2017 was a challenging year for the United States carbonated soft drinks (CSD) market, which has continued to decrease for nine straight years as total sales and volume of sugary sodas consumed by Americans has continued to decline for 11 consecutive years. According to Kell (2017), this is part of a long-term trend driven by consumer fears over the use of high calorie sugars and artificial sweeteners such as high fructose corn syrup and aspartame, two of the most controversial artificial sweeteners often used in diet colas. The use of such sweeteners is also the reason why sales of even diet sodas, supposed to be the industry saviours, continued to dip in 2016 with Diet Pepsi seeing a volume decline of 9.2% compared to 4.3% for Diet Coke as consumers opt for healthier options (Kell 2017).
With carbonated drinks like Pepsi Cola losing market share to non-carbonated drinks such as bottled mineral water, many food and beverage firms including PepsiCo are remaking their brand portfolios either through innovative reformulations of existing products or adding new product categories in order to tackle new food and beverage trends (Kell 2017b).
In the following section, we will identify the major food and beverage trends that are driving PepsiCo’s external market environment including the US soft drinks industry in general. This will help us understand how the beverage firm can utilise its brand competencies so as to take advantage of macro environmental opportunities while at the same time neutralising emerging threats that may undermine its progress.
PEPSICO sTRATEGY Case Study
Key Learning Outcomes
- Understand the broad macro-environment of PepsiCo and the global food and beverage industry in terms of political, economic, social, technological, environmental and legal factors (PESTEL/PEST/STEEPLE).
- Use our swot analysis example to gain an overall understanding of PepsiCo's strengths and weaknesses and strategic options arising from the opportunities and threats that have been identified from the Pestle analysis example on it's business environment.
- To apply strategy business models and frameworks such as Pestle/Pest/Steeple, Swot etc to real company cases.
Analyse the internal and external environment of PepsiCo using SWOT, PESTLE, PORTERS & BCG
PepsiCo is an American based multinational corporation that is engaged in the manufacture, marketing, and distribution of a broad range of snack foods and beverage brands including the iconic Pepsi Cola, which was formulated in 1898 by a pharmacist who founded The Pepsi-Cola Company. It became PepsiCo in 1965 after a merger with Frito-Lay, Inc. PepsiCo owns 22 billion dollar brands, referring to individual brands each generating annual retail revenue in excess of US$1billion (Annual Report 2016). These include Pepsi-Cola, Frito-Lay, Doritos, Gatorade, Quaker, Tropicana etc. The company is headquartered in Purchase, New York. Net revenue for the year ended 31st December 2016 was US$62.8 bn on operating income (pre-tax profit) of US$9.7bn (Annual Report 2016).
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