Dr. Robert D. Russell
10 December 2014
Learning organization project: PepsiCo
PepsiCo is operating in the food and beverage industry. PepsiCo merged with Pepsi and is the parent company that owns a variety of other companies such as, Frito Lay, Quakers, and ocean spray just to name a few. Pepsi alone is considered to be in the soft drink industry. (The PBG Inc. 2013).
In accordance to Kpmg LLP, PepsiCo's operations are organized into four business units: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). These four business units comprise six reportable segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), Latin America Foods (LAF), PAB, Europe, and AMEA. Pepsico is in 200 countries. Prior to their merger in February 2010, PepsiAmericas (PAS) and Pepsi Bottling Group (PBG), the two North American bottling units of PepsiCo, operated as the company's independent bottling subsidiaries. They were the major distributors of the finish goods. Since the merger, PAS and PBG are operating as a unit of Pepsi Beverages Company (PBC). PBC operates in the US, Canada and Mexico and encompasses approximately three-fourths of PepsiCo's North American beverage volume.(Kpmg 1). Other than producing, marketing and selling PepsiCo's global beverage brands, the PBC also manufactures and distributes third-party brands in key local markets such as Dr Pepper, Crush, Rock Star and Muscle Milk. In lieu of having a core focus on Pepsico, we will focus on Pepsi, its narrow subsidiary.
The soft drink market consists of retail sale of bottled water, carbonates, concentrates, functional drinks, juices, RTD tea and coffee, and other soft drinks. However, the total market volume for soft drinks market excludes the concentrates category. The market is valued according to retail selling price (RSP) and includes any applicable taxes (Williams 12).
Pepsi stands second place, next to its largest competitor Coca-Cola Co. Other competitors in the industry are Canada dry, Dr Pepper Snapple, Nestle, Davis Beverage, red bull, and other minor competitors such as store brands. In 2005 Pepsi Almost dominated the industry by creating a breakthrough on how to service their customers. The company began branching out to more countries but had a difficult time competing in the “syrup” category. The “syrup” category is the liquid used at fast food restaurants and amusement parks. They account for a large portion of the industries profitability (Williams, 2011). With aid from large international fortunate five companies such as McDonalds, Coca-Cola was able to keep their competitive edge.
Table 1: united state soft drink market value
Source: Market line, AGR: 2007-11 1.1%
In 2011 the market grew by 2.5% to reach a value of $148.9 billion in comparison to 2010. The total industry revenue is expected to reach $178.5 billion by 2016, an increase of 19,9% since 2011. The market volume grew by 2.1% in 2011 reaching 114,863.5 million liters. There are about 150 businesses of this industry in the U.S. Pepsi grew from 185,000 employees from 2007 to 297,000 employees by 2011. (Wikipedia)
The Headquarter for PepsiCo is located in NY. Pepsi beverage division (PAB) is in charge of marketing, selling and distributing beverage related products from soda to ready to go tea and coffee. PAB also owns or leases approximately 85 bottling and production plants and production processing facilities and about 445 warehouses, distribution centers and offices.
Market trends services
PepsiCo provides a wide range of products. The most famous is their soda brands, there core flavors which are Pepsi, diet