History of PepsiCo Company | Business model, revenue & more (2024)

PepsiCo – About and How it works?

PepsiCo, Inc. is an American multinational food, snack and beverage corporation headquartered in Harrison, New York,in the hamlet of Purchase. PepsiCo has interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc.PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands,the largest of which included an acquisition of Tropicana Products in 1998 and the Quaker Oats Company in 2001, which added the Gatorade brand to its portfolio.

As of January 26, 2012, 22 of PepsiCo’s brands generated retail sales of more than $1 billion, and the company’s products were distributed across more than 200 countries, resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food and beverage business in the world, behindNestlé. Within North America, PepsiCo is the largest food and beverage business by net revenue. Ramon Laguarta has been the chief executive of PepsiCo since 2018. The company’s beverage distribution and bottling are conducted by PepsiCo and licensed bottlers in certain regions.

PepsiCo – Founder and History

Pepsi’s story started with Caleb Bradham, a North Carolina industrialist,who developed the first Pepsi recipe in the 1880s.The first Pepsi-Cola was created by Caleb D. Bradham (1866–1934), a pharmacist in New Bern, North Carolina. Hoping to duplicate the recent success ofCoca-Cola, Bradham named his sweet cola-flavored carbonated beverage Pepsi-Cola in 1898. The drink proved so popular that in 1902 Bradham incorporated the Pepsi-Cola Company. After many years of moderate prosperity, the company fell on hard times after World War I and was reorganized and reincorporated on several occasions in the 1920s.

PepsiCo – Mission

PepsiCo’s overall mission is to increase the value of our shareholder’s investment.

“We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.”

PepsiCo – Business Model

Pepsi generates revenue through the sale of various consumer food and beverage products. 53% of revenues come from food, and the remaining 47% comes from beverages. PepsiCo is a Food and Beverage Empire that in 2017 made over $63 billion in revenues.The North America Beverage segment represented 33% of those revenues. 58% of its revenues were in the US. The company distributes its products via direct-store delivery, customer warehouses, and other distribution networks. The Company’s product portfolio includes a range of high-profile brand name products, including Pepsi, Diet Pepsi, 7UP, Gatorade, Mirinda, Doritos, Lay’s, Cheetos, and Ruffles.

PepsiCo – Competitors

Coca-Colais PepsiCo’s top competitor. Other competitors include Keurig Dr Pepper, Danone,Nestle, Britvic, Red Bull, Mondelez International, and Monster Beverage.

PepsiCo – Challenges Faced

In the spring of 2002, PepsiCo’s senior management members met to consider the challenges facing the company in their quest to become a “growth company like no other.” As they surveyed the business landscape, they were guardedly optimistic about their ability to meet this ambitious goal; however, they were certain that growth was not negotiable. As Steve Reinemund, ex-chairman and ex-CEO, said in the 2001 annual report, “Growth, after all, is what PepsiCo is about.”

• Industry leaders co*ke and Pepsi have struggled to find growth as soda-drinking consumers buy less, and have tackled the problem differently. PepsiCo’sNorth American Beverage (NAB) division’s performance for the first half of 2018 showed a 2% case sales decline and an 18% operating profit shortfall.Coca-Colaeked out 2% growth in cases during this same time, with gains in Classic co*ke, Zero Sugar, and Diet co*ke.
• During the company’s Q2 earnings call, PepsiCo CEO Indra K. Nooyi, who is stepped down from the CEO role on Oct. 3, noted the slowdown in NAB sales. Nooyi mentioned an as-yet-unseen return to revenue growth in the second half of the quarter. So far, Pepsi has leaned on increased media spending to try and juice its carbonated beverage segment

There were several reasons why growth was non-negotiable.

• The new climate of investor expectations demanded earnings fueled by both top-line growth and consistency.
• Second, the company had just completed a series of spin-outs, acquisitions, and mergers, transforming PepsiCo into a convenience food and beverage giant. The acquisition of Tropicana and the landmark merger with the Quaker Oats Company (Quaker) created a number of synergies that remained to be exploited. Finally, PepsiCo had to adjust to a changing competitive landscape. It could no longer measure its performance only against the fountain and grocery store sales of Coca-Cola.

The new PepsiCo was a global food and beverage contender, competing against the likes of Kraft and Nestlé, as well as any upstart with a great idea for a drink or snack. Over the previous three years, the food and beverage industry continued to consolidate, and several key competitors had already established a footprint in PepsiCo’s platform areas.