SWOT Analysis
This PepsiCo SWOT analysis reveals how the second largest food company in the world uses
its competitive advantages to dominate snack and beverage industries. It identifies all the key
strengths, weaknesses, opportunities and threats that affect the company the most.
Strengths in the SWOT analysis of PepsiCo
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.
• Brand equity: it is one of the most prominent and famous brands in the world in the
food and beverage sector. It is also known as the brand of youth. It has a high brand
recognition and reputation. It has a brand valuation of $19.4 billion and it is ranked 29
in the Forbes most valuable brands list.
• Product portfolio Performance: 2015 saw a decrease in the sale of soft drinks. India
as a country is evolving and becoming more health conscious. This can be noted from
the 2015 analysis of top selling brands (in India) that the top 5 beverages are only juices
and sweet syrups. There is no soft drink in the top 5.
Brand Owned by Market Share
Real Dabur 8%
Tang Mondelez 6%
Slice PepsiCo 6%
Roohafza Hamdard 6%
Tropicana PepsiCo 6%
Source: The respective companies’ official websites and financial reports
R&D spending by the largest food and beverage companies (R&D and revenue in US$ billions)
Company 2015 2016 2017 Revenue % of revenue
PepsiCo 0.754 0.760 0.737 63.525 1.2
Nestlé S.A. 1.678 1.736 1.724 89.791 1.9
Mondelēz 0.409 0.376 0.366 25.896 1.4
Coca-Cola - - - 35.410 -
Source: The respective companies’ financial reports (Nestlé S.A R&D expenditure and
revenue are in euros)

10. B h a r a t B h u s h a n , C 3 9 |8 |
PepsiCo SWOT Analysis
• Strong Leadership: Under the leadership of Indra Nooyi PepsiCo has been doing really
well. It has managed to stay at number two position in the complete food and beverage
sector only behind Nestle in that field.
• Customer Loyalty: PepsiCo has an extremely loyal customer base. In its beverage
category all its soft drinks have an iconic taste and that’s why their customers do not
prefer to shift brands. They have emerged as a very strong brand when it comes to juices
and bottled water category. Frito-Lay has been one of the top-selling brands in the world
with brands under it such as Doritos, Lay’s, Funyuns, Uncle Chips, Cheetos, Tostitos
and Walkers. They had managed to grab 6 slots in the top 10 global snack brands with
topping the charts (all 3 spots) as well.
• Strong distribution: Pepsi has a global presence in more than 200 countries providing
them with a very good distribution network.
• Supply Chain: It has one of the best supply chain networks in the world, making the
products available throughout the world. Apart from this they also have a very efficient
reverse logistics associated with it.
• Tie-Ups: They have tie-ups with sports events and music concerts which keeps them in
the lime light and thereby increasing the brand recall. They have sponsorships to major
sports teams thereby standing with what the brand is known for, youth and energy.
• Clear target audience: Pepsi, unlike Coca Cola has always had a clear target audience
– the young crowd. It always targets youngsters through its ads and generally the
youngsters are shown to be smarter than the old ones. The message is clear – Pepsi is the
in thing.
Weaknesses in the SWOT analysis of PepsiCo:
• 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 brand
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 organisation. 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.

11. B h a r a t B h u s h a n , C 3 9 |9 |
PepsiCo SWOT Analysis
Opportunities in the SWOT analysis of PepsiCo:
• 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.
• Flavours: A brand which has risen strongly in the recent years is Paperboat. Paperboat
is known for its various flavours such as watermelon, raw mango etc. Bringing in such
flavours even in carbonated beverage form can help Pepsi attract a larger market.
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.
Conclusion
PepsiCo is a diversified company. Its ability to generate substantial returns is embedded in its
diversified products, and strong position in the markets in which those products are sold. 3.
PepsiCo will continue to grow and succeed in the future. With great innovations and new
products, PepsiCo constantly stays one step ahead of its competitors. The company has a long,
sustainable future due to its constant drive for new innovations, and products that will please
consumers.

12. P e p s i C o |10 |
References
References
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