Pepsico

PEPSICO, INC.

Overview

PepsiCo before 1997 was a company with businesses competing in three different industries: beverages (Pepsi-Cola), snack foods (Frito-Lay), and restaurants (Taco Bell, KFC, Pizza Hut). The company’s competitive success in the three industries mentioned above can be attributed in the ability to create a distinctive image and to develop innovative tasty new products. In 1996 sales reached $31.6 billion and their net income topped $1.15 billion. The company made 30% of its sales from operations outside the United States, beverages offered in 194 countries, its snack foods were in 40, and Taco Bell, KFC, Pizza Hut included 94 countries.

PepsiCo’s oldest and largest profit came from their beverage business unit. It included brands such as Pepsi ($18.4 billion), Diet Pepsi ($4.1 billion), Mountain Dew ($3.8 billion), Slice ($650 million), and Mug ($160 million). In addition, the beverage line carried a number of alternative brands including All Sport, Lipton’s Brew ready to drink iced tea, and Aquafina bottled water. In 1995 Pepsi-Cola brands accounted for about $32 billion in worldwide retail sales, equal to about 20% of all retail sales of soft drinks. The company was the second largest soft drink producer in the world trailing only rival Coca-Cola. Creative marketing campaigns involving innovative advertising, promotion, and new packaging were the key to sparking consumer interest in achieving competitive success. The Pepsi-Cola Company was started in 1903 by pharmacist Caleb D. Bradham in North Carolina.

Next, PepsiCo’s snack food business was primarily marketed and manufactured under the Frito-Lay name in the United States and under a number of different brands in international markets. In 1996 Frito-Lay was the only national manufacturer and marketer of salty snacks in the United States. Frito-Lay was acquired by PepsiCo in 1965 and was their most profitable division accounting for 28% of company sales and 48% of its profits in 1995. Frito-Lay’s best known products included Doritos, Ruffles, Lay’s, Fritos, Tostitos, Chee-tos, and GrandMa’s cookies. Doritos was Frito-Lay’s largest single selling brand with estimated worldwide retail sales of $1.7 billion for 1995. In 1989 PepsiCo/Frito-Lay acquired United Kingdom based Smiths