1. food and drink
2. beverages
3. non alcoholic beverages
4. soft drinks

Module 1: PepsiCo
Beverage Industry: Soft Drinks
 Consist of corporations that produce and sell
soft drinks
 Some of these companies also sell food items
 Global soft drinks’ total revenue over $600
billion
Major Soft Drink Corporations
 Coca-Cola
 PepsiCo
 Dr. Pepper Snapple
 Monster Beverage Co.
Porter’s Five Forces
 These forces determine competitive intensity
and profitability of firms in an industry
 Industry Competition, Buyer Power, Supplier
Power, Product Substitutes, Threat of Entry
Soft Drink Industry Competition
 Many competitive companies and varieties of
soft drinks
 Endless areas for possible expansion, i.e.
other products
 Large, established corporations in industry
Soft Drink Buyer Power
 Demand for soft drinks is elastic
 Individual purchases are relatively
insignificant
 Difficult for consumers to reproduce
 Buyers can be brand loyal
Soft Drink Supplier Power
 Firms can easily switch between suppliers
 Entry to supplier market is easy, and a
supplier can sway with lower price
 Many companies partly own their own
suppliers
Soft Drink Threat of Substitutes
 Consumers may prefer substitutes including,
water, tea, and sports drinks
 Price does not make a difference in switching
to substitutes
 Many companies have their own substitutes
Soft Drink Threat of Entry
 Barriers to entry due to established brands
 Significant costs and qualifications to enter
the market
 Industry leaders can force tough obstacles on
new comers
PepsiCo
 Food/beverage corporation headquartered in
New York
 Product Pepsi-Cola and Frito-Lay merger in
1965
 $65.49 billion in net revenue in 2012
PepsiCo Growth Strategy
 Research and development activities
 Drive innovation globally
 Develop new products
 Improve quality of existing products
 Enhance production processes
 Implement new, useful technologies
PepsiCo Business Units
 PepsiCo Americas Foods
 PepsiCo Americas Beverages
 PepsiCo Europe
 PepsiCo Asia, Middle East and Africa
PepsiCo Product Markets
 Carbonated drinks
 Non-carbonated drinks
 Snack foods
PepsiCo Carbonated Drinks
 Pepsi
 Mountain Dew
 7 Up
 Mirinda
 Pepsi Max
 Sierra Mist
PepsiCo Non-Carbonated Drinks
 Tropicana
 Gatorade
 Lipton Teas
 Aquafina
Snack Foods
 Lay’s
 Doritos
 Quaker Foods
 Cheetos
 Ruffles
 Tostitos
 Fritos
 Walkers
PepsiCo Primary Competitors
 Coca-Cola
 Nestle S. A.
 Danone
 DPSG
 Kellogg Company
 General Mills
 Mondelez International
 Kraft
PepsiCo Risk Factors
 Demand could be affected if no innovation
 Legal/regulatory environment limitations
 Bottom line contingent on ability to compete
 Need to grow business in emerging markets
 Unfavorable economic conditions
 Increasing costs or supply problems
 Failure to realize anticipated benefits
 Failure to complete successful acquisitions
PepsiCo SWOT: Strengths
 Diverse products
 Successful M & A
 Strong distribution channel
 Great brand loyalty
PepsiCo SWOT: Weaknesses
 Coca-Cola has large market share
 Heavy reliance on Wal-Mart as a customer
 Small profit margin
PepsiCo SWOT: Opportunities
 Push for healthy food and drinks
 Emerging/developing foreign markets
 Many available companies for M & A activity
PepsiCo SWOT: Threats
 Negative effects of legal issues
 Fluctuating tastes in food and beverage
 Many strong competitors in same industry