Pepsico International Case

INTRODUCTION

PepsiCo International

PepsiCo is a Public limited company in U.S. and founded in New York City in the year 1965. PepsiCo ranks among the world's five largest food and beverage companies with 16 brands, revenues of about US$ 27 billion and over 168,000 employees all over the world. PepsiCo International includes the snack businesses of Frito-Lay International and beverage businesses of PepsiCo Beverages International. PepsiCo brands are available in nearly 200 countries.

PepsiCo, is the second largest global U.S beverage and snack company, and also ranked as the India's second largest FMCG company after HUL .The company manufacture, market, and sell a variety of liquid refreshing beverages with the flag ship brand "Pepsi-Cola", as well as salty, sweet and grain -based snacks like Quaker Oats and Frito-Lay.

PepsiCo has other well known brands like Mountain Dew, Mirinda, Slice, and Tropicana. The company also manufacture and sell "Gatorade" which is an energy drink without caffeine, and company sell this drink as sports drink which is popular all over the world. The turnover of each brand is about 500 Crore globally. The marketing and selling of these products is done by a very good and developed distribution system of PepsiCo and it's been one of its main strength.

Indra Nooyi, the Chief Executive of PepsiCo since 2006, has focused on maintaining the company's leadership in the snack food industry as well as in LRB by being on the forefront of marketing healthier snacks and beverages and striving for a net-zero impact on the environment. This focus on healthier foods and lifestyles is part of Nooyi's "Performance with Purpose" philosophy.

India is one of the top five markets in terms of growth of the soft drinks market. The per capita consumption of soft drinks in the country is estimated to be around 6 bottles per annum in the year 2003. But being one of the fastest growing markets and by the sheer volumes, India is a promising market for soft drinks.

PepsiCo in India

The major players in the soft drinks market in India are PepsiCo and Coca-Cola Co. like elsewhere in the world. PepsiCo entered India in 1989 and has grown to become one of the country's leading food and beverage companies. One of the largest multinational investors in the country, PepsiCo has established a business which aims to serve the long term dynamic needs of consumers in India.

PepsiCo India and its partners have invested more than U.S. $700 million since the company was established in the country. PepsiCo provides direct employment to 4,000 people and indirect employment to 60,000 people including suppliers and distributors.

PepsiCo nourishes consumers with a range of products from treats to healthy eats that deliver joy as well as nutrition and always, good taste. PepsiCo India's expansive portfolio includes iconic refreshment beverages like Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks - Gatorade, Tropicana100% fruit juices, and juice based drinks - Tropicana Nectars, Tropicana Twister and Slice. Local brands - Lehar Evervess Soda, Dukes Lemonade and Mangola add to the diverse range of brands of PepsiCo and popular amongst the consumers.

PepsiCo's foods company, Frito-Lay, is the leader in the branded salty snack market and all Frito Lay products are free of trans-fat and MSG. It manufactures Lay's Potato Chips, Cheetos extruded snacks, Uncle Chips and traditional snacks under the Kurkure and Lehar brands. The company's high fibre breakfast cereal, Quaker Oats, and low fat and roasted snack options enhance the healthful choices available to consumers. Frito Lay's core products, Lay's, Kurkure, Uncle Chips and Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats and all of its products contain voluntary nutritional labeling on their packets.

The group has built an expansive beverage and foods business. To support its operations, PepsiCo has 43 bottling plants in India, of which 15 are company owned and 28 are franchisee owned. In addition to this, PepsiCo's Frito Lay foods division has 3 state-of-the-art plants. PepsiCo's business is based on its sustainability vision of making tomorrow better than today. PepsiCo's commitment to living by this vision every day is visible in its contribution to the country, consumers and farmers.

The marketing operations of both the departments are separate in India. In India the marketing operations of PepsiCo beverages is divided in four regions as East, West, North and South. The corporate head office of West region is in Mumbai. There are 6 production plants in west region, out of those two plants are in Mumbai, two plants are in Paithan in Raigad district and two plants are in Gujarat where the different SKU's are manufactured and supplied all over the Western region.

PepsiCo have been manufacturing and selling its products through Company operated bottling units (COBU) and Franchise operated bottling units (FOBU). In Mumbai there are 6 Sales Territories known as Warehouses namely, Chembur and Kanjur marg, South Mumbai, Ray road, Shivari, Jogeshwari and Goregaon.

Acquisition of Tropicana by PepsiCo

PepsiCo acquired Tropicana Products from Seagram Company Ltd., the biggest acquisition ever undertaken by PepsiCo in 1998. Tropicana was founded in 1947 by Anthony Rossi in Bradenton, Florida, USA. The Company is the world's largest marketer and producer of branded juices. The Company's portfolio consists of some of the best known trademarks in juice including Tropicana Pure Premium. This move was taken assuming there is a strong shift in consumer beverage demand since 2003 towards non-carbonated alternatives, creating new opportunities for drinks manufacturers in the country and consumers are getting more health conscious and the preference is changing considerably from carbonated soft drinks towards Fruit juices and the company wanted to prepare itself for the future change in consumer's preference. But it's not just the health