Strategic Management Insight | All You Need To Know About Strategic Management

SWOT analysis of Pepsi


NEW PepsiCo SWOT Analysis 2016!

SWOT letters written on dices.
SWOT acronym.

This is PepsiCo Inc. SWOT analysis in 2013. For more information on how to do a SWOT analysis please refer to our article.

Company Background

Name PepsiCo Inc.
Industries served Beverages, Food
Geographic areas served Worldwide
Headquarters U.S.
Current CEO Indra Nooyi
Revenue $ 65.492 billion (2012)
Profit $ 6.178 billion (2012)
Employees 297,000 (2012)
Main Competitors The Coca-Cola Company, Dr Pepper Snapple Group, Inc., Mondelez International, Inc., Hansen Natural Corporation, National Beverage Corp., Kraft Foods Inc., The Kellogg Company, ConAgra Foods, Inc., Nestlé S.A. and others.

PepsiCo is a world leader in convenient snacks, foods and beverages.
You can find more information about the business in its official website or Wikipedia’s article.


PepsiCo SWOT analysis 2013
Strengths Weaknesses
  1. Product diversity
  2. Extensive distribution channel
  3. Corporate Social Responsibility (CSR) projects
  4. Competency in mergers and acquisitions
  5. 22 brands earning more than $1 billion a year
  6. Successful marketing and advertising campaigns
  7. Complementary product sales
  8. Proactive and progressive
  1. Over-dependence on Wal-Mart
  2. Low pricing
  3. Questionable practices (using tap water but labeling it as mountain spring water)
  4. Much weaker brand awareness and market share in the world beverage market compared to Coca-Cola
  5. Too low net profit margin

NEW PepsiCo SWOT Analysis 2016!

Opportunities Threats
  1. Growing beverages and snacks consumption in emerging markets (especially BRIC)
  2. Increasing demand for healthy food and beverages
  3. Further expansion through acquisitions
  4. Bottled water consumption growth
  5. Savory snacks consumption growth
  1. Changes in consumer tastes
  2. Water scarcity
  3. Decreasing gross profit margin
  4. Legal requirements to disclose negative information on product labels
  5. Strong dollar
  6. Increased competition from Snyder’s


  1. Product diversity. PepsiCo has several hundreds of brands, which include: carbonated and noncarbonated drinks, water, savory and whole grain-based snacks. Product diversification strengthens PepsiCo because it doesn’t have to rely on few key products or seasonal sales and isn’t significantly affected by changes in customer tastes.
  2. Extensive distribution channel. PepsiCo products are served to more than 10 million stores per week in more than 200 countries.
  3. CSR. The firm recognizes its role in a society and engages in education, recycling, water usage reduction, obesity fighting and other projects through PepsiCo Foundation, thus increasing its brand awareness and customer loyalty.
  4. Competency in mergers and acquisitions. The key to PepsiCo business growth is its successful mergers and acquisitions of beverage, bottling and snacks companies. PepsiCo acquired such brands as Gatorade, Tropicana, Doritos, Quaker Oats and many others.
  5. 22 brands earning more than $1 billion a year. The company doesn’t have to rely on one or two of its product to bring most of the revenues. Instead, Pepsi has 22 brands that contribute significantly to its income, serving different industries and satisfying various consumer tastes.
  6. Successful marketing and advertising campaigns. More than $2 billion spent on advertising over 2012 resulted in PepsiCo’s growing market share over its main competitors, including Coca Cola Company, which spent even more on advertising.
  7. Complementary product sales. In its annual financial report, PepsiCo revealed one of its studies' results that about 30% of customers who buy its snacks also buy its beverages. PepsiCo’s decision to diversify its product range is firm’s competitive advantage too.
  8. Proactive and progressive. According to New York Times food industry writer Melanie Warner, PepsiCo, by many critics, is considered to be most proactive and progressive food company.


  1. Over-dependence on Wal-Mart. More than 13% of PepsiCo business revenues come from Wal-Mart store chain. Wal-Mart has a significant buyer power and can easily dictate prices over PepsiCo leaving it with very small margins. In addition, if PepsiCo would lose Wal-Mart it would lose 13% of its revenue and competitive advantage.
  2. Low pricing. PepsiCo usually prices its products lower than its competitors. Low price is associated with low quality and PepsiCo products are usually perceived as ones.
  3. Questionable practices. PepsiCo is using and selling tap water but places view of mountains on its water bottle labels, thus deceiving people that it is mountain spring water when it is not. PepsiCo has also been criticized for using water in India with higher than allowed amount of pesticides in it.
  4. Weak brand awareness. The Coca Cola Company has the largest share market of beverages in the world and much stronger brand awareness than Pepsi, placing it at competitive disadvantage.
  5. Too low net profit margin. PepsiCo’s net profit margin is 9.7% compared to Coca Cola’s 18.55% and Nestlé’s 11%.

NEW PepsiCo SWOT Analysis 2016!



  1. Growing beverages and snacks consumption in emerging markets. PepsiCo has made large investments in BRIC countries to expand its market share as these countries represent the fastest growing food and beverages markets in the world. If PepsiCo is successful it will increase its revenues and global market share significantly. In addition, it will be able to rely less on US market.
  2. Increasing demand for healthy food and beverages. Due to many programs to fight obesity, demand for healthy food and beverages has increased drastically. PepsiCo has an opportunity to further expand its product range with beverages and snacks that have low amount of sugar and calories.
  3. Further expansion through acquisitions. So far, PepsiCo has been successful in acquiring other companies and adding new growing brands to its portfolio.
  4. Bottled water consumption growth. Consumption of bottled water is expected to grow both in US (PepsiCo’s largest bottled water market) and the rest of the world.
  5. Savory snacks consumption growth. The same opportunity PepsiCo has in growing its revenue selling snacks as this market is also expected to grow.


  1. Changes in consumer tastes. Consumers around the world become more health conscious and reduce their consumption of carbonated drinks, drinks that have large amounts of sugar, calories and fat.
  2. Water scarcity. Water is becoming scarcer around the world and increases in both cost and criticism for PepsiCo over the large amounts of water used for production.
  3. Decreasing gross profit margin. PepsiCo’s gross profit margin was decreasing over the past few years and may continue to decrease due to higher water and other raw material costs.
  4. Legal requirements to disclose negative information on product labels. Some researches show that particular ingredients, consumed in extra large quantities, in some of PepsiCo products could cause cancer. For this reason, many governments consider to pass legislation that requires disclosing such information on product labels. Products containing such information may be perceived negatively and lose its customers.
  5. Strong dollar. More than 50% of PepsiCo’s income is from outside US. Due to strong dollar performance against other currencies PepsiCo’s income should fall.
  6. Increased competition from Snyder’s. Snyder’s increase its US savory snacks market share by 1.6% and almost all of it was taken from PepsiCo.