PESTEL analysis of Pepsi (PepsiCo)
This detailed PESTEL analysis of Pepsi aims to explore some of the macro-environmental factors that impact on PepsiCo globally. PepsiCo is an American multinational company, headquartered in New York. It is renowned globally for its snack, food, and beverage products.
Political factors affecting Pepsi (PepsiCo)
PepsiCo consumers enjoy more than one billion servings a day in more than 200 countries and territories (PepsiCo, 2020). This is an enormous figure; however, it also shows that the company may be exposed to a diverse range of political challenges in many countries.
PepsiCo came under immense pressures from citizens and institutions in some countries e.g. India and Mexico. Likewise, some people in the USA called for boycotting the company’s products (McGregor, 2016). This demonstrates that PepsiCo can experience political volatility in any country.
Political landscape changes often and therefore, can affect PepsiCo both positively and negatively. Governments change in every 4/5 year in many countries, and with that change many political and legal positions. Many political and legal changes in the USA and the UK have already impacted on the company. The sugar tax on soft drinks in the UK, and Thailand, and American soda tax to name but a few in this regard.
Economic factors affecting Pepsi (PepsiCo)
PepsiCo generated over $67 billion in net revenue in 2019 (PepsiCo, 2020). So, clearly its financial position is great. However, 2020 has been a challenging year for many companies including PepsiCo that witnessed a decline in beverage sales in some countries e.g. India. However, it marked a major victory over Coca-Cola in the war of beverage in the UK grocery market (Selwood, 2020).
If economic conditions are favourable, PepsiCo can grow further in both developed and developing countries. Developed countries with young work force offers it ample growth opportunities as purchasing products depend on the economic conditions of the buyers. However, trade disputes between the USA and other countries may work as a barrier.
Social factors affecting Pepsi (PepsiCo)
Social environment is another important element to explore in the PESTEL analysis of Pepsi. Surely, lifestyle changes are taking place rapidly in many countries with more people are becoming aware of the impacts of sugary drinks on human health. A cultural shift from carbonated drinks to healthy ones is evident in many countries. This is certainly is not good news for PepsiCo; however, it works as a motivating factor for the company to come up with healthier drinks. Indeed, it is promoting sugar-free and low-sugar products quite a lot to address the concerns of customers.
PepsiCo is committed to empowering people around the world. In May 2020, it took an initiative worth $7 million to support people with economic predicaments due to global economic lockdown. It has also worked on many other social projects over the years. These initiatives impact on the brand image of the company positively.
Technological factors affecting Pepsi (PepsiCo)
PepsiCo uses artificial intelligence (AI) and machine learning throughout the organization in various ways. It used Robot Vera in Russia to interview applicants for positions in sales. Its senior research and development engineer Shameer Mirza developed a machine learning model to predict the weight of processed potatoes to save money for the company (Marr, 2019). Likewise, the company has integrated various sources of data to understand individual customers and households better.
PepsiCo uses different technologies to reach out to its customers. Apart from TV ads, its uses social networking sites to keep in touch with them. It has millions of followers and subscribers on Instagram, Facebook, and YouTube. However, it has a limited number of followers on Pinterest.
Environmental factors affecting Pepsi (PepsiCo)
PepsiCo is considered one of the leading companies that pollute the planet. Tons of its plastic end in the oceans that endanger sea life. It is also accused of misleading customers about the recyclability of plastic (McCormick, 2020). However, the company is working on reducing the use of plastic. It is also working on the efficient use of clean and safe water which is very important for its own sustainability.
Legal factors affecting Pepsi (PepsiCo)
Earth Island Institute, a California-based environmental organization, announced suing PepsiCo and some other companies in early 2020 over polluting oceans with plastic bottles (Snouwaert, 2020). PepsiCo was also fined by the Hungarian Competition Authority in 2016 and by the India’s Supreme Court in 2002. These examples show why it is very important for the company to abide by rules and regulations.
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Last update: 30 November 2020
Marr, B. (2019) The Fascinating Ways PepsiCo Uses Artificial Intelligence And Machine Learning To Deliver Success, available at: https://www.forbes.com/sites/bernardmarr/2019/04/05/the-fascinating-ways-pepsico-uses-artificial-intelligence-and-machine-learning-to-deliver-success/?sh=5a4fa2c3311e (accessed 29 November 2020)
McGregor, J. (2016) Why some Donald Trump supporters are taking aim at Pepsi, available at: https://www.washingtonpost.com/news/on-leadership/wp/2016/11/15/now-some-donald-trump-supporters-are-taking-aim-at-pepsi/ (accessed 30 November 2020)
McCormick, E. (2020) Coke and Pepsi sued for creating a plastic pollution ‘nuisance’, available at: https://www.theguardian.com/environment/2020/feb/27/california-plastic-pollution-lawsuit-coke-pepsi (accessed 30 November 2020)
PepsiCo (2020) About the company, available at: https://www.pepsico.com/about/about-the-company (accessed 30 November 2020)
Selwood, D. (2020) Pepsi outpaces Coke by £8m in major victory over rival, available at: https://www.thegrocer.co.uk/soft-drinks/pepsi-outpaces-coke-by-8m-in-major-victory-over-rival/603378.article (accessed 28 November 2020)
Snouwaert, J. (2020) A California environmental group is suing Coke and Pepsi over claims they’re polluting oceans with plastic bottles, available at: https://www.businessinsider.com/coke-pepsi-other-companies-environmental-lawsuit-bottle-recycling-claims-2020-3?r=US&IR=T (accessed 25 November 2020)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.