Food & Beverage
Food & Beverage
In this strategy study, you’ll see how PepsiCo became one of the most renowned brands in the world. By leveraging innovation, technology, and market strategies, PepsiCo became a benchmark for success.
PepsiCo, Inc. is an American food and beverage corporation that ranks as one of the largest in the world. PepsiCo's products have penetrated over 200 countries since its inception. The company’s headquarters can be found in Purchase, New York.
PepsiCo had humble beginnings. The company now increased its global net revenue to more than 70 billion U.S. dollars in the year 2020. It owns a variety of remarkable brands with 60% dedicated to food items and 40% to beverages. Some notable brands include Pepsi and Mountain Dew.
A quick look at these statistics show why Pepsi’s such a powerful player in the international market:
The roots of PepsiCo can be traced back to 1880 when Caleb Bradham first developed the recipe. He was a pharmacist turned entrepreneur from New Bern, North Carolina. The recent success of Coca-Cola spurred something in him. He wanted to create a similar sweet carbonated drink.
The results were, of course, the sweet cola-flavored Pepsi-Cola. The famous drink was actually named Brad’s Drink. He started selling it to his pharmaceutical customers in 1893. The product rose in popularity in the 1900s. Soon it was no longer called Brad’s Drink but Pepsi Cola instead.
The name was inspired by the ingredients used. Kola nuts, vanilla, and sugar were some of the notable few. The drink was meant to help with digestion and rejuvenate the consumers. Bradham then established the Pepsi-Cola company to capture the market.
Initially, only the syrup was sold commercially. Bradham managed to sell 7,968 gallons of syrup in the first year alone. He changed tactics the following year and sold the drink in six-ounce bottles instead. This was an ingenious tactic as he sold 19,848 gallons of the drink!
Pepsi-Cola was first endorsed by a celebrity in 1909. The automobile racer, Barney Oldfield, claimed it was a great drink to consume before an event. After prospering for several years, the company fell hard after the first World War.
The company rose and fell numerous times in the 1920s. Nothing remained consistent. Charles G. Guth took over the company’s assets in 1931 and revamped the existing strategies.
Charles G. Guth is known as the founder of modern Pepsi-Cola. He hired a chemist to formulate a better drink. Guth then set up different bottling operations and started merchandising. The 12-ounce bottle that could be bought for five cents became a huge success.
He wasn’t in control for too long though. Guth was also the president of a candy and soda-fountain chain company called Loft. By losing legal battles that took place in the late 1930s, Pepsi-Cola was then run by the new management of Loft. In 1941, the two companies merged and became Pepsi-Cola Company.
Alfred N. Steel became the chief executive officer of Pepsi Company in 1950. He was formerly the Vice President of Coca-Cola Company. Steel emphasized sales promotions and unique advertising strategies. This increased Pepsi's net earnings exponentially and Pepsi became Coca-Cola’s primary competitor.
Pepsi merged with Frito Lay, Inc. in 1965. Frito Lay was known for its popular snacks such as Fritos, Doritos, and Lay’s potato chips. The company further diversified itself by conquering three restaurant chains.
It purchased Pizza Hut, Inc. in 1977, Taco Bell Inc. in 1978, and Kentucky Fried Chicken in 1986. They were later separated into a different company called Tricon Global Restaurants, Inc.
It was time to introduce some healthier brands under the company. That’s why PepsiCo secured Tropicana and Dole juice companies in 1998. After merging with Quaker Oats in 2001, PepsiCo created a new division called Quaker Foods and Beverages.
PepsiCo focused on expanding its operations in the early 21st century. The company invested in JSC Lebedyansky, Russia’s biggest juice manufacturer, in 2008. It acquired Wimm-Bill-Dann Foods three years later. These investments made PepsiCo the largest food and beverage corporation in Russia.
PepsiCo’s vision was to deliver the perfect snack with a complementary cola drink. This aspiration led it to become one of the world’s most successful food and beverage companies. The company’s products are enjoyed by consumers in over 200 countries.
This product portfolio managed to generate over $70 billion in net revenue in 2020 alone. PepsiCo’s brands provide a multitude of refreshing drinks and scrumptious snacks. Each generates approximately over $1 billion in annual retail sales.
PepsiCo has seven divisions and each is inspired by the motto “Winning with Purpose.” This reflects the company’s ambitions to overtake the marketplace. Despite the common goal, each division has its unique stories and modes of operation.
PepsiCo’s rise to fame is defined by its diversified strategies. The founder may not have been an expert, but he had the right idea. The company took chances with variety. Acquiring a plethora of brands helped PepsiCo stand out as an inclusive company.
Caleb Bradham was a man who wanted to find new ways to improve people’s health. He initially enrolled in the University of North Carolina but withdrew due to financial troubles. After teaching for a short time, he joined the University of Maryland. He opened Bradham’s Pharmacy after graduation.
It was in this pharmacy where he first concocted Brad’s Drink. The beverage was a mix of water, lemon oil, caramel, sugar, nutmeg, and cola nuts. This healthy cola drink supposedly helped with digestion. In 1898, he called it Pepsi from the Pepsin enzyme.
The new drink rose to fame shortly after it was introduced. The Food and Drug Act banned dangerous chemicals from food and drinks, but Pepsi stood strong. Since it was made from natural ingredients, people flocked to purchase this drink. It was considered to be a safer substitute.
The cost of sugar rose monumentally during World War I causing Bradham to go bankrupt. The price increased from 3 cents to 28 cents per pound! The company was bought by Craven Holding Corporation but faced bankruptcy once again. In 1931, it was taken over by Loft Candy Company.
Pepsi had significant sales compared to its competitors during the Great Depression. The company sold 12-ounce bottles for 5 cents each. Guth moved the headquarters to Long Island City and initiated a franchising system. The first-ever jingle was made in 1940 to advertise Pepsi.
While many people can’t detect the differences, Pepsi is sweeter than Coke. That always gives it an edge during sip tests. Pepsi is said to have a burst of citrusy flavor, unlike Coca-Cola. Coke is characterized by its slightly vanilla flavor. However, it dissipates over the course of a drink.
This is where Pepsi shines. Pepsi also contains more sugar, calories, and caffeine compared to Coke. Coca-Cola has more sodium in it. At the end of the day, both drinks have similar compositions. What really helps them stand out is branding and advertising.
The company produces beverages that have less than 100 calories from added sugar. Consumers demand more nutritious choices. PepsiCo responded with new products that have low or no calories. They reintroduced some of their iconic global brands this way. Pepsi Black recently made an appearance.
Bubly sparkling water has no artificial flavor or sweeteners. It also has no calories! KeVita, a probiotic-based product, now has Master Brew Kombucha flavors. The company’s brand Drinkfinity has a unique take. Consumers can make their own tasty beverages. This will be done without adding any artificial flavors or sweeteners.
It’s okay to do things differently. To stand out in the crowd, it’s important to incorporate unique elements into your product. It doesn’t matter whether it’s in terms of product construction or advertisement. Stay true to your brand and see how it skyrockets to success.
Many industries took a hit during World War. However, Pepsi was resourceful. The company ensured it had a steady supply of sugar. The drink was a common sight to the military all over the world. The war came and left but the brand remained. The company embraced the postwar years.
Alfred Steele, the CEO of Pepsi-Cola, married Joan Crawford. The actress lauded the drink in corporate and social gatherings in the 1950s. By the 1960s, the company targeted the Baby Boomers. The ads dubbed them as “the Pepsi Generation.”
The youth was further appealed after the introduction of the first diet soda. The company acquired Mountain Dew in 1964 and has been seen to expand quickly since. The once failing brand was now at the pinnacle of success. Especially when it made international headlines in 1974.
Pepsi Generation ads popped up throughout the 1970s and 1980s. This undoubtedly attracted the younger crowds. To appeal to the older generations, the Pepsi Challenge was introduced. Potential consumers were enticed by in-store tastings.
The company did something different and reaped the benefits. PepsiCo hired Michael Jackson to be the spokesperson of the company. Pepsi was placed in the limelight with all the attention he was getting from “Thriller.”
The television commercials were also a huge hit. Pepsi hired several well-known celebrities and musicians to showcase their product. Some notable characters include Michael J. Fox, Geraldine Ferraro, and Tina Turner.
Pepsi was riding the train of success when Coca-Cola changed its signature formula. The “New Coke” was disastrous. The company had to reintroduce its classic formula to recapture the market.
Caleb Bradham will be pleased to see how far Pepsi has come. The brand has evolved from the syrup it produced back in the day. Consumers can now enjoy Diet Pepsi along with classic Pepsi Cola.
Several varieties eliminate caffeine or incorporate fruity flavors. The company branched out to the sports drink market with Gatorade too. Some other acquisitions include Aquafina water, Amp energy drinks, and Starbucks beverages.
Don’t be afraid to make use of your resources. PepsiCo used unconventional methods to rise to fame. Lauding the beverage in meetings and using flashy advertising paid off in the long term. It’s important to understand what catches the market’s eye. Pay attention to see where the benefits lie.
PepsiCo Inc. is one of the two behemoths of the beverage industry. The other company is Coca-Cola. Pepsi has a strong beverage portfolio. There are a plethora of beverages including carbonated drinks, water, juices, and non-carbonated items.
PepsiCo holds a 24.1% share of the food and beverage industry. Pepsi Cola, Mountain Dew, and Mirinda are the leading brands in terms of carbonated drinks. Tropicana is a crowd favorite in the juice category while Aquafina is in the bottled water category.
PepsiCo’s Naked Juice brand produces premium juices and smoothies as well. Through a joint venture with Unilever, the company also produces Lipton tea. Coffee products are also available thanks to merging with Starbucks. Let’s not forget the Gatorade energy drinks brand either.
Pepsi noticed a decline in sales with carbonated drinks. With rising health concerns, Pepsi decided to tap into different ventures. Namely, healthier ventures. Hence, PepsiCo’s Tropicana branch introduced three new flavors of juice. The ratio for which was a serving of one fruit and one vegetable every 8 ounces.
Naked Juice also introduced new flavors including Chia Sweet Peach and Chia Cherry Lime. These drinks came with chia seeds which are known to be rich in protein, fiber, and antioxidants. It’s also filled with Omega-3 oils. Another flavor called Kale Blazer was produced with green vegetables.
In this highly competitive industry, branding and advertising make or break a company. PepsiCo is no different. The company categorizes its brands into three sectors. They are Fun for You, Good for You, and Better for You.
The Fun for You brands feature the most popular PepsiCo products. These include Pepsi, Lays, Cheetos, Mountain Dew, and more. To ride the changing tides, Pepsi is slowly incorporating more products that are “good for you.”
Focusing on healthier options helped Pepsi grow in this volatile market. The Good for You brands focus on nutrition. These products include fruits, vegetables, whole grains, seeds, and nuts. They minimize the use of sodium, sugar, and fat. Notable brands include Tropicana, Quaker, and Aquafina.
Finally, the Better for You products feature snacks with minimal fat content. These include Baked Lays or whole grains snacks. There are even certain beverages that promise low or zero calories.
The battle for dominance between PepsiCo and Coca-Cola can be traced back to the 1980s. The “New Coke,” although disastrous, had actually helped increase the company’s sales. Coca-Cola had to reintroduce its classic formula in the market.
This is what sparked the ferocious rivalry between the two companies. However, in 1992, Pepsi faced a similar product failure. The spin-off Crystal Pepsi didn’t impress the buyers as they expected. The generation X buyers were left unimpressed and the product was soon discontinued.
For decades to come, Coca-Cola remained the undisputed leader in the multi-billion industry. However, PepsiCo has always been on the brink of stealing that title. The high point of this feud may have been in the 1980s but it’s still being fought today. The companies simply shifted their attention elsewhere.
Both PepsiCo and Coca-Cola are responding to the shifting industry demands. The demand for carbonated drinks has significantly decreased. So the companies are expanding their business outside the beverage market.
It’s important to identify new audiences and follow the consumption behavior. With this data at hand, you can enable your company’s growth. Don’t be afraid to do things differently. Follow market trends and see what the audience craves. Meet that demand and rise above your competitors.
The beverage industry is defined by its intense competition. This is why different companies spend so much on marketing and advertising. Innovating the product isn’t enough. Selling it on the right channels is. PepsiCo has created several exciting campaigns throughout the years.
This industry behemoth invests billions in promotions and sales. The battle of sodas has been ongoing for decades. Coca-Cola comes up with an intriguing marketing strategy which is topped by PepsiCo. This has been going back and forth for ages. Pepsi is smarter in terms of product placement.
The company positioned its products as nutritious and healthy. This sets it apart from other carbonated drinks. PepsiCo continuously reflects youthful energy in its marketing campaign. That’s the key theme. Their price strategy captures that target market as well. Anyone with a fast-moving lifestyle is bound to be enticed by this.
The company aims to remain the consumer’s first choice. That’s why it diversifies its portfolio by introducing new and healthier choices. Product packaging is a key element in PepsiCo’s marketing strategy. There’s variety in the design and the elements capture the buyer’s attention.
Pepsi’s design team is rewarded for its innovative packaging. By regularly updating the design, it retains old customers and attracts potential ones. Attractive packaging encourages sales too. That’s why the company changes its styles and sizes according to customer demand.
In modern-day society, marketing is futile without social media. PepsiCo has an impressive social media presence. The company knows how to drive user engagement and gain customer loyalty. Most video campaigns by PepsiCo have been a success. This is partly because it can be run in multiple channels.
PepsiCo has over 37 million followers on its Facebook page. However, it has separate accounts for different products. So the numbers add up to more. It’s easy to tell that the brand is increasingly popular due to the rising number of followers. Through this channel, all the products, events, and sponsorships are promoted.
Twitter has also been an important pitstop for the company. The company has separate accounts for different countries. The main account has more than 3 million followers. Pepsi utilizes this platform to promote its products and brands too. It uses Twitter to share photo and video advertisements. Instagram is used similarly.
PepsiCo also has a YouTube account to promote its brand. The company uploaded over 140 attractive videos to capture its audience. These videos aren’t advertisements only. There are educational videos promoting the brand value and sharing social messages too.
PepsiCo spent 1.73 billion dollars in 2019 alone. The company increased its spendings by 240 million dollars in the United States. The company always aims to strengthen its online presence for better positioning. Incorporating sustainable packaging materials only helped gain unwavering customer loyalty.
The company’s slogan, “Live for Now,” is a clever way to skew perceptions. It shows PepsiCo embraces a fulfilling yet adventurous lifestyle. The brand subtly repositioned itself as a product “for those who think young.” It’s more forward-thinking than Coca-Cola’s current slogan “Open Happiness.”
Pepsi’s advertising is notorious for poking fun at its all-time, rival. The vending machine ad uses emotional coercion to some extent. Imagine a parent seeing this. A child picks Pepsi over Coke. They’ll subconsciously believe it’s a better choice for kids.
COVID-19 compelled the company to become more selective in terms of advertising. PepsiCo took a step back to see how the new market operates. The company narrowed down its activities. It removed the activities that had low returns and focused on the ones with more returns.
Consumer habits changed significantly. This is why selective advertising became a critical strategy in these trying times. It wasn’t necessarily a bad change. PepsiCo CEO, Ramon Laguarta, claims the company became better at marketing. It’s easier to get the momentum going and reach a larger audience.
PepsiCo now has stronger in-house capability in terms of advertising. The company wields greater efficiency and speed now. The second quarter of 2020 witnessed a push in organic sales by 6%! The sales for Quaker Oats increased by 23% as well. Most importantly, the organic sales for beverages increased by 2%.
2021 seems to be a good year for the company. PepsiCo reports that its revenue jumped by 8.8%! The fourth-quarter earnings surpassed the estimates thanks to increased sales. PepsiCo reported a net income of $1.85 billion, a significant jump from the $1.77 billion a year before.
The beverage and food behemoth has witnessed a significant increase in operating profits. As of today, the total revenue for the company has increased by 20.5% since last year! On top of that, PepsiCo is planning a new five-year $1 billion cost-cutting plan.
Competition is inevitable in today’s market. It’s important to experiment with different strategies. You won’t find the one most suitable for your brand otherwise. If you want your brand to grow, you need to revamp your advertising tactics. Be aggressive and rise the ranks!
The pandemic transformed the way companies operate. PepsiCo wasn’t spared either. The beverage giant employs workers from all around the world. It’s impossible to shift back to the traditional way of working. The company is driven by its unique portfolio strategies. This paid off in these tumultuous times.
The company is seen to outperform others in this industry, especially in the beverage one. The managers were encouraged to pinpoint which team members are required when. This way, the work was split according to projects and could be completed remotely.
The company took eight months to curate this working model. It was rolled out in different phrases across countries. The company paid close attention to employee productivity and morale. PepsiCo compared the work levels to when everyone was working in the office.
The results showed that employees were most productive when they spent around 2.5 days at the office. Everything else could be done remotely. The company believes in value creation. Employees were encouraged to work in environments where the output was best.
PepsiCo relies on its managers making the best decision for the company and its employees. Managers are supposed to know how their team works the best. The company wishes to eliminate proximity bias. It’s important not to reward those working in the office only.
Leveraging this flexibility will ensure a strong working environment. PepsiCo empowers its employees to be creative. It’s important to embrace this new way of working. The company aims to create protocols that help it track and measure the success of this hybrid model.
The post-pandemic world will witness new divisions in the workplace. This is the perfect opportunity to overhaul the rigid working structure. PepsiCo took this chance to offer more flexibility for its employees. Traditional working structures will have negative repercussions. People crave flexibility. That’s where creativity thrives.
A company cannot survive without its employees. It’s important to ensure they remain satisfied. Employees must have room for creativity. Businesses can make the most use of the talented labor market through flexibility. People are more productive when they have control over their decisions.
PepsiCo is a leading brand for a good reason. It managed to sustain even during recessions. It shows how powerful PepsiCo’s strategies are. The company’s sustainability can be attributed to its unique marketing strategies. PepsiCo knows how to position itself in the market well.
The company has over 22 brands in its portfolio. It’s not limited to drinks only. Detecting market trends, the company introduced nutritious snacks and healthy drinks. PepsiCo foresaw the declining sales of carbonated drinks. That’s why it acquired Aquafina and Tropicana as soon as it was able.
PepsiCo embodies youthful energy. This is obvious in their advertising campaigns. The company’s main consumers come from middle-class to upper-class families. The prices reflect that as millennials from different families gravitate toward these products.
PepsiCo always knew how to drive more sales. By increasing their digital advertising, the company witnessed a large hike in sales. The company began interacting with its customers through online promotional campaigns. Millions of people from around the globe were connected in seconds.
The company has become more conscious about its messages too. PepsiCo’s digital marketing campaigns always hit the mark. The “Bring Home Happiness” campaign had over a billion views. This 20-minute video went viral due to its effective placement on social media.
Another campaign called “Made for This” targeted millennials as it featured high school athletes. This campaign highlighted how Gatorade fuels an athlete’s passion and energy.
PepsiCo has always been mindful of the changes in the market. The company revamped its marketing strategies to reach a more diversified clientele. There are more products for health-conscious consumers. More delicious yet nutritious choices have been introduced too.
PepsiCo relies on sponsors and partners for improving brand awareness and image. The company leveraged the power that came with its campaigns. This is why it heavily invests in sports marketing. It partnered with numerous sports institutions all over the world.
PepsiCo has a long relationship with sports. The company partnered with the National Basketball Association in 2015. This allowed the company to promote its products through the WNBA, NBA Development League, and USA Basketball. It partnered with the Board of Control for Cricket in India in 2016 too.
PepsiCo marked its second year of partnership in 2017 with the UEFA Champions League. The company promoted its most popular global brands including Pepsi, Gatorade, and Lays. It’s important to build loyalty in today’s versatile market. What better way to promote unity than sports?
Marketing is constantly evolving. Brands must make use of multiple channels for effective advertising and promotion. Both digital and traditional channels must be used. Research your consumers and redesign your marketing strategies for growth.
PepsiCo’s smartest move would be not limiting itself to the beverage industry. Coca-Cola is known for its drinks. It has put all its efforts into establishing a global brand for its core product. It certainly paid off but there’s more to the story.
The American market is slowly shifting away from sugary and carbonated drinks. Both the companies diversified their products. They now offer juices, sports drinks, and bottled water. Here, Pepsi has an edge. It has occupied a larger market thanks to Lipton, Pure Leaf, and its other organic drinks.
It was a power move when Pepsi tapped into the snacks industry in the 1960s. Merging with Frito-Lay enabled it to produce potato chips, oatmeals, and recently hummus. This is something Coca-Cola wasn’t able to venture into at all. Pepsi faces a couple of crucial advantages here.
PepsiCo is growing in terms of size. Especially due to the snack industry. It’s continuously changing and introducing new products. This is why Pepsi has a larger impact compared to its rivals. The company has targeted high-growth areas Coca-Cola did not.
Another reason why PepsiCo stands out is that it has a synergistic business. A rational consumer buys products that complement each other. If someone buys Lays, there’s a likely chance they’ll buy a bottle of Pepsi to complement it. This way, Pepsi subtly encourages its customers into making double purchases.
The global food system has brought forth opportunities and means of convenience. However, it has left behind negative footprints as well. These are directly linked to climate change, water scarcity, soil erosion, and more. It’s important to tackle these challenges along with the changes in market demand.
The food system requires a transformation. PepsiCo aims to change the world by adopting more sustainable practices. This will be incorporated in terms of production, distribution, consumption, and disposal. The company aims to build a more sustainable food system. One that doesn’t strain the planet’s boundaries.
PepsiCo has made some major investments in sustainability and social responsibility. It’s important to maintain a good image. The spotlight is often on large brands like Pepsi. PepsiCo has an ambitious plan called Performance with Purpose Agenda 2025. Since this was launched, PepsiCo managed to outperform the S&P 500.
This agenda focuses on three things. The people, the products, and the planet. There are some key milestones that the company achieved. It assisted six million women by investing in communities all around the world. The company replenished 2.7 billion liters of water in high-risk areas.
PepsiCo has provided 11 million people with safe water since 2006. To reduce emissions, Pepsi ordered Tesla’s electric trucks for its distribution network. The company also served 260 million food and beverages to needy communities.
Success is meant to be shared. Your brand image is closely entwined with your social activities. Make sure you send the right message. Focus on social matters that affect you. Your CSR activities will help you attract more talent too. Employees take social responsibility seriously. You should too.
PepsiCo’s strategy involves paying attention to the market needs. The company always gravitated towards providing a healthier alternative. This was witnessed in the founder’s actions and the brands it acquired later. PepsiCo delivers innovative solutions and impactful campaigns that offer a wonderful user experience.
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PepsiCo is a brand that helps you feel good through consumption. The tasty treats and beverages are nutritious and healthy. Its strong social responsibilities reach out to over 200 countries and territories. This is reflected in the company’s philosophy- Performance with Purpose.
PepsiCo wasn’t afraid to do things differently. The company saw the rising fame of Coca-Cola and decided to take a chance. Brad’s Drink wasn’t a mere soda. It was a healthy alternative. Constructed from all-natural ingredients helped Pepsi gain an edge over its biggest rival.
This is further witnessed when PepsiCo acquires numerous brands. The company didn’t limit itself to beverages. It merged with Frito Lay and tapped into the food industry. Pepsi detected profitable sources of income and grabbed the opportunity. This helped when there was a demand for healthy goods.
PepsiCo used underhanded advertising strategies at first. Discussing the beverage in corporate meetings got the word of mouth going. Alfred Nu Steele knew how the market operated. He caught the eye of his consumers that way too. Pinpoint your target market and pay attention to their behavior. See what they want and act accordingly.
A company cannot sustain itself without its employees. It’s important to build a workplace environment that encourages creativity. If an employee has more freedom in choices, they will be inclined to work better. The pandemic changed the way the corporate industry functions. It’s time to embrace flexibility, encourage creativity, and stimulate growth.
Traditional marketing is powerful but digital marketing is increasing in popularity. To sustain in this competitive market, it’s important to leverage all platforms. Make sure your campaigns reach the right channels. Try to nurture a relationship with your customers. Increase your engagement and witness organic growth!
Markets are ever-changing. Consumer behavior is too. Your success depends on how quickly you act on these changes. Adopt the right strategies, offer the best products, and progress with sustainable growth.