Pepsi Co Inc.’s Financial Performance: A Closer Look

PepsiCo, Inc. is a food and beverage firm from America. It is one of the largest worldwide, with products marketed in more than 200 countries. It earned its name after the Pepsi-Cola Corporation merged with Frito-Lay, Inc. in 1965.  Purchase, New York is where the company’s headquarters are located in.

Early History

The original Pepsi-Cola was invented by Caleb D. Bradham, a pharmacist in New Bern, North Carolina (1866-1934). Bradham called his sweet cola-flavoured fizzy drink Pepsi-Cola in 1898, hoping to replicate the recent popularity of Coca-Cola. The glass was so successful that Bradham founded the Pepsi-Cola Corporation in 1902. Despite several years of moderate profitability, the corporation struggled after World War I and was restructured and reintroduced many times in the 1920s.

Pepsi Co. & Loft Inc

Charles G. Guth (1876-1948), the creator of modern Pepsi-Cola, purchased the company’s trademark and assets in 1931. He founded a new Pepsi-Cola Corporation and after having a chemist create a better drink, he developed new bottling plants and began selling a massively popular 12-ounce bottle for five cents.

Guth was also the executive of Loft Inc., a candy company and soda-fountain chain established in 1919. In 1936-1939 he lost a majority position in the Pepsi-Cola Corporation in court disputes with Loft’s new management. Loft Inc. was changed to Pepsi-Cola Company after the latter united with Loft in 1941.

New CEO

Alfred N. Steele (1901-59), a former vice president of the Coca-Cola Corporation, was named CEO in 1950. Throughout the 1950s, his concentration on massive advertising campaigns and promotional products raised Pepsi-net Cola’s earnings 11-fold, driving it to the top of the Coca-Cola competition. Following Steele’s death, his wife, actress Joan Crawford, joined the company’s board of directors. 

Expansion & new partnership

Pepsi-Cola’s initially partnered with Frito-Lay. The substantially larger firm expanded further with the acquisitions of three restaurant chains—Pizza Hut, Inc. (1977), Taco Bell Inc. (1978), and Kentucky Fried Chicken Inc., now known as KFC (1986)—as well as Seven-Up International (1986).

However, the restaurant chains became a new, separate company called Tricon Global Restaurants, Inc. in 1997. In 1998, PepsiCo bought the Tropicana and Dole juice brands from the Seagram Corporation and merged with the Quaker Oats firm to establish the Quaker Foods and Beverages division in 2001. After this, PepsiCo’s top brands were Pepsi cola, Frito-Lay salty snacks, Lipton Tea, Tropicana juices, Gatorade drinks for sports, Quaker Oats cereal grains, and Rold Gold candies.

PepsiCo concentrated on extending its business in other countries in the early twenty-first century, particularly Russia, which was its second-largest market. It purchased a majority stake in JSC Lebedyansky which is Russia’s largest juice maker and finalised its purchase of Wimm-Bill-Dann Foods three years later. All these facilitated PepsiCo becoming the leading food and beverage corporation in Russia.

Competition

The Coca-Cola Corporation has always been seen as PepsiCo’s principal competitor in the beverage business. In December 2005, PepsiCo exceeded The Coca-Cola Company in market value for the first time in the 12 years since both firms began competing. The Coca-Cola Corporation had a larger market share in carbonated soft drink sales in the United States in 2009. 

Yet, due to product line variations between the two businesses, PepsiCo retained a greater proportion of the US refreshment beverage market in the same year. PepsiCo’s business has changed to incorporate a larger product base, including meals, snacks, and beverages, as a consequence of mergers, acquisitions, and partnerships undertaken by the company in the 1990s and 2000s.

PepsiCo’s revenues are no longer primarily derived from the manufacturing and sale of carbonated soft drinks. In 2009, beverages accounted for less than half of the company’s entire sales. That year, PepsiCo’s major non-carbonated brands, Gatorade and Tropicana, accounted for little more than 60% of total beverage sales. 

PepsiCo’s Frito-Lay and Quaker Oats brands dominate the US snack food industry, accounting for nearly 39% of total US snack food sales in 2009.

Kraft Foods, now known as Mondelez International, which owned 11% of the US snack market share in the same year, is one of PepsiCo’s main competitors in the snack food business overall. RC Cola, Keurig Dr Pepper, and regionally specific independent brands are some other soda competitors.

Changes in ingredients

Public health experts have proposed that the component composition of PepsiCo’s core snack and carbonated soft drink products may be linked to the increased prevalence of health disorders such as obesity and diabetes. The corporation agrees with personal responsibility supporters who argue that foods and beverages with greater sugar or salt content should be consumed in moderation by those who exercise regularly.

Adjustments to the composition of its goods with nutrition in mind have included, among other things, lowering fat content, moving away from trans-fats, and creating products in calorie-specific serving sizes to prevent overconsumption.

With the launch of Diet Pepsi in 1964 and Pepsi Max in 1993, both of which are versions of its full-calorie equivalent, Pepsi, one of the early ingredient adjustments was sugar and caloric reduction. More recent adjustments have included a reduction in saturated fat, which Frito-Lay lowered by 50% in Lay’s and Ruffles potato chips in the United States between 2006 and 2009. 

In 2009, PepsiCo’s Tropicana brand introduced Trop50, a new orange juice variety sweetened in part by the herb Stevia that cut calories in half. Since 2007, the business has also made lower-calorie Gatorade variations known as “G2” accessible. PepsiCo declared on May 5, 2014, that it will eliminate brominated vegetable oil from several of its products, although no timetable was given. 

Achievements & more

PepsiCo goods are consumed over one billion times every day by customers in over 200 nations and jurisdictions worldwide making net sales up to $86 billion in 2022.

PepsiCo’s product portfolio offers a diverse range of pleasant meals and drinks, including numerous legendary brands with projected annual retail sales of more than $1 billion each.

PepsiCo declared in 2010 that by 2012, it would withdraw beverages with greater sugar content from primary and secondary schools globally, as public perception increased focus on the marketing and distribution of carbonated soft drinks to youngsters. It also substituted “full-calorie” drinks in U.S. schools with “lower-calorie” alternatives under voluntary standards implemented in 2006, resulting in a 95 per cent decline in full-calorie variation sales in these schools in 2009 compared to sales in 2004. PepsiCo stopped promoting and selling products that did not fulfil its nutrition criteria to children under the age of 12 in 2008, in compliance with rules issued by the International Council of Beverage Associations. Michelle Obama launched the Let’s Move! initiative in 2010 to encourage better food alternatives in public schools, enhanced food nutrition labelling, and more physical activity for children. In response to this, in 2012, PepsiCo said that, together with food manufacturers Campbell Soup, Coca-Cola, General Mills, and others, it will remove one trillion calories from their items sold by the end of 2012 as well as 1.5 trillion calories by the end of 2015.

Exención de responsabilidad:

Esta información no se considera un consejo de inversión ni una recomendación de inversión, sino una comunicación de marketing