COMPANY PROFILE -PepsiCo
Business Sector :FCMG, Non-alcoholic beverages
Operating Geography :North America, United States, Global
About PepsiCo :
PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Purchase, New York. The merger of two reigning companies, Pepsi-Cola Company and Frito-Lay, Inc. gave birth to PepsiCo in 1965. PepsiCo is the largest food and beverage business by net revenue in North America, while it is the second largest in the world. It is involved in manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products, boasting around 22 iconic top billion-dollar brands like Pepsi, Lays, Mountain Dew, Tropicana, Brisk, Starbucks, Fritos, Aquafina, Quaker and more. PepsiCo has global presence in more than 200 countries and territories and employed approximately 263,000 people worldwide, including approximately 113,000 people within the United States as of Dec, 2017.
PepsiCo’s mission and vision which the organization describes as “Our Goals’ read “Our Performance with Purpose efforts are directed toward creating a healthier relationship between people and food while continuing to grow our business. Through our 2025 Agenda, we are making progress on our goals, which aim to deliver change across our company, value chain, industry and the world.”
PepsiCo Revenue :
$63,525 million – FY ending 30th December, 2017 (y-o-y growth 1%)
$62,799 million – FY ending 30th December, 2016
Competitive Analysis of PepsiCo
|1. Consistently strong financials and dividend payout |
2. Large, diversified and unique product portfolio
3. Innovative marketing campaigns
4. World Class Partnerships
5. Numerous initiatives for Environmental Sustainability
|1. Largely Dependent on US Markets
2. “Unhealthy” perception of consumers
|1. Venezuela Impairment charges|
2. Pursue inorganic growth with focus on healthier offerings
3. Winning the MSG contract
4. Ramping up digital capabilities and e-commerce
|1. Intense Competition
2. Impact of Brexit
3. Penalty from Lawsuits
4. Frequent product recalls
USD 12.53 Great quality, Affordable pricing.
Detailed SWOT Analysis of PepsiCo
1. Consistently strong financials and dividend payout: PepsiCo has succeeded in maintaining a healthy balance sheet with strong financials successively year after year. In 2017, PepsiCo continued to deliver strong performance and shareholder returns with 2.3% organic revenue growth and 9% core constant currency EPS growth. PepsiCo returned $38 billion to shareholders through dividends and share repurchases combined. Even the second quarter growth for 2018 reaffirmed their financial targets with 2.4% net revenue growth. PepsiCo’s approach of “Performance with Purpose “— is woven into their business and business strategy — and fuels them to generate sustained financial growth and consistently strong returns. The multinational food and beverage snacker has substantially outperformed competition, in total returns over the past five years. Tts dividend yield and free cash flow persistently remains quite strong. PepsiCo has succeeded in maintaining an excellent track record of consecutive dividend increase for 45 years. The company’s dividend payout ratio is safe with a payout ratio of 47.1% in fiscal 2017 (based on PepsiCo’s free cash flow).
2. Large, diversified and unique product portfolio: It has a huge and diversified portfolio of foods and beverages, consisting of around top 22 billion dollar brands. Their flagship food and beverage brands is what makes PepsiCo unique. Their Global Brands include likes of Pepsi, Lays, Mountain Dew, Miranda, Tropicana, Fritos, Lipton, Aquafina, Lays, Cheetos, Quaker and many more. Through extensive research on consumer preferences, cutting edge designs, exciting campaigns and world class partnerships, PepsiCo boasts of building powerful brands. They continue to innovate in this space with shifting consumer tastes and higher demand for more nutritious food and beverages. The PepsiCo teams have endeavored hard to produced foods and beverages with lean calories, reduced sodium and minimum saturated fat without compromising on great taste. PepsiCo’s product portfolio which is by and large divided under the following three categories 1. Good for You 2. Better for You and 3. Fun for You. In 2006, PepsiCo’s portfolio was predominantly dominated by the third category which was 70% larger than Good for You and Better for You slices combined, but by 2017 end, they have become nearly equal in size. In 2017, PepsiCo continued to expound their low- and zero-calorie beverages as part of their Hello Goodness platform, by rolling out products such as Aqua Minerale Water+Juice, new flavors of KeVita Master Brew Kombucha, and Tropicana Probiotics. Their iconic black can Pepsi, more popular as Pepsi Zero Sugar or Pepsi Max — continued to grow and saw good traction around the globe. Quaker 3-minute Oats, Legume based products and Simply brands products were introduced to adapt to the demands for more nutritious and more delicious foods.
3. Innovative marketing campaigns: PepsiCo ensures that their marketing campaigns are exciting and generate buzz to drive home the point. The Company has been engaged in designing very innovative marketing campaigns both on physical and digital media. On June 8, 2015, PepsiCo celebrated its 50th anniversary. Throughout the week, restaurants across US offered PepsiCo inspired specials as a part of the celebrations. Some lucky fans also got the chance to watch star athletes like the Kansas City Royals’ Eric Hosmer and J.D. Martinez of the Detroit Tigers play live. Apart from these, there were other campaigns like “Crash the Super Bowl” of Doritos, Pepsi Max transforming the local pitch of a group of footballers in Barcelona into an interactive football arena, amongst some notable others. PepsiCo’s premium bottled water brand LIFEWTR rendered a whopping $200M in annual retail sales in 2017, its flagship year of launch. Four series of bottles celebrated public art, women in the arts, fashion and arts in education. Gatorade’s “Made for This”, campaign featured high school athletes and the iron grit behind their greatest achievements which was very well received by audiences. l. With over 400 awards in their kitty since 2012, PepsiCo’s design team helps boost the Company’s reputation as one of the world’s leading corporate innovators.The rest of this section is available only in the 'Complete Report' on purchase.
This section is available only in the 'Complete Report' on purchase.
1. Venezuela Impairment charges: In 2015, due to high economic instability, restrictive foreign exchange regulations and a fluctuating exchange rate in Venezuela, PepsiCo deconsolidated its wholly owned subsidiaries in Venezuela, thereby eliminating all of their assets and liabilities from its balance sheet. In the process, it reported losses for that year, with a negative change in both revenues and operating profits. However, this could be an opportunity for investors as PepsiCo will continue to operate in that country, but will not have to deal with the economic fluctuations and uncertainty that currently plague Venezuela. The country generated 2% of the revenues and net operating profit of PepsiCo from January through August 2015, till the time it was deconsolidated.
2. Pursue inorganic growth with focus on healthier offerings: PepsiCo has liquid funds of around US$ $7.3B (excluding certain items) as of 30th December, 2017. The organic growth of 2.3% in FY 17 is quite good for PepsiCo, but there is ample scope for pursuing inorganic growth via acquisition, alliances and partnerships, in markets with slowing growth or those in which it does not have a strong presence. Acquiring local competitors will also give it an added advantage of eliminating some of the competition from that particular market and help in acquiring a large market share. PepsiCo’s recent acquisition of Bare Foods Co., maker of baked fruit and vegetable snacks, is aligned with the company’s recent strategy of focusing on more nutritious products. The Bare Snacks brand’s products are Non-GMO Project verified. It began with baked apple chips and has extended its line of offerings to banana and coconut snacks, as well as into vegetable chips, which are baked, rather than fried. Keeping in mind shifting consumer preferences towards healthy food, PepsiCo believes that nutritious products will be the key for long-term growth and the company is looking at multiple channels to make its portfolio of products healthier. “Everyday Nutrition Products” from PepsiCo’s stable is its current focus area and the company now derives approximately 45% of its revenues from these “Guilt Free Products”.The rest of this section is available only in the 'Complete Report' on purchase.
This section is available only in the 'Complete Report' on purchase
Major Competitors :
Major Brands :
- Quaker Oats
- Mountain Dew
USD 12.53 Great quality, Affordable pricing.
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References used in PepsiCo Analysis Report
1. Annual report 2017-https://www.pepsico.com/docs/album/annual-reports/pepsico-inc-2017-annual-report.pdf?sfvrsn=1f19b18d_4
2. Revenue 2018- https://www.cnbc.com/2018/10/02/pepsico-earnings-q3-2018.html
3. Pepsico Nutrition- https://www.pepsico.com/brands/nutrition
4. Mission and Vision- https://www.pepsico.com/about/mission-and-vision
Copyrights and Disclaimer
PepsiCo SWOT and PESTLE analysis has been conducted by Aditi Chaturvedi and reviewed by senior analysts from Barakaat Consulting.