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Pepsi SWOT 1.One of the most popular and globally recognised brands in foods and beverages 2.

One of the most diversified product portfolio 3. Popular subsidiary brands like Frito Lay, Gatorade, Pepsi, Quaker, Tropicana, Yum! Brands, etc. 4. Global reach with presence in over 200 countries 5.An employee strength of around 300,000 people 6. CSR through PepsiCo Foundation, which works in the sector of education, health, water conservation, education etc. 7. Pepsi Refresh Project that funds new ideas or ventures that have the potential to benefit the society 8.Strong and efficient supply chain network, ensuring that all the products are available even in the most remote places 9. Excellent branding and advertising with global celebrity as brand ambassadors 10. Tie-ups, sponsorships with global sports events, music concerts, etc Weakness 1.Strong competition in the aerated

drinks segment from Coca Cola means high brand switching 2. Cases against products have been blown out of proportion, thereby affecting brand image 1.Increase penetration into developing countries and capture their market 2.Increase its product portfolio by acquisition of other brands 3.To expand the Yum! Brands eatery in untapped countries and regions like tier 2 cities 4.To improve its brand image by involving in more CSR activities to benefit the locals 1.Health consciousness amongst people can take a toll on its aerated drinks and snacks food markets 2.Compliance with different government regulations and norms in different countries 3.Inlation, economic slowdown and instability causes decline in the purchasing power of consumers 4.Strong competition from other brands in each segment of its operation



The strength of these brands is evident in PepsiCos presence in over 200 countries. The company has the largest market share in the US beverage at 39%, and snack food market at 25%. Such brand dominance insures loyalty and repetitive sales which contributes to over $15 million in annual sales for the company Diversification - PepsiCos diversification is obvious in that the fact that each of its top 18 brands generates annual sales of over $1,000 million. PepsiCos arsenal also includes

ready-to-drink teas, juice drinks, bottled water, as well as breakfast cereals, cakes and cake mixes.This broad product base plus a multi-channel distribution system serve to help insulate PepsiCo from shifting business climates. Distribution - The company delivers its products directly from manufacturing plants and warehouses to customer warehouses and retail stores. This is part of a three pronged approach which also includes employees making direct store deliveries of snacks and beverages and the use of third party distribution services. Overdependence on US Markets - Despite its international presence, 52% of its revenues originate in the US. This concentration does leave PepsiCo somewhat vulnerable to the impact of changing economic conditions, and labor strikes. Large US customers could exploit PepsiCos lack of bargaining power and negatively impact its revenues. Low Productivity - In 2008 PepsiCo had approximately 198,000 employees. Its revenue per employee was $219,439, which was lower that its competitors. This may indicate comparatively low productivity on the part of PepsiCo employees. Image Damage Due to Product Recall - Recently (2008) salmonella contamination forced PepsiCo to pull Aunt Jemima pancake and waffle mix from retail shelves. This followed incidents of exploding Diet Pepsi cans in 2007. Such occurrences damage company image and reduce consumer confidence in PepsiCo products.


Broadening of Product Base - PepsiCo is seeking to address one of its potential weaknesses; dependency on US markets by acquiring Russias leading Juice Company, Lebedyansky, and V Wwater in the United Kingdom. It continues to broaden its product base by introducing TrueNorth Nut Snacks and increasing its Lipton Tea venture with Unilever. These recent initiatives will enable PepsiCo to adjust to the changing lifestyles of its consumers. International Expansion - PepsiCo is in the midst of making a $1, 000 million investment in China, and a $500 million investment in India. Both initiatives are part of its expansion into international markets and a lessening of its dependence on US sales. In addition the company plans on major capital initiatives in Brazil and Mexico. Growing Savory Snack and Bottled Water market in US - PepsiCo is positioned well to capitalize on the growing bottle water market which is projected to be worth over $24 million by 2012. Products such as Aquafina, and Propel are well established products and in a position to ride the upward crest.PepsiCo products such as, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips, Fritos corn chips, Ruffles potato chips, Sun Chips multigrain snacks, Rold Gold pretzels, Santitas are also benefiting from a growing savory snack market which is projected to grow as much as 27% by 2013, representing an increase of $28 million.


Decline in Carbonated Drink Sales - Soft drink sales are projected to decline by as much as 2.7% by 2012, down $ 63,459 million in value. PepsiCo is in the process of diversification, but is likely to feel the impact of the projected decline. Potential Negative Impact of Government Regulations - It is anticipated that government initiatives related to environmental, health and safety may have the potential to negatively impact PepsiCo. For example, manufacturing, marketing, and distribution of food products may be altered as a result of state, federal or local dictates. Preliminary studies on acrylamide seem to suggest that it may cause cancer in laboratory animals when consumed in significant amounts. If the company has to comply with a related regulation and add warning labels or place warnings in certain locations where its products are sold, a negative impact may result for PepsiCo. Intense Competition - The Coca-Cola Company is PepsiCos primary competitors. But others include Nestl, Groupe Danone and Kraft Foods. Intense competition may influence pricing, advertising, sales promotion initiatives undertaken by PepsiCo. Resently Coca-Cola passed PepsiCo in Juice sales. Potential Disruption Due to Labor Unrest - Based upon recent history, PepsiCo may be vulnerable to strikes and other labor disputes. In 2008 a strike in India shut down production for nearly an entire month. This disrupted both manufacturing and distribution.


1. Product diversity. PepsiCo has several hundreds of brands, which include: carbonated and noncarbonated drinks, water, savory and whole grain-based snacks. Product diversification strengthens PepsiCo because it doesnt have to rely on few key products or seasonal sales and isnt significantly affected by changes in customer tastes. 2. Extensive distribution channel. PepsiCo products are served to more than 10 million stores per week in more than 200 countries. 3. CSR. The firm recognizes its role in a society and engages in education, recycling, water usage reduction, obesity fighting and other projects through PepsiCo Foundation, thus increasing its brand awareness and customer loyalty. 4. Competency in mergers and acquisitions. The key to PepsiCo growth is its successful mergers and acquisitions of beverage, bottling and snacks companies. PepsiCo acquired such brands as Gatorade, Tropicana, Doritos, Quaker Oats and many others. 5. 22 brands earning more than $1 billion a year. The company doesnt have to rely on one or two of its product to bring most of the revenues. Instead, Pepsi has 22 brands that contribute significantly to its income, serving different industries and satisfying various consumer tastes. 6. Successful marketing and advertising campaigns. More than $2 billion spent on advertising over 2012 resulted in PepsiCos growing market share over its main competitors, including Coca Cola Company, which spent even more on advertising. 7. Complementary product sales. In its annual financial report, PepsiCo revealed one of its studies results that about 30% of customers who buy its snacks also buy its beverages. PepsiCos decision to diversify its product range is firms competitive advantage too.

8. Proactive and progressive. According to New York Times food industry writer Melanie Warner, PepsiCo, by many critics, is considered to be most proactive and progressive food company.


1. Overdependence on Wal-Mart. More than 13% of PepsiCo revenues come from Wal-Mart store chain. Wal-Mart has a significant buyer power and can easily dictate prices over PepsiCo leaving it with very small margins. In addition, if PepsiCo would lose Wal-Mart it would lose 13% of its revenue and competitive advantage. 2. Low pricing. PepsiCo usually prices its products lower than its competitors. Low price is associated with low quality and PepsiCo products are usually perceived as ones. 3. Questionable practices. PepsiCo is using and selling tap water but places view of mountains on its water bottle labels, thus deceiving people that it is mountain spring water when it is not. PepsiCo has also been criticized for using water in India with higher than allowed amount of pesticides in it. 4. Weak brand awareness. The Coca Cola has the largest share market of beverages in the world and much stronger brand awareness than Pepsi, placing it at competitive disadvantage. 5. Too low net profit margin. PepsiCos net profit margin is 9.7% compared to Coca Colas 18.55% and Nestls 11%.


1. Growing beverages and snacks consumption in emerging markets. PepsiCo has made large investments in BRIC countries to expand its market share as these countries represent the fastest growing food and beverages markets in the world. If PepsiCo is successful it will increase its revenues and global market share significantly. In addition, it will be able to rely less on US market. 2. Increasing demand for healthy food and beverages. Due to many programs to fight obesity, demand for healthy food and beverages has increased drastically. PepsiCo has an opportunity to further expand its product range with beverages and snacks that have low amount of sugar and calories. 3. Further expansion through acquisitions. So far, PepsiCo has been successful in acquiring other companies and adding new growing brands to its portfolio. 4. Bottled water consumption growth. Consumption of bottled water is expected to grow both in US (PepsiCos largest bottled water market) and the rest of the world. 5. Savory snacks consumption growth. The same opportunity PepsiCo has in growing its revenue selling snacks as this market is also expected to grow.


1. Changes in consumer tastes. Consumers around the world become more health conscious and reduce their consumption of carbonated drinks, drinks that have large amounts of sugar, calories and fat.

2. Water scarcity. Water is becoming scarcer around the world and increases in both cost and criticism for PepsiCo over the large amounts of water used for production. 3. Decreasing gross profit margin. PepsiCos gross profit margin was decreasing over the past few years and may continue to decrease due to higher water and other raw material costs. 4. Legal requirements to disclose negative information on product labels. Some researches show that particular ingredients, consumed in extra large quantities, in some of PepsiCo products could cause cancer. For this reason, many governments consider to pass legislation that requires disclosing such information on product labels. Products containing such information may be perceived negatively and lose its customers. 5. Strong dollar. More than 50% of PepsiCos income is from outside US. Due to strong dollar performance against other currencies PepsiCos income should fall. 6. Increased competition from Snyders. Snyders increase its US savory snacks market share by 1.6% and almost all of it was taken from PepsiCo.