PepsiCo SWOT Analysis 2022 ❤️

PepsiCo’s current position in the global food & beverage market as the second-largest firm is due to its ability to use its strengths to grow. 

Despite increasing market saturation, the company continues to grow. The SWOT analysis has shown that PepsiCo’s position is well-positioned to grow and achieve the top spot in the global food & beverage industry. 

The SWOT analysis framework highlights the firm’s strengths and potential opportunities to address its business risks and weaknesses. 

 

PepsiCo, a global company must address these issues in order to reduce barriers to its global performance.

PepsiCo’s SWOT analysis reveals major challenges in areas such as competition, changing consumer behavior, product development, and so on.

Company Background

Key Facts
Name PepsiCo Inc.
Founded August 28, 1898
Logo PepsiCo logo
Industries served Beverage (Pepsi, Mountain Dew, Gatorade, Sierra Mist)
Food (Quaker Oats, WBD, Rold Gold)
Snack (Lay’s, Doritos, Cheetos)
Geographic areas served Worldwide (more than 200 countries)
Headquarters Purchase, New York, U.S.
Current CEO Indra Nooyi
Revenue (US$) 63.525 billion (2017) 1.2% increase over 62.799 billion (2016)
Profit (US$) 4.857 billion (2017) 30.3% decrease over 6.329 billion (2016
Employees 263,000 (2017)
Main Competitors The Coca-Cola Company, DPSG, Mondelēz International, Monster Beverage Corporation, Hansen Natural Corporation, National Beverage Corp., Kraft Foods Group, The Kellogg Company, ConAgra Foods., Nestlé S.A., Snyder’s-Lance and other beverage, food, and snack companies.

Company overview 

PepsiCo is a multinational corporation that manufactures and distributes food products and beverages in over 200 countries. 

Pepsi-Cola was founded in Delaware in 1919. In 1965, the company was reincorporated in North Carolina under the name PepsiCo Inc. after merging Frito-Lay and Pepsi-Cola. 

PepsiCo will have a brand value in excess of $19 Billion, $70.3 Billion in revenues, and a market capitalization totaling $213 billion by 2021. 

PepsiCo drinks include carbonated soft drinks and sports drinks, juices, and bottled water.

Food products include flavored snacks and rice, chips, and dairy-based items. PepsiCo bought Tropicana and Quaker Oats from Reuters in 2001.

Milestones/ Development Timeline of PepsiCo

1890 Caleb Bradham makes Pepsi in his drugstore
1898 Pepsi-Cola Company is created
1898 Release of the Original Pepsi logo
1940 Introduction of Mountain Dew as the product name
1950 First Pepsi commercial
1965 Pepsi-Cola was merged with Frito-Lay, resulting in the creation of PepsiCo
1973 Pepsi has a new look
1988 Cherry Pepsi introduced
1998 Tropicana was acquired by PepsiCo
2001 PepsiCo and Quaker Oats merged
2003 PepsiCo added another logo modification
2019 PepsiCo changes and adopts the current logo

SWOT Analysis of PepsiCo

PepsiCo SWOT Analysis can help you see the strengths and weaknesses of your company. PepsiCo’s SWOT Analysis will guide the company’s future plans. 

While the company will look to capitalize on the opportunities, it will also prepare for any threats.

 Strengths In The SWOT Analysis Of PepsiCo’s

❤️ Best Global Brand – According to Forbes 2019, PepsiCo is ranked #29 most valuable brand, with a brand value of $18.8 billion. PepsiCo ranked as the 87th largest global company in Forbes’ Global 2000 in 2020.

❤️ The Power of One Strategy – PepsiCo is stronger and more diverse because it sells both food and snacks (Frito Lays and Cheetos) and beverages (Pepsi and Gatorade). Its food business was 54% and its beverages were 46%.

❤️ Highly Diversified Portfolio – The core strength of PepsiCo is its large portfolio of brands that span the entire food and beverage industry. PepsiCo owns 22 brands including Pepsi Max and Diet Pepsi. Each brand generates more than $1B in retail sales each year. Pepsico’s diverse portfolio helped it surpass its forecasts, even though other companies were struggling to meet them due to market uncertainty. The decline in soft drink sales was offset by strong demand for snacks such as Lays or Doritos.

❤️ Strong Global Presence – PepsiCo has benefited from a strong global presence, participating in more than 200 countries around the globe. PepsiCo’s strong presence in all markets around the globe has increased global awareness as well as brand recognition among consumers. PepsiCo’s strengths have allowed it to compete with other companies like Coca-Cola.

❤️ Direct-Store-Delivery: PepsiCo uses direct store delivery (DSD) for its supply chain and distribution network, which ensures that independent bottlers and distributors deliver beverages, snacks, and foods directly to retail stores. DSD allows quicker restocking better promotion in-store and maximum visibility.

❤️ Market dominance: Businesses that are dominant and superior in the marketplace have more freedom to set their terms. Information Resources reports that in 2019, Pepsi accounted for 22.0% and Coca-Cola for 20%. It capitalizes on its dominant position to build strong relationships with retailers, gaining valuable and easily accessible shelf space.

❤️ Effective Marketing Strategy: Pepsi is a firm believer in the importance of marketing. It has sponsored the Super Bowl halftime show since 2007, reaching a total audience of 100,000,000 people in 2019. Pepsi Super Bowl LIIV Halftime Show in 2020 featured renowned performers and attracted 104.1 million viewers.

❤️ Pepsi is an iconic youth brand. Pepsi has maintained its reputation as a beloved youth brand. Many of the most memorable ads targeted pre-teens and teens with music, sports, and other fun elements.

❤️ Effective Supply Chain Management: Businesses operate in many markets around the globe to achieve cost efficiency. This can be difficult without a well-designed supply chain management.

Pepsi’s supply chain management strategy is one of the best in the world. This allows the company to access cheaper raw materials from all over the globe. Pepsi’s greatest strength is its logistical dominance.

In the case of coconut milk, fresh ingredients and refrigeration are required to get it on shelves. The raw coconut is from Indonesian and Philippine growers; the packaging material comes in from Europe, Asia, and the Middle East; storage and distribution take place at the ports of California and New York.

❤️ Marketing through Sport: Partnering with sporting clubs and organizations offers a unique opportunity to market directly to athletes.

Pepsi, for example, entered into a seven-year partnership at the championship level with the Tampa Bay Lightning (AMALIE Arena).

❤️ PepsiCo Foundation (philanthropic section) has a strong corporate social responsibility. It works with hundreds of international, national, and community-based organizations to improve resource sustainability and address the challenges facing society around the globe.

PepsiCo, for example, has partnered up with the Inter-American Development Bank (IDB), in projects that provide clean drinking waters and better sanitation in Latin America.

❤️ PepsiCo’s loyal customers are a great example of loyalty, especially among younger generations who enjoy the famous taste of its soft drinks.

Pepsi recently launched the first-ever cash-back loyalty program PepCoin to reward loyal customers with cash prizes when they pair their favorite soft drinks and snacks.

 Weaknesses In The SWOT Analysis Of PepsiCo’s

❤️ Overdependence on Food and Beverages. Companies’ flexibility and agility are affected by their dependence on packaged food and carbonated soft drinks. PepsiCo chose to ignore the advice of wise men and put all its eggs in one basket: food and beverages. To avoid losing everything, the company must diversify.

❤️ Products Perceived to be unhealthy: It is all about perception when it comes to consumer products like soft drinks and snacks. PepsiCo’s carbonated soft beverages contain high-sugar concentrates, while its snacks are overly salty with chemical flavorings and additives. This is a significant weakness in the current health-conscious consumer market.

❤️ Failed products: can have a negative impact on your business. PepsiCo’s failed product lines include Crystal Pepsi (Colorless Cola), Pepsi blue, and others. PepsiCo demoralized employees and made them look incompetent in public, allowing for competition to flourish.

❤️ Advertisements that are controversial: Companies must use their position to promote the common good of society. PepsiCo’s 2017 advertisement featuring Kendall Jenner was criticized for trivializing Black Lives Matter. After one day, the ad was removed.

This is a significant weakness in comparison to the positive values of life, like family get-togethers, which Coca-Cola advertisements consistently promote.

❤️ Poor Environment Record: PepsiCo was ranked as one of the top three plastic polluters in the world by Break Free from Plastic. PepsiCo has not taken meaningful steps to improve the recycling of its bottles.

❤️ Products that are Racially Insensitive: PepsiCo’s insensitive products were highlighted during the national debate about racial inequalities in the US. After being called racist by Black Lives Matter protesters, the company had to change its Aunt Jemima’s name and brand image. PepsiCo may also consider changing Uncle Ben’s products.

Opportunities In The SWOT Analysis Of PepsiCo’s

❤️ Product diversification: Businesses can diversify into other segments to reap the benefits of their operations and maintain stability. PepsiCo’s 22 brands are all concentrated in the food and beverage sector. PepsiCo can take advantage of opportunities in other markets by diversifying the product portfolio into other industries, such as sportswear. The acquisition of a small, but well-established sportswear brand could help. PepsiCo has the option to diversify its product line by adding alcoholic beverages. After Coca-Cola Co’s announcement that they will be introducing an alcoholic drink to the US market by 2021, the company announced it was looking at expanding into the alcoholic market.

❤️ Expand E-Commerce: Customers are increasingly using digital channels to shop online. PepsiCo can capitalize on the advantages of online shopping. It can expand its e-commerce (mobile app) and increase sales through these channels.

❤️ Businesses: that foster strong partnerships and alliances are more successful in a globalized market. PepsiCo, for example, can expand the partnership with Starbucks in other areas to reap all of the benefits of their many coffee shops.

❤️ Consumer-Driven R&D: The key to success is adapting to market changes. PepsiCo can increase its investment in manufacturing, research, development, and go-to-market capabilities. This will allow it to gain an advantage over other competitors in a changing retail and consumer landscape. PepsiCo spent more than $710 million in research and development during FY2019. Its R&D expenses ranged from $665 million to $760 million over the past seven-year.

❤️ PepsiCo Expands Operations in Emerging Markets: PepsiCo has a unique opportunity to expand its operations and increase its customer base in these emerging markets, thanks to the rapid growth and improved economic conditions in Africa, Asia, and South America.

❤️ PepsiCo is focusing on health-conscious customers’ needs. By 2025, 75% of PepsiCo’s food products will have less than 100 calories, 1.3 mg of sodium per calorie, and 1.1 grams of saturated fat per 100 calories.

❤️ Increase healthy options: PepsiCo’s soft drinks and snacks are often regarded as unhealthy. 44% only have less than 100 calories per serving. This is unhealthy and high. PepsiCo can capitalize on the increasing health-consciousness of consumers by expanding its product range to include healthier options like milk and vegetable-based shakes.

❤️ Innovate new flavors: Companies must adapt to changing consumer tastes and preferences to ensure consistent top-line growth. PepsiCo has the ability to introduce new flavors and expand its customer base. PepsiCo recently introduced Pepsi Cafe, which combines the delicious taste of coffee and Pepsi Cola.

❤️ Enhance Corporate Social Responsibilities: Sentimental and emotional values influence consumer decisions. PepsiCo has the opportunity to increase its corporate responsibility activities in order to improve sustainable use and address issues directly affecting consumers. This will strengthen loyalty and attract new customers. PepsiCo joined other companies and consumers in condemning Facebook for its inaction on hate speech and racism. PepsiCo reclaimed millions of dollars in ads from Facebook as part of its CSR commitment to its customers.

❤️  PepsiCo Announces: Plans to Buy Rockstar Energy Beverages For $3.85 Billion – PepsiCo bought Rockstar Energy Beverages in March 2020 to be able to compete with Monster Beverage, the largest competitor in the energy drink market. PepsiCo also completed the acquisition of South Africa’s Pioneer Foods, worth $1.7 billion.

❤️ At-home Soda Machine – The company expanded its reach into healthier fare by purchasing SodaStream, an at-home seltzer manufacturer for $3.2 billion. Bubly sparkling water was then launched.

Threats In The SWOT Analysis Of PepsiCo’s

❤️ Stiff Competition: PepsiCo is under severe competition from Nestle, Coca-Cola and Dr. Peppers, Unilever, and so forth. Because of the competition, long-term sustainability is also at risk. It increases the cost to protect market share by promoting, advertising, and offering discounts to retain customers.

❤️ Economic slowdown or recession: The possibility of a recession or slowdown in the food and beverage markets is possible. PepsiCo could experience losses in a recession because its product portfolio consists of products that are often among the first to be cut by consumers in times of economic hardship. Pepsi had 3300 job cuts in 2008-09 due to declining soft drink sales. Due to market uncertainties, the company had to abandon its full-year outlook for 2020-2021. After its net income dropped to $1.41 billion, it scrapped its projection for 4% revenue growth in 2020’s first quarter.

❤️ The adoption rate of new technologies by competitors is a key factor in determining the success of businesses. PepsiCo could lose its competitive edge to its competitors if it adopts game-changing technologies faster.

❤️ Changes in Demographics. Changes in the demographics and economic environment can transform target markets, which can have a negative impact on businesses. The demographics of Nordic countries such as Sweden ( median aged 41.1 years) have changed with an increase of older consumers and a decrease in the number of young people. These changes could threaten PepsiCo’s profitability and sustainability, as a large percentage of its customer base is made up of youth.

❤️ Trade Tensions are rising: Instability and uncertainty can hinder effective operations. The US-China Trade Tensions have exacerbated uncertainty in global markets and increased instability over the past two years. If trade tensions rise, PepsiCo’s global operations could be hampered. This can lead to trade wars, isolationism, and protectionism in the company’s overseas markets.

❤️ Government Regulations and Laws: Recently, governments have adopted more pro-health regulations in order to reduce the number of lifestyle diseases and illnesses that can be attributed to unhealthy and junk products. PepsiCo’s future profitability and sustainability could be threatened by this trend, as its product portfolio is dominated by unhealthy soft drinks and snacks.

❤️ PepsiCo’s increasing health consciousness: PepsiCo’s soft drinks and snacks are often regarded as unhealthy. This suggests that the company is facing a growing threat from Cannibalism.

Limitations of SWOT Analysis for PepsiCo

The SWOT analysis is a popular tool for strategic planning, but it does have some limitations.

  • Some capabilities or factors can be both a strength or a weakness of an organization. This is one of the main limitations of SWOT analysis. Changes in environmental regulations can pose a threat to a company, but can also present an opportunity for the company. If the company is able to develop products faster than its competitors, it could be a competitive advantage.
  • SWOT is not a way to gain a competitive advantage. It should not be a goal in and of itself.
  • This matrix is only a starting place for discussion about how strategies might be implemented. The matrix provided an evaluation window, but not an implementation plan. It was not based on the strategic competitiveness of PepsiCo.
  • SWOT is a static analysis – an analysis of the status quo that includes a few potential changes. The dynamics of a competitive landscape may change as circumstances, capabilities, threats, and strategies change.
  • The SWOT analysis could lead a firm to focus too much on one external or internal factor when formulating its strategies. SWOT analysis may not show the interdependencies between key internal and externe factors. This could be a problem when devising strategies.

Weighted SWOT Analysis of PepsiCo

Due to the limitations of the SWOT matrix/SWOT analysis, corporate managers decided that each firm’s internal strengths and weaknesses should be given weightage. 

Organizations assess the impact of future events on company performance and the likelihood that they will occur.

This is a Weighted SWOT analysis. This is better than a simple SWOT analysis. With the Weighted SWOT Analysis, PepsiCo managers can concentrate on the most important factors and ignore the rest. 

This solves the problem of organizations making too many lists, but not enough critical factors.

PepsiCo’s SWOT Analysis – Recommendations

PepsiCo has the ability to use its strengths to respond to the SWOT analysis’s issues, particularly those that are considered to be threats. These are the realistic steps that PepsiCo can take to increase its international competitiveness and growth:

  1. Diversify your businesses to reduce market risk exposure
  2. To increase revenues, you should continue to penetrate new markets
  3. To attract more customers, and improve product healthfulness
  4. To combat environmentalism, increase recycling efforts

The Key Takeaways

PepsiCo’s SWOT Analysis indicates that the company requires more planning to grow its business. There are new companies entering the market every now and again, while the existing companies are doing their best to adapt to market trends and customer preferences. These are some suggestions for companies –

  1. The company must work hard to introduce new, healthier products. They could bring in a new line of non-carbonated beverages that are lower in calories and less harmful for diabetic patients.
  2. PepsiCo must work to improve its technology. Online platforms are available that allow customers to place orders and receive home delivery. This will create new jobs and require a reliable supply chain.
  3. PepsiCo might look into more acquisitions and collaborations to increase its growth. They will be able to introduce new products and expand their business through a successful partnership.

Edraw Max allows you to easily create a SWOT analysis diagram or any other diagram. You have a lot of SWOT symbols and templates to choose from. It’s easy to create a SWOT analysis Diagram.

References

  • Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of Management, 29(6), 801-830.
  • Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108.
  • PepsiCo 2014 Annual Report.
  • PepsiCo Inc. (2012). PepsiCo Announces Strategic Investments to Drive Growth.
  • Pickton, D. W., & Wright, S. (1998). What’s SWOT in strategic analysis? Strategic Change, 7(2), 101-109.
  • Piercy, N., & Giles, W. (1989). Making SWOT analysis work. Marketing Intelligence & Planning, 7(5/6), 5-7.
  • Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal of Marketing Theory and Practice, 54-69.

FAQs Of PepsiCo

What is PepsiCo’s SWOT analysis?

This SWOT analysis conducted by PepsiCo shows the way the world’s second-largest food manufacturer is using its competitive advantage to lead the snack and beverage sector. Find all the important strengths potentials, weaknesses, opportunities, and threats to the business.

What is the strength of PepsiCo company?

This SWOT analysis performed by PepsiCo illustrates how the second-largest food manufacturer is leveraging its competitive advantages to dominate the beverage and snack industry. Find the most important strengths, weaknesses as well as weaknesses, opportunities, or threats facing the company.

What is PepsiCo’s competitive advantage?

PepsiCo employs cost management as its primary competitive strategy. The strategy is focused on cost reduction to boost the financial performance of PepsiCo and its overall competitiveness. To challenge Coca-Cola items, PepsiCo offers low prices with low operating expenses.

What are PepsiCo’s core competencies?

One of the major essential strengths that make up Pepsico is its extensive product portfolio. The company has been growing its product line-up through a variety of acquisitions in its time. For instance, the acquisition of Tropicana has helped Pepsico launch healthy juices into the market.

Pepsico SWOT Analysis Conclusion:

PepsiCo has the market knowledge, financial resources, and brand equity to address market threats and capitalize on new market opportunities, despite its weaknesses, such as a poor product image, sustainability issues, and a focus on complementary products. 

PepsiCo has the opportunity to capitalize on its customers who are health-conscious by expanding beverage offerings and maximizing new market opportunities.

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