I.

STRENGTHS

1. A massive portfolio:

Commencing operations in 1965, PepsiCo has become the second largest food
and beverage company in the world today. The company sells nearly 100
different brands and earned 86.39 billion dollars in 2022, second only to Nestlé.
PepsiCo was able to achieve this via strengthening its product portfolio and
offering as many different beverages and foods as possible.

PepsiCo’s top earning brands

PepsiCo’s brand portfolio is highly diversified. No competitor has as many high
earning brands as PepsiCo. They each rely on a few main products to earn the
majority of their revenue. This makes them very vulnerable to any changes in
their core products’ markets.

PepsiCo is better equipped to satisfy the needs of its customers with its wide
variety of successful products. The company offers nearly every type of
beverage or snack and its brands can often be substituted for each other.

2. Brand recognition and reputation

PepsiCo owns and markets some of the most recognizable global brands,
including Pepsi, Tropicana, Gatorade, Mountain Dew, Aquafina, Lay’s, Doritos,
Cheetos and many other popular brands.

According to Interbrand and Forbes, the Pepsi brand is the 22nd and 30th most
valuable brand in the world, worth US$20.491 billion and US$18.2 billion,
respectively. Forbes also identified Frito-Lay as the 40th most valuable brand in
the world, worth US$13.6 billion.

Except for Coca-Cola and Sprite, no other non-alcoholic beverage brand besides
Pepsi has been recognized as being one of the top 100 most valuable brands in
the world.

According to IRI data, which measured the most popular U.S. snack brands in
the first half of 2017, 8 of the 10 most popular snack brands were owned by
PepsiCo.
 Top 10 best-selling U.S. snack brands

The company sells its products in more than 200 countries, so consumers are
aware of PepsiCo’s brands all over the world. Owning and selling popular
brands also helps PepsiCo to cross-sell its other brands or introduce new
products to the market much more easily.

Ý 2 có thể cân nhắc bỏ vì hơi trùng ý 1, kiểu nêu ra PepsiCo có nhiều brands
nên nổi tiếng. Ý 1 bao quát luôn ý 2 là có nhiều sp

3. Strong Global Presence

PepsiCo has exploited the benefits of a solid global presence by partaking in

more than 200 countries worldwide. PepsiCo’s overwhelming presence in
markets across the globe has enhanced global awareness and recognition of the
brand among consumers. One of the strengths that have enabled PepsiCo to go
head-to-head with competitors, such as Coca Cola is its global presence. This
contributes to PepsiCo’s image as a trust-worthy company with a very loyal
customer base. As a result, all of their campaigns have the potential to be
well-received by the public.
North America is Pepsi’s largest market and represents 60% of total revenue,
Europe being the second largest representing 16% of the revenue, and LatAm,
AMESA, and APAC representing 10%, 8%, and 6% of revenue, respectively.

Image source: PepsiCo annual report 2022

4. Affordable prices
All of PepsiCo’s products are generally cheap, which allows customers of all
ages to have easy access to the product, especially ones with lower income. This
affordability has led to increased brand awareness, which in turn has created a
wave of excitement and hype around the campaigns and initiatives of PepsiCo.
5. Focus on innovation and customer-oriented products

A company can only survive for so long if it focuses on innovation and its
customers. Innovation has helped PepsiCo to introduce many popular brands to
create its strong product portfolio. Usually, the more a company spends on
innovation the faster it grows. Research and development (R&D) spending by
PepsiCo is one of the highest among all the food and beverage companies. The
company has spent US$737 million or 1.2% of its revenue on R&D in 2017, a
growth of over 40% since 2011.

R&D spending by the largest food and beverage companies

(R&D and revenue in US$ billions)

Source: The respective companies’ financial reports (Nestlé S.A R&D

expenditure and revenue are in euros)

To strengthen its innovation capabilities, PepsiCo currently runs research

centers in 9 countries, including Brazil, China, Germany, India, Mexico, Russia,
the United Arab Emirates, the United States and the United Kingdom. The
company’s research centers use their knowledge of nutrition science, food
science and engineering, as well as consumer insights to develop new nutritious
products that meet market trends.

II. WEAKNESSES:

1. Coca-Cola rivalry.
PepsiCo has always had a rivalry with Coca-Cola products. In many cases,
they’re each other’s only competition. It leaves little room for other companies
to come in. Because most other companies don’t have the funds, resources, and
reach that these two do.

2. The health crowd.

However, PepsiCo faces problems in the health community. Many of the

products offered are high in sugar and calories. The soda beverages are
connected to the growing obesity rates and related health conditions, like type 2
diabetes. Although PepsiCo has created more health-conscious choices, such as
diet Pepsi and Pepsi zero, the company continues to push their unhealthy food
formulas more often to the public.

3. In only one industry.

PepsiCo offers 100 brands of products. However, they’re only in the food
industry. It’s smart to offer so many choices in one industry. But it’s still
basically putting all their eggs in one basket. If competitors like Coca-Cola
decide to move into other industries, PepsiCo will find themselves scrambling
to keep up.

4. Controversial Advertisements

Companies must use their elevated position to advance society’s common good.
Unfortunately, in 2017, PepsiCo’s advert featuring Kendall Jenner was criticized
for trivializing the Black Lives Matter movement. The ad was pulled after one
day.

After that, the company released this statement:

“Pepsi was trying to project a global message of unity, peace, and

understanding. Clearly, we missed the mark, and we apologize. We did not
intend to make light of any serious issue. We are removing the content and
halting any further rollout. We also apologize for putting Kendall Jenner in this
position.”

This is a major weakness compared to the positive values of life, such as family
get-togethers consistently advocated for in most of Coca-Cola’s advertisements.
III. OPPORTUNITIES

1. E-Commerce and Online Customers

The current digital age presents an opportunity for many businesses,
including PepsiCo. A significant number of consumers are online
consumers turn to online channels for their purchasing needs. This means
that PepsiCo can get to know this audience better and serve their needs by
leveraging big data. But it’s worth noting that this giant beverage
company has already made strides toward its online audience by
partnering with major online retailers such as Amazon and Walmart to
make its products easily accessible.

2. Health and Organic Foods

As mentioned earlier, PepsiCo has suffered slight reputational damage, as
a significant number of its consumers believe its products are unhealthy.
On the flip side, these customers would instead go for healthy and organic
foods/ beverages as more and more consumers have become conscious
about their food choices.

This presents a unique opportunity that could see PepsiCo gain more
customers while fixing its reputation. PepsiCo has already made strides in
 this area with its acquisition of the plant-based snack company, Bare
Snacks. Expanding into the plant-based and vegan market could not only
meet consumer demand, but also align with PepsiCo’s sustainability
goals.

3. Consumers in Developing Markets

As mentioned above, a sizable chunk of Pepsi’s revenue comes from its
North American market. However, it is missing out on a huge market, as
the global soft drinks market was valued at $416 billion in 2021 and is
expected to grow at an annual rate of 5.2%.

Consumers in Developing Markets present a significant opportunity for

growth and expansion for the company. As more and more consumers in
these markets gain access to disposable income, the demand for
PepsiCo’s products will likely increase.

IV. THREATS

1. Intense Competition
The food and beverage industry features a couple of major players
who provide fierce competition to PepsiCo. For instance, it’s a
well-known fact that Pepsi has for years lagged behind Coca-Cola
in market share. Around the early 90s, Coca dominated the Asian
market, especially and most prominently in the Philippines, Coca
accounted for 75% of the beverage market share while Pepsi just
had 17%. And this competition has only intensified over the past
few years as new market entrants disrupt traditional business
models.

And not only that, but its pricing strategy is one that needs careful
consideration as people have become increasingly price-sensitive.
They must strike a balance between offering high-quality products
while also remaining competitive in terms of price and value.

2. Changing Customer Preferences

Although PepsiCo still enjoys a fair share of popularity and market,
its customers are changing their consumption preferences due to a
couple of factors. These factors include health factors, lifestyle
factors, and economic factors. Consumer preferences are constantly
changing, and this could lead to a decrease in demand for
PepsiCo’s products.
 Not only that, but Pepsi’s not-so-good sustainability outlook has
also contributed to this shift. But it must be noted that PepsiCo has
taken steps to address this by implementing sustainable packaging
solutions and reducing its carbon footprint. They’ve also developed
low-sugar and zero-sugar options in their beverage lineup, but they
still have a long way to go.

3. Changing Government Regulations

Much like any other industry, the food and beverage industry is
subject to government regulations. These regulations often impact
the way a business conducts its operations but are generally
designed to protect the public. However, they can pose a significant
threat to PepsiCo.

For instance, nutritional labeling regulations compel food

companies like Pepsi to provide more detailed nutritional
information on their products. This could have a damaging effect
on the company, as Pepsi’s products are not necessarily the
healthiest. Also, they’ve had to invest in technology and processes
to ensure that they are able to provide accurate nutritional
information to consumers.