CASE 21
PepsiCo’s Diversification Strategy in 2014
John E. Gamble
Texas A&M University–Corpus Christi
P
epsiCo was the world’s largest snack and beverage company, with 2013 net revenues of approximately $66.4 billion. The company’s portfolio of businesses in 2014 included Frito-Lay salty snacks, Quaker Chewy granola bars, Pepsi soft-drink products, Tropicana orange juice, Lipton Brisk tea, Gatorade, Propel, SoBe, Quaker
Oatmeal, Cap’n Crunch, Aquafina, Rice-A-Roni,
Aunt Jemima pancake mix, and many other regularly consumed products. The company viewed the lineup as highly complementary since most of its products could be consumed together. For example,
Tropicana orange juice might be consumed during breakfast with
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In addition, the company’s Performance with Purpose plan was focused on minimizing the company’s impact on the environment by lowering energy and water consumption and reducing its use of packaging material, providing a safe and inclusive workplace for employees, and supporting and investing in the local communities in which it operated. PepsiCo had been listed on the
Dow Jones Sustainability World Index for seven consecutive years and listed on the North America Index for eight consecutive years as of 2013.
Even though the company had recorded a number of impressive achievements over the past decade, its growth had slowed since 2011. In fact, the spikes in the company’s revenue growth since 2000 had resulted from major acquisitions such as the $13.6 billion acquisition of Quaker Oats in 2001, the 2010 acquisition of the previously independent Pepsi Bottling Group and PepsiCo Americas for $8.26 billion, and the acquisition of Russia’s leading food-and-beverage company, Wimm-Bill-Dann (WBD) Foods, for
$3.8 billion in 2011. A summary of PepsiCo’s financial performance for 2004 through 2013 is shown in
Exhibit 1. Exhibit 2 tracks PepsiCo’s market performance between 2004 and July 2014.
Copyright © 2014 by John E. Gamble. All rights
The annual report is the greatest important method for it to convey itself to potential investors. Such as, it would come as no surprise that an annual report helps to present the company in the best light possible without violating any Securities and Exchange Commission (SEC) regulations. Unfortunately, many investors read annual reports but fail to read them effectively. In other words, while annual reports are clearly prepared without any intent to deceive or reflect dishonesty about the business, investors should always read them with a sense of skepticism. In other words, learn how to read between the lines and decipher the actual condition of the company. Oftentimes, essential components of
growth of 50.2% and the net profit of 56.1% over the same period. The company also enjoys strong
According to PepsiCo “Organic revenue grew 5 percent in the fourth quarter and in the full year, reported net revenue declined 1 percent for the quarter and 1.5 percent for the full year, reflecting the impact of previously announced structural changes” (PepsiCo, 2013). The cost of running the business paid off from a revenue standpoint but overall net revenue fell by one percent. Additionally, Pepsi remained exceedingly concentrated on generating appealing returns for shareholders, and returned $6.5 billion to shareholders in 2012 “through a combination of share repurchases and dividends,” (Pepsi, 2013) This increased costs for the company but the cost spending implemented paid off for shareholders who would be more willing to invest more in the company in the future.
The purpose of this research is to conduct a research analysis of PepsiCo Canada. Given its official website and the Ryerson Library resources available, it will help further understand the company better. I did my research by looking through all the websites that were available for this assignment. One by one, I mark the ones that have the most sufficient information that allowed me to pick my top two Ryerson Library Resources. PepsiCo Canada is one of the most recognized and respected brands all across the country. Their company employs approximately 10,000 Canadian workers that is organized into two businesses; one being the Beverages and one being the Foods. (PepsiCo Canada, 2011). Their business strategy is to have performance with purpose.
PepsiCo 's income statement shows that 2006 Net Income was significantly higher than both 2004 and 2005 (35% and 38%). One of the key factors that account for this growth is
In 1965, Pepsi Co was created through a merger of two companies Pepsi Cola and Frito Lay by Donald M. Kendall, President and Chief Executive Officer of Pepsi-Cola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay. Pepsi was originally founded in 1898 by Caleb Bradham, a New Bern, North Carolina, druggist, who first formulated Pepsi-Cola. Today, Pepsi is part of a portfolio of drinks that includes carbonated and non-carbonated drinks such as soft drinks, juices and juice drinks, ready-to-drink teas and coffee drinks, isotonic sports drinks, bottled water and enhanced waters. PepsiCo operates in four major fields. These fields include: PepsiCo Americas Beverages, PepsiCo Americas
1. PepsiCo. is the world’s largest snack and beverage company in the world as of 2013. However, when this case was wrote PepsiCo. was not the world leader in the snack and beverage company, it was second. PepsiCo. corporate strategy has diversified itself into many different categories, such as sweet and salty snacks, soft drinks, orange juice, bottled water, tea and coffee. They proceed with caution with which industries to enter or not to enter. If they decide they are going to enter a new market, they have to discuss the means of entry in this market. They use a lot of diversification, which helps them out a lot because they already have a foundation in the snack and beverage area. The company
* Dow Jones Sustainability Indexes 2012, Leadership in Corporate Economic, Environmental and Social Performance for the sixth consecutive year
Coca Cola Enterprises (CCE) embarked on a massive makeover of their information system in 2004 converting over to the SAP software. (http://www.beveragedaily.com/Formulation/CCE-SAP-join-forces-to-improve-supply-chain) This included a major overhaul of their legacy system and working with SAP to develop an app specifically for them. When this venture began in 1999 we must remember that the Spilt of Coca Cola Enterprises becoming an operation solely based in Europe had not occurred. Thus the implementation for SAP was not only in North America, but Europe also. Throughout the paper we will discuss how this conversion went and what exactly went and what effects
PepsiCo is a world leader in convenient food and beverages that manufacture, market, distribute and sell wide variety of beverages, foods and snacks, serving consumers in almost every part of the world. PepsiCo operates under six reportable segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), Latin America Foods (LAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe (Europe) and PepsiCo Asia, Middle East and Africa (AMEA). All of the mentioned segments are registered under one symbol “PEP” whose shares are traded on the New York Stock Exchange, Chicago Stock Exchange and SIX Swiss Exchange. Since 49% of PepsiCo’s operations are outside of the U.S. that generates significant portion of the company’s net revenue, PepsiCo selected the currency of its foreign subsidiaries in which they generally operates as its functional currency, which is translated into US dollars on the company’s financial statements. I have found that two major players, PepsiCo and Coca-Cola dominate the non-alcoholic beverage industry around the world. There is tremendous competition within a relatively slowing industry and PepsiCo currently controls nearly 21% of the industry with its Frito- Lay segment alone controls 60% of the U.S snack-food market.
Many beverages have been produced and manufactured over time, but there has never been a drink that makes your mouth water as your hear the pop of the bottle opening, a drink that bubbles in your mouth as you drink it, a drink that has an even richer history and more efficient company than any other. This drink is “French Wine Cola.” At least that is what John Stith Pemberton, the creator of Coca-Cola, called it before his bookkeeper, Frank Robinson, suggested the now famous name Coca-Cola(Library of Congress). Robinson also suggested adding the slogan, “delicious and refreshing,” to all of Coke’s ads. Coca-Cola is a beverage that has been successful for many years.Though most people would tell you Coca-Cola is just a drink, it is more than just a soft drink. Coke, created by a man who lived in Columbus, Ga, started out as a medicine, has a unique bottling,and is a very interesting piece of history as a business and as a soft-drink.
Pepsi-Cola is a carbonated beverage that is produced and manufactured by PepsiCo. It is sold in stores, restaurants and from vending machines. The drink was first made in the 1890s by pharmacist Caleb Bradham in New Bern, North Carolina. The brand was trademarked on June 16, 1903. There have been many Pepsi variants produced over the years since 1903, including Diet Pepsi, Crystal Pepsi, Pepsi Twist, Pepsi Max, Pepsi Samba, Pepsi Blue, Pepsi Gold, Pepsi Holiday Spice, Pepsi Jazz, Pepsi X (available in Finland and Brazil), Pepsi Next (available in Japan and South Korea), Pepsi Raw, Pepsi Retro in Mexico, Pepsi One, and Pepsi Ice Cucumber in Japan .Pepsi cola is situated is an Industry that is dominator by two Competitors Coca
The portfolio also included well-known commercial brands such as, Cap’n Crunch, Aunt Jemima, Rice-A-Roni, and the prize brand Gatorade. After the acquisition of Quaker Oats, PepsiCo continued to expand their international business in 2006 and 2007 by acquiring fast-growing snack and beverage companies to enhance their market share outside of the United States. Naked fruit juice, Izze soda, Bluebird snacks, and Sabra hummus are just a few of the companies that PepsiCo acquired to leverage their international portfolio. In 2007, the total in acquisitions were $1.3 billion, which was considerably more than 2006, which totaled $552 million and 2005, which totaled $1.1 billion. PepsiCo has also increased their revenues across the food and beverage portfolio from $20 billion in 2000 to $39.5 billion in 2007 (Gamble & Thompson, 2001 p. 424).
Coca-Cola has been around for generations with the same iconic taste, logo and symbolism. Its brand has represented family and the memories of good times, celebrations and comfort of being with those we love. Unfortunately, the company has not made good marketing decisions in the recent past and has lost relevancy. The purpose of this essay is to assess the conditions that created Coca-Colas marketing problems, evaluate the future of healthy beverages and non-carb drink brand extensions, and provide recommendations to the management.
The industry I have chosen is the Pepsi-Cola Company. Pepsi is one of the world’s leading food and beverage companies. The company was founded by Caleb Davis Bradham, a New Bern, North Carolina pharmacist in the 1890s. Mr. Bradham became the first president of the company. Pepsi-Cola was formulated in 1898. He believed the drink was more than a refreshment but a “heathy” cola. In late 1902, the Pepsi-Cola Company was formed due to the rising popularity and demand for the Pepsi-Cola syrup. On June 16, 1903, “Pepsi Cola” became an official trademark. In 1910 Pepsi-Cola Company held their first Bottle Convention in