PepsiCo SWOT analysis 2016

| March 17, 2016

Company Background

Name PepsiCo Inc.
Logo
Industries served Beverage (Pepsi, Mountain Dew, Gatorade, Sierra Mist)
Food (Quaker Oats, WBD, Rold Gold)
Snack (Lay’s, Doritos, Cheetos)
Geographic areas served Worldwide (more than 200 countries)
Headquarters Purchase, New York, U.S.
Current CEO Indra Nooyi
Revenue US$63.056 billion (2015) 5.4% decrease over US$66.683 billion (2014)
Profit US$5.452 billion (2015) 16.3% decrease over US$6.516 billion (2014)
Employees 263,000 (2016)
Main Competitors The Coca-Cola Company, DPSG, Mondelēz International, Monster Beverage Corporation, Hansen Natural Corporation, National Beverage Corp., Kraft Foods Group, The Kellogg Company, ConAgra Foods., Nestlé S.A., Snyder’s-Lance and other beverage, food and snack companies.

Business description

PepsiCo business overview from the company’s financial report:

“We are a leading global food and beverage company with a complementary portfolio of enjoyable brands, including Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. Through our operations, authorized bottlers, contract manufacturers and other third parties, we make, market, distribute and sell a wide variety of convenient and enjoyable beverages, foods and snacks, serving customers and consumers in more than 200 countries and territories.

Performance with Purpose is our goal to deliver sustained value by providing a wide range of beverages, foods and snacks, from treats to healthy eats; finding innovative ways to minimize our impact on the environment and lower our costs through energy and water conservation as well as reduce our use of packaging material; providing a safe and inclusive workplace for our employees globally; and respecting, supporting and investing in the local communities in which we operate. PepsiCo was again recognized for its leadership in this area in 2014 by earning a place on the prestigious Dow Jones World Index for the eighth consecutive year and on the North America Index for the ninth consecutive year.”[1]

PepsiCo SWOT 2016 Factors

Strengths

1. Comprehensive product portfolio with more than 100 brands serving nearly every niche in the beverage, food and snack industries. Commencing operations in 1965, PepsiCo has become the second largest food and beverage company in the world today. The company earned US$63.056 billion in 2015, 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 around 100 different brands, of which 22 have each generated more than US$1 billion dollars in 2015.[1] In addition, more than 10 brands have generated between US$500 million and US$1 billion in revenue.

Figure 1. Brand portfolio by world’s largest food and beverage companies

Brand portfolios of the largest beverage and food companies, including PepsiCo, Coca Cola, Nestle, Mondelez International and Kraft Foods.

Source: The respective companies’ official websites and financial reports [1][2][3][4][5]

Figure 2. PepsiCo’s top earning brands (in US$ billions)

22 PepsiCo brands earning more than $1 billion each. Those brands include (form highest earnign to lowest earning): Pepsi-Cola, Lay's, Mountain Dew, Gatorade, Tropicana, Diet Pepsi, 7UP, Doritos, Quaker Foods, Cheetos, Mirinda, Lipton RTD Tea, Ruffles, Tostitos, Aquafina, Pepsi Max, Brisk, Sierra Mist, Fritos, Diet Mountain Dew, Starbucks RTD beverages and Walkers.

Source: PepsiCo financial report 2011[6]

PepsiCo’s brand portfolio is highly diversified and only The Coca-Cola Company has more brands in the beverage, food and snack industries. No competitor has as many high earning brands as PepsiCo. They each rely on a few main products to earn the majority of their revenue. This makes them very vulnerable to any changes in their core products’ markets.

PepsiCo is better equipped to satisfy the needs of its customers with its wide variety of successful products. The company offers nearly every type beverage or snack and its brands can often be substituted for each other. For example, Lay’s can be replaced with Doritos, Cheetos, Ruffles, Tostitos or Fritos, so if one product doesn’t satisfy a consumer’s needs, PepsiCo can offer many more choices. Therefore, changes in customer tastes do not affect the company as severely as they would other companies.