Overview of Pepsi Company

The PepsiCo challenge (to keep up with archrival The Coca-Cola Company) never ends for the world's #2 carbonated soft-drink maker. The company's soft drinks include Pepsi, Mountain Dew, and Slice. It owns Frito-Lay, the world's #1 maker of snacks such ascorn chips (Doritos, Fritos) and potato chips (Lay's, Ruffles). Cola is not the company's only beverage: PepsiCo sells Tropicana orange juice brands, Gatorade sports drink, and Aquafina water. PepsiCo also sells Dole juices (licensed) and Lipton ready-to-drink tea (licensed from Unilever). Its Quaker Foods division offers breakfast cereals (Life),pasta (Pasta Roni), rice (Rice-A-Roni), and side dishes (Near East). Wal-Mart is PepsiCo's largest customer, accounts for 9% of sales. PepsiCo may be vying for more Pepsi-drinking people but its hefty snacks and juice sales help to quench the company's thirst for bottom-line growth. Frito-Lay's salty snacks rule the US market; the snack division accounts for about one-third of company sales. The company announced a major restructuring in 2007, splitting its two business units(Pepsi-Cola North America and PepsiCo International) into three: one for US food, a second for US drinks, and a third for food and drinks abroad. CEO Indra Nooyi said that due to the company's healthy growth in recent years, PepsiCo is approaching a size that can be better managed as three units rather than two. The split looks like this: PepsiCo Americas Foods includes Frito-Lay North America, Quaker, and the Latin American food and snack businesses; PepsiCo Americas Beverages includes North American beverage sales, including Gatorade and Tropicana and PepsiCo International includes business in the UK, the rest of Europe, Asia, the Middle East, and Africa. With a saturated soft-drink market, the company continues to try new iterations: In 2007the company introduced its first vitamin-enhanced water, called Aquafina Alive. It signed licensing agreement with Ben & Jerry's in 2006 for the sale of Ben & Jerry's milkshakes in the US, as well as a deal with Starbucks for the distribution of the coffee purveyor's Ethos water brand. Hot on the heels of Coke's introduction of Blak, in 2006Pepsi launched a coffee-flavored cola, named, Pepsi Max Cino, in the UK.

Venturing further into the non-cola category, PepsiCo acquired sparkling juice companies IZZE and Naked Juice in 2006. It also began selling Fuelosophy, a smoothie drink, at organic grocery store chain Whole Foods, and struck a deal to develop products with juice maker Ocean Spray Cranberries. Bowing to the public's growing concern about childhood obesity, in 2006 Pepsi, along with Coca-Cola, Cadbury Schweppes, and the American Beverage Association agreed to sell only water, unsweetened juice, and low-fat milk to public elementary and middle schools in the US. As for high schools, the agreement calls for no sugary sodas to be sold and one-half of the offered drinks to be water, diet sodas, lemonade, or iced tea. The agreement was facilitated by former president Bill Clinton. CEO Steve Reinemund stepped down as CEO in 2006 in order to spend more time with his family. His replacement was Indra Nooyi, the company's president and CFO. Indian-born Nooyi, the 11th female CEO of a FORTUNE 500 company, has been instrumental in strategic decisions at the company, such as the acquisition of Tropicana and merger with Quaker Oats. Shortly after her appointment, Nooyi restructured the top level of power at the company. She appointed John Compton, previously head of the Quaker-TropicanaGatorade unit, to the newly created position of CEO for PepsiCo North America, reporting directly to her.