Joe DavidSWOT Analysis of Pepsi (PepsiCo)
This is a detailed SWOT analysis of Pepsi (PepsiCo). It aims to look into the strengths and the weaknesses of PepsiCo. It also aims to look into the opportunities the company should explore and the threats it should keep an eye on. PepsiCo is a multinational food, snack, and beverage corporation headquartered at New York in the United States.
Strengths of Pepsi (PepsiCo)
PepsiCo is one of the most famous companies in the world. It has 23 brands that generate more than $1 billion each in estimated annual retail sales (PepsiCo, 2021). Both Pepsi-Cola and Diet Pepsi are two of the top 10 beverages in the United States (Hartlaub, 2019). In fact, PepsiCo is the 4th largest beverage company in the world (Conway, 2020).
PepsiCo operates in more than 200 countries and territories around the world. Its products are consumed more than one billion times a day! This clearly demonstrates how far deep the company has already reached. It should be mentioned that it generated more than $67 billion in net revenue in 2019 (PepsiCo, 2021).
PepsiCo has three distribution channels i.e. direct store delivery (or DSD), customer warehouse, and third-party distributor networks. These channels enable the company to deliver its products even in remote areas based on customer needs. As PepsiCo is one of the largest nonalcoholic beverage makers in the world, retailers are often more than happy to offer it major shelf space. This helps PepsiCo increase its visibility and presence and influence consumer purchase decisions effectively.
PepsiCo has a broad and strong range of product mix that has enabled the company to achieve competitive advantages over many of its competitors. Pepsi, 7up, Mirinda, Doritos, Quaker, Walkers, and Tropicana are some of the most famous members of the PepsiCo family.
PepsiCo has made a number of acquisitions over the years. For instance, it purchased Tropicana Products in 1998 and merged with Quaker Oats Company in 2001. It is worth mentioning that the Pepsi-Cola Company merged with Frito-Lay, Inc. in 1965 to become what is known today as PepsiCo.
Weaknesses of Pepsi (PepsiCo)
Many people often perceive soft drinks as unhealthy. This is not only a perception but also supported by research. For instance, according to a research conducted in the USA as reported by the British newspaper ‘the Daily Mail’, people who drink more than one fizzy soft drink a day are up to 60 per cent more likely to develop obesity and high blood pressure, leading to heart attacks and strokes (NHS, 2017). This is certainly alarming and more public awareness of the issue may heavily impact on the consumption of soft drinks of PepsiCo and other similar companies.
Some analysts argue that though PepsiCo has reached out many countries and regions, its primary focus remained on some of its key markets. Likewise, its marketing efforts to reach out to health-conscious customers have not been that impressive.
Celebrity endorsements are often useful to take a brand’s messages to wider audience. However, not all celebrity-oriented campaigns are successful and some may indeed cause controversies. For instance, PepsiCo faced a backlash in 2017 for releasing an advertisement starred by reality TV star Kendall Jenner. The ad was criticized for seemingly co-opting the resistance movement while framing a privileged, white 21-year-old supermodel with a can of soda as a peacemaker between civil rights activists and police (Solon, 2017).
Opportunities for Pepsi (PepsiCo)
PepsiCo can further grow into its existing markets with its market penetration strategies. Market penetration strategy refers to selling existing products into existing markets. Diversification into different market segments is also a very good opportunity for PepsiCo. Diversification strategy refers to selling new products into new markets. Introducing more products with less health implications is certainly worth exploring. In addition, PepsiCo can create alliances with other businesses to increase its market presence around the world.
Threats to Pepsi (PepsiCo)
Threat is the last element to address in the SWOT analysis of Pepsi (PepsiCo). PepsiCo faces a number of competitors because of its operations around the world. The main competitor of PepsiCo in the beverage market is Coca-Cola company. Other major competitors in the same market are Dr. Pepper Snapple and Red Bull. The major competitors of PepsiCo in the food and snacks market are Mondelez, Kellogg’s, P&G, and Conagra.
More and more people are becoming aware of the health implications of soft drinks. This awareness is great from consumers’ perspective; however, may impact very negatively on the sales of PepsiCo soft drinks.
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Last update: 18 February 2021
References:
Conway, J. (2020) Global beverage market: leading companies 2019, based on sales, available at: https://www.statista.com/statistics/307963/leading-beverage-companies-worldwide-based-on-net-sales/ (accessed 16 February 2021)
Hartlaub (2019) Sweet, America’s top 10 brands of soda, available at: http://www.nbcnews.com/id/42255151/ns/business-us_business/t/sweet-americas-top-brands-soda/#.XLHwjSxrxdg (accessed 12 April 2019)
NHS (2017) Fizzy soft drinks linked to health risk, available at: https://www.nhs.uk/news/food-and-diet/fizzy-soft-drinks-linked-to-health-risk/ (accessed 12 April 2019)
PepsiCo (2021) About the company, available at: https://www.pepsico.com/about/about-the-company (accessed 16 February 2021)
Solon, O. (2017) Kendall Jenner’s Pepsi ad criticised for co-opting protest movements for profits available at: https://www.theguardian.com/fashion/2017/apr/04/kendall-jenner-pepsi-ad-protest-black-lives-matter (accessed 12 April 2019)
Photo credit: Pixabay
Author: Joe David
Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.
M Rahman