Pepsico Case Study

PepsiCo

"We aspire to make PepsiCo the world's premier consumer Products Company, focused on convenient foods and beverages. We seek to produce healthy financial rewards for investors as we provide opportunities for growth and enrichment to our employees, business partners and communities in which we operate. And in everything we do, we strive to act with honesty, openness, fairness and integrity (PepsiCo Mission Statement, 2006)".

And very rightly so, they have been able to do what they say. Pepsi co is the second largest brand in food and beverages manufacturer's industry after nestle. PepsiCo is a house of brand for almost 45 brands of which 17 are mega brands, which generate sales of more than $1billion. In terms of sales, Kraft is only 2 to 3 billion away from PepsiCo thus generating a major threat to PepsiCo for its place in F&B industry. Nestle is too far ahead because of its inclusion of more than 100 brands in its portfolio. Pepsi has always been ahead of its competition in terms of Return on Investment since 2003 and onwards when it started moving ahead to be on the top in this regard for S&P 500(standard and Poor, a rating company) 500 and S&P industry average. PepsiCo clearly dominates the market in snack's market with the largest share of 21% in US along with being at the same position when it comes to total beverages and snacks sales (market share 25%, coca cola 11%).

Competitors' analysis in Snacks

Pepsi owns a good place in snack market with the name of Frito Lay in its portfolio, which gives brands like Lays, Fritos, and Doritos etc. Pepsi has a very good standing since most of the Pepsi brands in this category holds number 1 or number 2 positions in US market which is the largest domain of Pepsi marketplace. Coca Cola does not have any position in this category. Kraft on the other side is on # 3 in the world in the category of chocolates in US (and number 2 in Europe) and salty snacks. With brands like Toblerone and Milka, Kraft is very popular in America and European countries. "Kraft Foods' international salty snacks business is centered around the Nordic countries where our Estrella and Maarud brands of potato chips, nuts and extruded snacks are the market leaders (Kraft, 2007)". Oreo, Chips-Ahoy and Ritz are 3 leading brands in biscuit for Kraft which contribute a lot to its position in F&B Industry. It does not give any major competition to Pepsi Co in snack industry since both have expertise in different segments, PepsiCo in Chips while Kraft in chocolates. Unilever is not much into competition with PepsiCo's Frito Lays. Unilever is much more operating in the healthy snack category with the name of Slim Fast, which are primarily targeting the market of health conscious consumers. However, Rold Gold Pretzel from Pepsi Co has some threat from Slim-Fast Pretzel Snacks but only in European markets since this product from Unilever is only marketed to European countries.

The major threat to Pepsi Co is the joint of venture of P&G and Coca-cola in snacks. These two giants already have strong presence in the market and P&G already having a top brand Pringles in its portfolio can be a source to cut throat competition to PepsiCo.

If we give a look at Coca-Cola brand sheet (Coca-Cola company website: http://www.thecoca-colacompany.com/brands/brandlist.html) we see that Coca cola is almost non-existing in any other food product category than beverages which can be the main reason why Coca cola is at number 5th in the top brands in F&B industry behind Unilever.

Competitors' Analysis in Beverages

Pepsi has a very strong market position in beverages industry such as carbonated drinks, mineral water and juices. Brands like Pepsi, Dew, Tropicana and Aquafina has great contribution to its success. However, it is facing strong rivalry