Pepsi is owned by PepsiCo, the holding company which owns many brands spanning from drinks to food & snacks and more. PepsiCo generated nearly $80 billion in revenue in 2021 and over $7.6 billion in profits. PepsiCo is primarily owned by institutional investors like The Vanguard Group (8.9%) and BlackRock (7.6%). Top individual investors comprise Robert Pohlad, the company’s board member; and the company’s CEO, Ramon Laguarta.
| Aspect | Description | Analysis | Examples |
|---|---|---|---|
| Products and Services | PepsiCo is a multinational food and beverage company offering a wide range of products and services. These include iconic beverage brands like Pepsi, Mountain Dew, Tropicana, and Aquafina, as well as snack brands like Lay’s, Doritos, Quaker Oats, and Gatorade. PepsiCo also provides various healthier and innovative product lines. | PepsiCo’s extensive portfolio covers a diverse range of food and beverage categories, catering to different consumer preferences, from indulgent snacks to healthier options. | Pepsi, Mountain Dew, Lay’s potato chips, Gatorade sports drinks, Tropicana juices. |
| Revenue Streams | PepsiCo generates revenue primarily through the sale of its food and beverage products. This includes carbonated soft drinks, snacks, juices, and sports drinks. The company also earns income through strategic partnerships and licensing agreements. | Sales of food and beverages, particularly carbonated soft drinks and snacks, are the core revenue source. Diversification into healthier products and partnerships contribute to revenue stability. | Revenue from beverage and snack sales, partnership agreements, licensing income. |
| Customer Segments | PepsiCo serves a broad and diverse customer base, including consumers of all age groups, snack enthusiasts, sports enthusiasts, health-conscious individuals, and professionals in the food and beverage industry. | PepsiCo’s expansive product range allows it to address various consumer needs, from indulgence to wellness and convenience. | Consumers of all age groups, snack enthusiasts, athletes, health-conscious individuals, foodservice professionals. |
| Distribution Channels | PepsiCo distributes its products through a global network of retailers, supermarkets, convenience stores, vending machines, restaurants, and e-commerce platforms. It leverages a vast distribution and logistics network. | Extensive distribution channels ensure that PepsiCo products are accessible to consumers worldwide, whether through traditional retail or online platforms. | Supermarkets, convenience stores, vending machines, partnerships with restaurants and cafes, e-commerce platforms. |
| Key Partnerships | PepsiCo collaborates with agricultural organizations, farmers, and suppliers to ensure a sustainable and responsible supply chain. It also partners with retail chains, restaurants, and foodservice providers for product placement and promotions. | Collaborations with suppliers and retailers help maintain a consistent product supply and visibility. Sustainability partnerships emphasize responsible sourcing. | Collaborations with potato farmers for sustainable potatoes, partnerships with major retail chains and fast-food restaurants. |
| Key Resources | PepsiCo’s key resources include its research and development capabilities, brand portfolio, supply chain and distribution network, global workforce, and sustainability initiatives. | Research and development drive product innovation and quality. A vast brand portfolio offers market reach. An efficient supply chain ensures product availability. Sustainability efforts contribute to brand image. | R&D centers, brand portfolio, global logistics network, sustainability initiatives. |
| Cost Structure | PepsiCo incurs costs in raw materials, production and manufacturing, marketing and advertising, employee salaries, research and development, and distribution logistics. | Investment in research and development and marketing is essential for product innovation and brand promotion. Employee salaries are significant due to a large workforce. | Sourcing raw materials, manufacturing products, advertising campaigns, employee wages, R&D expenses. |
| Competitive Advantage | PepsiCo’s competitive advantage lies in its vast brand portfolio, research and development capabilities, global distribution network, commitment to sustainability, and a focus on consumer preferences for healthier and innovative products. It continually adapts to changing consumer tastes and preferences. | A wide range of well-known brands and a strong commitment to sustainability set PepsiCo apart in the food and beverage industry. Research and development enable product innovation and quality. | Iconic brands like Pepsi, sustainability initiatives like “PepsiCo Positive,” focus on consumer preferences like healthier snacks. |
| Value Proposition | PepsiCo offers consumers a diverse selection of food and beverage products, focusing on quality, innovation, and sustainability. It aims to provide choices for all tastes and lifestyles, from classic indulgence to healthier options. | PepsiCo’s value proposition centers on providing consumers with a wide range of convenient and flavorful products while embracing sustainability and healthier living. | Enjoying a refreshing Pepsi cola, snacking on Lay’s potato chips, choosing Tropicana juices for nutrition. |
Background
PepsiCo, Inc., is an American multinational company with diverse food, drink, and snack interests. Founded in 1898 by pharmacist Caleb Bradham, Pepsi generated $86 billion in revenue from its portfolio in 2022 and claims its products are enjoyed over 1 billion times a day by consumers around the world.
Here is a look at the history and origins of PepsiCo and how it rose to such prominence.
Pepsi Cola
In 1893, pharmacist Caleb D. Bradham invented a sweet, carbonated beverage known as “Brad’s Drink” and sold it from his store in New Bern, North Carolina.
The concoction – a mix of kola nut extract, vanilla, caramel, lemon oil, and nutmeg (among other additives) – was renamed Pepsi-Cola in 1898 because it was marketed as a product that could relieve dyspepsia (indigestion).
In December 1902, Bradham incorporated the Pepsi-Cola Company and then registered the Pepsi-Cola trademark in 1903. It was also around this time that Bradham moved production of the beverage from his pharmacy to a rented warehouse.
Financial woes and new owners
The company enjoyed a degree of success over the next two decades but was forced to file for bankruptcy in 1923. Bradham had stockpiled a large quantity of sugar in anticipation of a shortage after the First World War, but fluctuations in the commodity’s price meant he incurred a significant financial loss.
As a consequence, the company’s trademark and patents were sold to Wall Street broker Roy C. Megargel for $35,000. However, Megargel could not obtain the funds necessary to revive the brand and later sold it to Charles Guth.
Guth was the president of Loft – the then-largest candy company in the world – substituted Coca-Cola with Pepsi-Cola in his stores’ fountains after the Coca-Cola company refused to sell him discounted syrup.
Growth
Pepsi enjoyed a period of growth over the Great Depression thanks to the introduction of a 12-ounce bottle in 1934. The 12-ounce bottle of Pepsi-Cola was sold for 5 cents, while competitors sold their own 6-ounce cola for the same price.
This discrepancy was marketed to price-conscious consumers in magazine comic strips and also a series of nationwide radio jingles. Over the late 30s, 40s, and 50s, the company utilized the services of actresses such as Polly Bergen and Joan Crawford to promote its products.
In 1964, Diet Pepsi was introduced and the company acquired the Mountain Dew soft drink from Tip Corporation.
Merger with Frito-Lay
Pepsi announced plans to merge with Frito-Lay to form PepsiCo, Inc. in February 1965 and the deal was approved by shareholders in June.
Pepsi had previously envisioned selling Frito-Lay snacks with its soft drinks, with then-CEO Donald Kendall telling Forbes in 1968 that “potato chips make you thirsty, Pepsi satisfies thirst.” For Frito-Lay, the merger enabled it to access to Pepsi’s extensive distribution network in more than 108 countries.
PepsiCo then listed on the New York Stock Exchange in 1965 for 7.5 cents and reported $510 million in revenue. The Doritos corn chip was released in 1966 and rapidly became popular with consumers across the United States.
Expansion
The newly diversified PepsiCo opened a new headquarters in New York in 1970 and became the first American company to produce, market, and sell products in the Soviet Union in 1974.
The company acquired Pizza Hut, Taco Bell, and KFC over the 70s and 80s before later spinning them out under a separate company called Tricon Global Restaurants. It also acquired numerous food and snack companies over this period, such as 7-Up, Walker Crisps, Smith Crisps, and Gamesa – Mexico’s largest cookie company.
The 1990s and 2000s were marked by acquisitions of companies whose products represented healthier food choices. These included the 1991 joint venture with Unilever’s Lipton Tea as well as the acquisition of Aquafina in 1992 and a merger with the Quaker Oats Company in 2001.
While competitor Coca-Cola has focused mostly on the beverage market, PepsiCo continues to diversify today with 53% of its revenue coming from food-based businesses.
Organizational Structure:
PepsiCo, Inc. is a multinational company with diverse food, drink, and snack interests.
The company is structured as a holding company, owning various brands spanning from drinks to food and snacks.
PepsiCo’s portfolio includes Pepsi-Cola, Diet Pepsi, Mountain Dew, Frito-Lay snacks, Doritos, Lipton Tea, Aquafina, Quaker Oats, Pizza Hut, Taco Bell, and KFC.
The company operates through various business segments, including Frito-Lay North America, Quaker Foods North America, PepsiCo Beverages North America, Latin America, Europe, and Africa, and Asia Pacific, Australia, and New Zealand.
Business Model:
PepsiCo’s business model revolves around its diverse product portfolio, consisting of beverages, snacks, and food products.
The company’s various brands are sold globally and are enjoyed by consumers over a billion times a day.
PepsiCo focuses on innovation, marketing, and distribution to reach a wide customer base.
The company uses a combination of in-house production and strategic acquisitions to expand its product offerings and market presence.
Additionally, PepsiCo has a strong distribution network that enables its products to reach consumers in more than 108 countries.
Leadership Style:
PepsiCo’s leadership style is guided by its mission to create shareholder value while delivering long-term sustainable growth.
The company emphasizes innovation, customer-centricity, and a commitment to meeting consumer preferences for healthier food and beverage choices.
PepsiCo’s leadership team, led by the CEO Ramon Laguarta, focuses on building strong brand equity, ensuring product quality, and driving profitability across its diverse product categories.
Key takeaways:
- PepsiCo, Inc., is an American multinational company with diverse food, drink, and snack interests. Founded in 1898 by pharmacist Caleb Bradham, Pepsi generated $86 billion in revenue from its portfolio in 2022.
- The company enjoyed a degree of success in the early 1900s but was forced to file for bankruptcy in 1923. Bradham stockpiled a large quantity of sugar in anticipation of a shortage after the First World War, which left him exposed financially.
- Pepsi enjoyed a period of growth over the Great Depression thanks to the introduction of a 12-ounce bottle in 1934 as well as various innovative marketing campaigns and celebrity promoters. However, its 1965 merger with Frito-Lay set it on the path to becoming the diversified food and drink business it is today.
Key Highlights of PepsiCo:
- Ownership Structure: PepsiCo is owned by institutional investors like The Vanguard Group (8.9%) and BlackRock (7.6%). Top individual investors include Robert Pohlad and the company’s CEO, Ramon Laguarta.
- Diverse Product Portfolio: PepsiCo is a multinational company with a diverse portfolio of food, drink, and snack brands enjoyed by consumers worldwide.
- Financial Performance: In 2021, PepsiCo generated nearly $80 billion in revenue and reported over $7.6 billion in profits.
- Organizational History: PepsiCo was founded in 1898 by pharmacist Caleb Bradham, who initially created a sweet carbonated beverage known as “Brad’s Drink.” It later became Pepsi-Cola, which was marketed as a remedy for indigestion (dyspepsia).
- Growth and Innovation: PepsiCo experienced growth over the years through innovative marketing, introducing a 12-ounce bottle during the Great Depression, and utilizing celebrity endorsements in its marketing campaigns.
- Merger with Frito-Lay: In 1965, PepsiCo merged with Frito-Lay, leading to the formation of PepsiCo, Inc. The merger allowed for the combination of snacks with soft drinks and expanded the company’s distribution network.
- Expansion and Diversification: Over the decades, PepsiCo expanded its operations globally, acquired various food and snack companies, and diversified its product offerings. Acquisitions included Pizza Hut, Taco Bell, KFC, 7-Up, and more.
- Focus on Healthier Choices: In the 1990s and 2000s, PepsiCo shifted its focus to include healthier food choices through ventures like the joint venture with Unilever’s Lipton Tea and the acquisition of Aquafina and Quaker Oats.
- Continued Diversification: Today, PepsiCo continues to diversify its business, with 53% of its revenue coming from food-based businesses.
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