The Pepsico SWOT Analysis: A Discussion in Depth.

Share This Post

Table of Contents

This blog post will discuss SWOT analysis and provide recommendations for PepsiCo to improve their SWOT. A SWOT analysis is a form of business analysis. An organization’s strengths, weaknesses, opportunities, and threats are all considered. Zooming out from a company’s current situation, the SWOT analysis may help an organization identify strengths and weaknesses. This approach also helps determine what opportunities are available or threats in an organization’s environment.

The SWOT Analysis & Recommendations section of this blog post will explore each one of these four elements in more depth so you can see how easy it is!

01.

What is SWOT

SWOT Analysis: SWOT analysis evaluates an organization’s strengths, weaknesses, opportunities & threats based on internal and external factors (Reingold & Sisodia 2019). A SWOT analysis evaluates the business environment in which an organization operates and its position within that environment. SWOT is best used to inform decision-making about possible areas for improvement or where action should be taken (Reingold & Sisodia 2019). SWOT is based on what an organization can do to improve its competitive advantage and achieve its goals. SWOT analysis provides organizations with a better understanding of the opportunities available and threats they may face within their industry or market (Horton, 2016).

02.

What is SWOT FOR PepsiCo

  • PepsiCo’s Strengths:

PepsiCo has several strengths that it could build on, including its international reach, firm brand name and experienced leadership team. PepsiCo is the second largest food & beverage company in America, with over 110 brands worldwide. They are also known for their snack foods which include Frito-Lay snacks and Quaker products. PepsiCo has diverse offerings, which include beverages production, snacks and foods.

PepsiCo also owns the Gatorade brand, one of the most successful sports drink brands in America today (Reingold & Sisodia 2019). The company recently acquired an 80% stake in SodaStream for 144 million dollars to help expand its offerings in the healthy drinks category.

  1. Best Global Brand
    PepsiCo is a known multinational beverage company based in Purchase, New York. According to Forbes’ 2019 ranking, the brand is worth $18.8 billion. PepsiCo ranked #47 in 2017 and rose 21 places. Pepsi is one of the most valuable brands worldwide (Forbes 2019).
    Pepsi’s brand value increased from $16 billion to $18.75 billion between 2016-17, a rise of 14% that put it ahead of both Coca-Cola ($15bn) and Nestlé ($11.36bn) (Forbes 2018).
    PepsiCo is an international force, with its Quaker brand taking home the top honour at this year’s Cannes Innovation Lions competitions for product innovation (JWT Intelligence 2016).
  1. Power of One Strategy
    Selling snacks “Food & Snacks” (Frito Lays, Cheetos, Doritos, Kurkure) and “Beverages” (Pepsi, Gatorade, Tropicana) and beverages together has allowed PepsiCo to grow its Frito-Lay North America snack business by $432 million or 11% in the third quarter of 2018 (Benton 2018).
    PepsiCo recently acquired SodaStream, a home carbonation company that allows consumers to make their own soft drinks at home. The deal is expected to help PepsiCo expand its offerings in the healthy drinks category.
  1. Highly Diversified Portfolio – ropThe main strength of PepsiCo lies in many brands under its portfolio spanning across the food and carbonated soft drink sector.PepsiCo has 22 brands, iguana, Quaker Foods North America, Gatorade, Frito-Lay North America, PepsiCo Americas Foods, which are among the top 100 brands in 2017 (Interbrand 2018). PepsiCo’s diversity in terms of geography is also significant. PepsiCo operates across six continents, with more than 50% of its revenues from outside America (Reingold & Sisodia 2019).
  1. Its worldwide dominance is unparalleled. It has established a reputation for its innovative products that appeal to people all around the world. With over 200 countries represented across the globe, it’s no surprise that PepsiCo boasts a truly global presence. This strong global presence has allowed the company to expand its portfolio of brands and grow revenues. 
    For instance, PepsiCo’s international revenue grew by $22 billion between 2011-2016 (PepsiCo Investor Presentation 2017). This figure represents more than half of PepsiCo’s total growth in net revenue since 2011 ($42billion) (PE.P.S.I 2017).
  1. PepsiCo’s supply chain and distribution network utilize direct store delivery (DSD). This strategy has helped the company to reach consumers and retail outlets more efficiently. Which ensures that the products are delivered directly to consumers or retailers (Reingold & Sisodia 2019).
    This has also helped PepsiCo avoid the costs of stocking up its products in warehouses and transportation costs. It allows for more control over inventory management, marketing strategy, consumer relations and pricing.
  1. Market Dominance: PepsiCo is one of the most dominant businesses in its sector, with a market share of more than 40% for both Pepsi and Gatorade (Reingold & Sisodia 2019).
    The company has used its market dominance to strengthen its brand image and gain consumer loyalty. It also allows PepsiCo to take advantage of economies of scale by buying raw materials in bulk.
  1. Pepsi Recognizes the Importance of Marketing: Pepsi has sponsored the Super Bowl halftime show for many years, demonstrating its commitment to marketing.; Pepsi’s marketing strategies have helped strengthen its brand image and drive sales. For instance, Pepsi used a multi-brand approach to expand into the healthy drinks market through acquisitions such as SodaStream. This acquisition provides some growth opportunities for Pepsi in this growing market (Johnson 2017).
    PepsiCo is also known to align its brand with pop culture, with its brands becoming part of popular culture. Pepsi has used celebrity endorsements to promote its products on television and social media platforms (Reingold & Sisodia 2019).
  1. Iconic Youthful Brand: The target market for Pepsi has always been the younger generation. The company’s brands are associated with good times, and Pepsi is the number one drink of choice for teens.
    PepsiCo has established a strong bond between its products and this younger generation through effective marketing campaigns such as the Pepsi Generation campaign from 1963-1966. (Reingold & Sisodia 2019).
    In addition, the Pepsi logo is easily recognizable and stylized to appeal to youth. The company has also changed its brand identity many times, making it more relevant to younger generations (Dahlen 2015). PepsiCo understands that if it can maintain strong connections with this generation, it will help the company stay relevant with future generations.
  1. Effective Supply Chain Management: In today’s highly globalized economy, PepsiCo has established a tight supply chain management infrastructure to ensure that its goods remain high in quality and are delivered on time. Since PepsiCo’s products are manufactured at its CARBONATED SOFT DRINK plants worldwide, it needs to develop strong relationships with suppliers and distributors (Reingold & Sisodia 2019).
    PepsiCo has developed a network of more than 17,000 direct store distributors worldwide to serve its products in over 200 countries. It also manages this system through computerized technology that allows for real-time tracking of inventory and distribution (Reingold & Sisodia 2019).
    To ensure it can deliver on time and promptly, PepsiCo has invested heavily in its distribution infrastructure. It is one of the most sophisticated logistics systems in the private sector. This includes an efficient warehouse management system that can track inventory at each location (Reingold & Sisodia 2019).
  1. Marketing through Sports: As a result of these partnerships, PepsiCo has access to powerful platforms to promote its goods through sports clubs and organizations. For every $1 spent on sports marketing, $11 of advertising value is created (Reingold & Sisodia 2019).
    Pepsi has been sponsoring sporting events and teams since the early 1970s, when it first became a sponsor of the NFL. Pepsi’s most notable sports sponsorships have included the Super Bowl, The Olympic Games, FIFA World Cup soccer and many more (Reingold & Sisodia 2019).
    PepsiCo has also invested in professional athletes to promote its brands even further through celebrity endorsements. Celebrity endorsement strategies are a vital component of Pepsi’s marketing strategies. For example, in 2019, Pepsi announced a new long-term sponsorship deal with singer Beyonce that gave exclusive global rights to her image and intellectual property (Dahlen 2015).
    In addition, as part of its partnership with Beyonce, PepsiCo agreed to provide $50 million to fund the singer’s worldwide tour in 2019 (Dahlen 2015).
  • PepsiCo’s Weaknesses:

Like many large organizations, PepsiCo has some weaknesses it could improve, including its environmental impact on certain brands.

  1. Overdependence on Food and Beverages: Overreliance on bicarbonate beverages and pre-prepared meals degrades a firm’s flexibility and agility in the face of disruption. And sugar is a risk for PepsiCo.
    Its reliance on its carbonated soft drink brands, such as Pepsi-Cola, has been well documented (Reingold & Sisodia 2019). Currently, the beverage industry (SODA SPARKLING WATER) is under pressure, with consumers demanding healthier options in their drinks (Dahlen 2015).
    PepsiCo must invest in other beverage options and introduce healthier food choices to remain profitable and competitive as the industry continues to change (Dahlen 2015).
    The company’s dependence on packaged foods, especially those rich in sugar or salt, can also risk PepsiCo if consumers demand more healthy options.
  1. Products Perceived as Unhealthy: Soft drinks and snacks are an excellent example of consumer products in which perception is everything. PepsiCo has been criticized for products that are perceived as unhealthy, especially in areas of the world where obesity rates have risen quickly (Reingold & Sisodia 2019).
    These products are often considered empty calories, providing little to no nutritional value (Dahlen 2015). PepsiCo must continue to create healthier options for consumers that still taste good and give the company a competitive edge in this market.
  1. The Results of Failed Products: Every failure is a fault. Crystal Pepsi (Colorless Cola), Pepsi Blue, and other failed products from PepsiCo are examples.
    The company’s failed product launches are also opportunities to learn and improve for the future (Reingold & Sisodia 2019). For instance, after Pepsi Blue was released in 2002, it quickly disappeared from shelves amid poor sales due to its bitter taste (Dahlen 2015).
    When it was re-released in 2011, Pepsi Blue had been reformulated and marketed as a “blueberry” flavoured drink with an overall sweeter taste (Dahlen 2015). PepsiCo must continue to work on creating innovative products that consumers will love.
  1. Controversial Advertisements: Companies are held to a higher standard: they must use their advantageous position to advance the general good. Unfortunately, PepsiCo’s advertisement featuring Kendall Jenner was pilloried for trivializing the Black Lives Matter movement. After one day, the ad was discontinued
    “In the ad, Jenner gives a Pepsi to a police officer. People took issue with the imagery of Jenner approaching the police officer and handing him a can of soda as a sign of peace.”
  1. Poor Environmental Record: Break Free from Plastic, a coalition of individuals and organizations committed to eliminating single-use plastics, has named PepsiCo one of the world’s top three plastic polluters. The company has failed to implement effective measures to increase bottle recycling (Reingold & Sisodia 2019).
    PepsiCo is also criticized for its copious use of palm oil, linked to deforestation (Dahlen 2015). The company must invest more in recycling efforts and explore sustainable packaging options.
  1. Racially-Insensitive Products: Following the national debate on racial inequality in the United States, PepsiCo’s racially insensitive products came to light. Following accusations from Black Lives Matter activists that the brand name and logo of Aunt Jemima were racist, the firm was compelled to alter them. Other goods like Uncle Ben’s may also be changed as a result of this controversy.
  • PepsiCo’s Opportunities
  1. Product Diversification: Diversification into many markets allows firms to take advantage of unique benefits to other sectors and build stability. Although it has 22 different brands under PepsiCo management, they are all concentrated in the food and CARBONATED SOFT DRINK PRODUCTION sector. By acquiring a small but established sportswear brand, like Under Armour plc (NYSE: UA), PepsiCo can benefit from other sectors by diversifying its product portfolio into other areas. Through the purchase of alcoholic beverages, PepsiCo may also diversify its product line. After Coca-Cola Co announced that it would

  2. Expand E-Commerce: Customers are increasingly turning to digital channels for internet purchases. PepsiCo has an opportunity to take advantage of the advantages of online shopping by developing its e-commerce (mobile apps) and increasing sales through these channels.

  3. Enhance Alliances and Partnerships: Businesses seeking and nurturing strong relationships and partnerships thrive in a globalized economy. For instance, PepsiCo may expand its existing collaboration with Starbucks into other areas to take advantage of all the benefits of their many coffee shops.

  4. Increase Consumer-Driven R&D: The ability to adapt to change is critical for long-term success. PepsiCo has the means to grow investment in R&D, SOFT DRINK PRODUCTION LINE, and go-to-market capabilities, giving it an edge over rivals in the changing consumer and retail landscapes. Between $665 million and $760 million were invested by PepsiCo in research and development during the

  5. Expanding Operations in Emerging Market: PepsiCo’s rapid expansion in developing nations across Africa, Asia, and South America offers the company an incredible opportunity to expand into these areas and develop its customer base.

  6. Efforts towards Health: To achieve these goals, the company must reduce sugar, salt, and fat content in 75% of its products to less than 100 calories of added sugar per 12 ounces by 2025, 1.3 milligrams of salt per calorie, and less than 1.1 grams saturated fat per 100 calories among conscious consumers’ demands by 2025.

  7. Increase Healthy Options: The fact that most of PepsiCo’s soft drinks and snacks are considered harmful suggests that there is still room for improvement. Only 44% of the firm’s beverage portfolio has less than 100 calories per serving, which are excessive and unhealthy. By extending product lines to include healthy alternatives such as milk or vegetable-based shakes, the business can take

  8. Introduce New Flavors: Consistent top-line growth is required by businesses to accommodate changes in consumer preferences and tastes. PepsiCo can release new flavours for its soft drinks and snacks, increasing its customer base. The firm recently introduced new varieties, including Pepsi Café, which combines the classic taste of coffee with Pepsi Cola.

  9. Enhance Corporate Social Responsibility: Emotional and sentimental values have a significant impact on consumer preferences. PepsiCo may improve its corporate social responsibility activities to promote environmentally responsible resource usage while also engaging directly with consumers on issues that affect them. It condemned Facebook’s inactivity on hate speech and racism, bringing consumers and other companies in opposition. To preserve brand loyalty and attract new

  10. Acquisition of Energy Drink– In March 2020, PepsiCo revealed its intentions to acquire Rockstar Energy Beverages for $3.85 billion to compete against its leading competitors Monster Beverage in the energy drink market. In addition, PepsiCo completed the acquisition of South Africa’s Pioneer Foods for $1.7 billion.

  11. At-home Soda Machine – Following the $3.2 billion purchase of at-home seltzer maker SodaStream, Coca-Cola began expanding its healthy food push with the $2.6 billion acquisition of SweetLeaf Flavors and later introduced sparkling water brand Bubly.

  • PepsiCo’s Threats
  1. Stiff Competition: Coca-Cola, Nestle, Dr. Pepper, Unilever, and other companies compete fiercely for market share and profits in the beverage business. Coca-Cola, Nestle, Dr. Pepper, Unilever, and other competitors are all vying for market share and gains in the beverage sector. As a result of increasing competition, Changing Regulatory Environment: The company has been impacted by changing consumer preferences and health-related legislation that alters its business. Many governments have imposed stricter regulations on companies to control obesity rates, which affect PepsiCo’s sales through its unhealthy products such as soda pop. The Food and Drug Administration (FDA) recently passed a law requiring food companies to reduce sodium levels in their products. This has placed an additional burden on PepsiCo, forcing it to reformulate its offerings for healthier alternatives.

  2. Economic Slowdown or Recession: Even though consumer food and beverage sectors are robust, a downturn or recession cannot be ruled out. Because PepsiCo’s product range is skewed towards items frequently among the first to be cut in an economic recession, it may suffer losses. The firm experienced massive growth during the recession, increasing its revenue by over 200 percent between 2002 and 2010. Pepsi has cut 2,300 jobs in recent years as a result of soft drink sales declines. The company was unable to meet its full-year forecast for 2020-21 owing to market uncertainty. When its net income fell to $1.34 billion in 2020, it revised its sales and profit targets.

  3. Competitors Adopt Technology More Effectively: The success or failure of firms depends on the adoption rate of cutting-edge technology in today’s technologically advanced and fiercely competitive business environment. If PepsiCo doesn’t adopt game-changing technologies quickly enough, it might lose its market position to rivals.

  4. Demographics Changes: Changes in demographics and economic conditions might disrupt marketing targets, negatively influencing businesses. For example, as the median age of Sweden’s population (41.1 years) has grown older and the number of youths has decreased, so has the demographic makeup of Nordic nations such as Sweden. These shifts might jeopardize PepsiCo’s financial

  5. Increase in Trade Tensions: Ineffective operations are hampered by uncertainty and instability. The US-China trade tensions have added to market uncertainty and instability in the last two years. If trade conflicts escalate, PepsiCo’s global activities could be jeopardized, resulting in a trade war, isolationism, and protectionism in foreign markets for the company.

  6. Government Laws and Regulations: Governments have increasingly implemented pro-health rules in the recent past to combat lifestyle diseases and disorders linked to junk and unbalanced diets. If this trend continues, PepsiCo’s profitability, sustainability, and even existence may be threatened since its product range is dominated by unhealthy soft drinks and snacks.

  7. Increasing Health Consciousness: Most of PepsiCo’s soft drinks and snacks are deemed unhealthy, suggesting that raising health consciousness in consumer markets poses a danger (Cannibalism) to the business.

03.

SWOT Recommendations

Focus on environmental impact and work to reduce water usage, improve recycling practices at plants, and the disposal methods used by consumers (Reingold & Sisodia 2019).

Offer healthier food & beverage options that also target women, such as LIFEWTR (PepsiCo, 2014).

Focus on new product development in American markets and increase their social responsibility efforts. For example, Pepsi could reduce its products’ sugar & salt content to address obesity rates across America today (Reingold & Sisodia 2019).

SWOT Analysis: SWOT analysis evaluates an organization’s strengths, weaknesses, opportunities & threats based on internal and external factors (Reingold & Sisodia 2019). A SWOT analysis evaluates the business environment in which an organization operates and its position within that environment. SWOT is best used to inform decision-making about possible areas for improvement or where action should be taken (Reingold & Sisodia 2019). SWOT is based on what an organization can do to improve its competitive advantage and achieve its goals. SWOT analysis provides organizations with a better understanding of the opportunities available and threats they may face within their industry or market (Horton, 2016).

04.

Reference

05.

Where can I find more information about these Information if needed?

At iBottling, we provide more information on carbonated soft drink filling machines through our website. If you have any other questions or comments, please do not hesitate to contact us via email at info@ibottling.com! We are always looking for better ways to improve the customer experience, so please just let us know if there’s anything else!

Please check below link to see what is beverage production equipment

You also welocme to contact us by clicking below button

Please check the beverage productoin line we’ve made.

Picture of John Lau.
John Lau.

John Lau, oversea project manager, an engineering graduate with expertise in optimizing beverage production equipment during his university studies, is now at the helm of global projects in the industry. Committed to educating clients on the benefits of customized equipment solutions that notably boost operational efficiency, Lau views this specialization in tailoring bottling machines as a key facet of his professional commitment.

Subscribe Us

Exclusive information and suggestions that I only provide with my private newsletter subscribers to help you lower your manufacturing and procurement expenses.

More To Explore

ask for a quick quote

drop us a line