Pepsi SWOT Analysis analyzes, Pepsi is one of the most famous and liked FMCG brands across the world. There’s nothing better than a refreshing beverage on a hot day, but Pepsi offers more than just soda. This corporation is a food and beverage empire with numerous lucrative brands, including sodas, waters, potato chips, juices, sports drinks, snacks, and more. Its global reach and massive presence on supermarket shelves should be the perfect recipe for success, but there are some pitfalls that may plague this company if left unchecked.
Did you know? In 1922 & 1933, The Coca-Cola Company was offered a chance to buy the Pepsi-Cola company, and it declined 3 times.
In 1893, Pepsi – or Brad’s Drink was created and developed by Caleb Bradham in his drug store in New Bern, North Carolina, United States, where the drink was later sold. Pepsi is manufactured by PepsiCo, which also owns well-known brands such as Walker’s crisps (Lay’s potato chips), Doritos, Tropicana, 7 Up, Mountain Dew, Naked Juice and Nobby’s Nuts.
This can only be achieved through a firm with extensive knowledge, experience and innovative strategies. To determine the strengths of the company potential, weaknesses, opportunities and threats, it is necessary to conduct a SWOT analysis by Pepsi.
Pepsi At A Glance – Pepsi SWOT Analysis
Founders: Caleb Bradham
Year of establishment: 1898 (as Pepsi Cola) and 1966 (as PepsiCo Inc.)
CEO: Indra Nooyi
Headquarters: Harrison, New York
Employees (Dec 2020): 267,000
Ticker Symbol: PEP
Annual Revenue (Dec 2020): US$68.2 Billion
Profit net income (Dec 2020): US$7.2 Billion
Products & Services: Pepsi | Mountain Dew | Gatorade | Tropicana beverages | 7 Up | Mirinda
Company Website: www.pepsico.com
Competitors: Coca-Cola | Red Bull | Unilever | Campbell Soup Company | Conagra Brands | Monster Beverage | General Mills
Pepsi SWOT Analysis – SWOT Analysis Of Pepsi
SWOT Analysis Of Pepsi analyzes the brand based on its strengths weak points, weaknesses, opportunities, and threats. With Pepsi SWOT Analysis it is clear that the advantages and disadvantages are internal factors, while threats and opportunities are external elements. Here we are going to talk about Pepsi SWOT Analysis. Below Is The Detailed SWOT Analysis Of Pepsi.
Pepsi Strengths – Pepsi SWOT Analysis
1. Best Global: Brand Based on Forbes 2019 ranking, PepsiCo is ranked as the 29th most valuable brand, with an estimated worth in the range of $18.8 Billion. The year 2020 was the last time PepsiCo is rated 87th largest corporation in the world by Forbes’ Global 2000.
2. The Power of One Strategy: Selling “Food & Snacks” (Frito Lays, Cheetos, Doritos, Kurkure) and “Beverages” (Pepsi, Gatorade, Tropicana) under one umbrella is what makes PepsiCo an even stronger and diverse business. The food segment accounted for 54% of its sales and drinks made up 46 percent.
3. Highly Diversified Portfolio: The primary benefit of PepsiCo is its large variety of brands that are part of its portfolio that span across the beverage and food sector. PepsiCo is home to 22 brand names that include Pepsi, Diet Pepsi, Pepsi Max, Fritos, and many others. Each brand generates greater than one billion in annual sales. While many companies struggled to beat their projections because of market uncertainty, PepsiCo managed to meet and beat its estimates due its diverse portfolio. A booming consumption of its snacks such as Doritos and Lays helped offset the drop in soft drinks’ sales.
4. Strong Global Presence: PepsiCo has profited from the advantages of a large global presence through its participation over 200 nations around the globe. PepsiCo’s dominance throughout the world has helped increase the global recognition and popularity of the brand with customers. One of the strengths allows PepsiCo to compete with its competitors is Coca Cola.
5. 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 retails stores. DSD guarantees speedier restocking greater promotion in the store and the highest visibility.
6. Market dominance: The market favors dominant and superior businesses, which allows them to set the rules. Based on Information Resources, in 2019, Pepsi accounts for 22 percent while Coca Cola accounts for 20 percent in all U.S. liquid refreshment beverage category. It capitalizes on its position to build strong relationships with retailers, gaining substantial and easy-to-access shelves.
7. An effective marketing plan: Pepsi understands the importance of marketing as demonstrated through the fact it’s sponsored this Super Bowl halftime show for seven years and has a reach of 100 million viewers in the year the year 2019. In 2020, the Pepsi Super Bowl LIV’s Halftime Show featured some of the most famous performers and attracted 104.1 millions viewers.
8. Iconic Pepsi’s Youthful Brand: The primary market has always been the younger generation. Pepsi has maintained its position as a brand that is renowned for its youth. The company’s most memorable advertisements were targeted at preteens and teens. They were based on the excitement of music, sports, etc.
9.Supply Chain: An efficient Supply Chain Management In today’s highly globalized world, businesses must are operating in multiple markets around the globe in order to maximize their efficiency and this can be a challenge without a well-organized control of the supply chain. Pepsi is one of the best efficient supply chain management practices in the world, which allows the company to take advantage of cheaper raw materials from different countries around the globe. Logistical dominance is an important advantage for Pepsi. For instance when it comes to coconut milk that is raw ingredients are fresh and refrigerants are required from the moment it is delivered to shelves in stores. Raw coconut is sourced from farmers located in Indonesia as well as the Philippines Packaging materials come out of Europe, Asia, and the Middle East; and storage and distribution takes place in the ports in California in California and New York.
10. Marketing collaboration: Marketing through sports Collaborations with organizations and sports clubs provide a unique opportunity to market directly to sports fans in arenas. As an example, Pepsi entered into a 7-year , championship-level partnership together with Tampa Bay Lightning and AMALIE Arena.
11. Solid Corporate Social Responsibility: PepsiCo Foundation (philanthropic division) collaborates with hundreds of national, international and community-based organizations to increase sustainability of the environment and to address issues facing society around the globe. For instance, PepsiCo has partnered with the Inter- American Development Bank (IDB) in projects that provide pure drinking water and better hygiene in Latin America.
12. Customer loyalty: PepsiCo has an extremely loyal customer base, especially in the younger age group who enjoy the famous flavor of its soft drinks. Recently, Pepsi has launched a first-ever cash-back loyalty program ” Pep Coin” to reward loyal customers by offering cash prizes to pair their favorite beverage with a snacks.
Pepsi Weaknesses – Pepsi SWOT Analysis
1. Dependence upon Food and Beverages: Over dependence to carbonated drinks as well as packaged food products can limit the flexibility and agility of companies in the event of turmoil within the sector. PepsiCo chose to stand against the wise guys by putting all its eggs in one basket that is food and drinks. The company must diversify its offerings to prevent losing all its items.
2. Unhealthy food: Foods that are perceived as unhealthy Perception is everything when it comes to the consumption of products like beverages and snack foods. The majority of PepsiCo’s sodas and carbonated soft drinks are laced with significant sugar concentrates, while the snacks it sells are heavily salted with chemicals and flavorings as well as additives. This is a huge flaw especially in today’s conscious consumer market.
3. Failed products: The effects of failed products Failure in any business is a sign of weakness. PepsiCo’s products that failed, such as Crystal Pepsi(Colorless Cola), Pepsi Blue and more. Demoralized workers and painted as incompetent in the public eye, allowing for competitors to expand.
4. Advertising that is controversial: Businesses have to make use of their positions of power to benefit society’s good. In 2017, the PepsiCo ad with Kendall Jenner was criticized for minimizing what was deemed to be a minor issue in the Black Lives Matter movement. The commercial was removed after just one day.
The company has released the following release:
“Pepsi tried to convey an international message of peace, unity, and respect. We clearly missed the mark and we are sorry. We were not trying to minimize any serious problem. We are taking the content off the site and will not allow any future release. We apologize for placing Kendall Jenner in this position .”
This is a huge disadvantage when compared to the positive aspects of living, like gatherings with family members that are consistently promoted in the majority of Coca Cola’s commercials.
5. Poor environmental record: PepsiCo was named as one of the globe’s most polluting plastics in a report by Break Free From Plastic. PepsiCo has not been able to take meaningful steps to improve the recycling of its plastic bottles.
6. Products that are racially sensitive: The national debate regarding racial discrimination within the US led to the spotlight being paid to PepsiCo’s products that were racially insensitive. It was forced into changing its name and the images of Aunt Jemima after it was branded discriminatory from Black Lives Matter activists. PepsiCo is also looking into making other products similar to Uncle Ben’s.
Pepsi Opportunities – Pepsi SWOT Analysis
1. Different brands: Diversification of Product is the process of diversifying into various categories. It allows businesses to reap benefits that are not available in their usual area of operation and achieve stability. Although PepsiCo owns 22 different brands in its portfolio, the majority of these brands are primarily in that sector of food and beverages. PepsiCo can reap the benefits of other areas through expanding its product portfolio to other industries beyond beverages and food like sportswear, by acquiring the small, but well-established sportswear company. PepsiCo could also expand its product range to include alcohol-based beverages. The company recently announced it was looking into expanding into the alcohol market following Coca-Cola Co announced they would introduce an alcoholic beverage on the US market by 2021.
2. Expand E-Commerce: More consumers are shopping online via digital channels. shopping. PepsiCo has the chance to benefit from the internet shopping experience by expanding E-commerce (mobile app) and increasing sales through these channels.
3. Alliances and partnerships: Improve Alliances and Partnerships in the global marketplace, companies who seek to build good alliances, partnerships and alliances are more effective. For instance, PepsiCo can extend the existing relationship to Starbucks to other areas, allowing them to reap the benefits of their numerous partner’s cafes.
4. Enhance Consumer: Driven Research and Development: Being able to adapt to market changes is the most important factor to be successful. PepsiCo has the ability to increase its investment into research and development as well as manufacturing and go-to-market capabilities , and gain an advantage over its rivals in the ever-changing landscape of retail and consumer. In the fiscal year ending in 2019, PepsiCo spent over $710 million on research and development, with R&D expenses ranging from $665 million to $760 million over the last seven years.
5. Expanding operations in Emerging Market Growth: The rapid growth and improving economic condition in emerging markets such as Africa, Asia, and South America provide PepsiCo with the opportunity to grow it’s operations within these areas and expand its customers base.
6. Efforts to cater to health-conscious consumers Needs: PepsiCo has increased its effort to cut down on sugar salt, fat and salt in 75 percent of its food products by 2025 to less 100 calories of sugar added per 12 ounces. 1.3 milligrams per calorie of sodium, and lower than 1.1 grams of saturated fat for 100 calories.
7. Quality products: Increase the number of healthy options Most beverages and snack items sold by PepsiCo are deemed unhealthy suggests that there are opportunities to improve. Just 44 percent of the PepsiCo beverage portfolio is less than 100 calories for each cup, and these is extremely unhealthy and unhealthy. The company could profit from the opportunities created by the increasing number of consumers who are health conscious by broadening its product offerings to include healthier alternatives like milk and shakes made of vegetables.
8. Introduce new flavors: Businesses must be able to adjust to the changing preferences of consumers and tastes , while ensuring steady top-line growth. PepsiCo is able to introduce new flavors in beverages and snack items that it sells to consumers and grow its client base. The company recently launched new flavors, such as Pepsi Cafe that is a blend of the flavorful aroma of coffee and Pepsi Cola.
9. Increase Corporate Social Responsibility: Consumers’ choices are driven by emotions and sentimental values. PepsiCo can improve the quality of its Corporate Social Responsibility actions to increase the sustainability of renewable resources and address problems that directly affect consumers that increase loyalty and attracting new consumers. The company joined with consumers and other businesses in expressing its displeasure with Facebook’s lack of action against racist hate speech and discrimination. PepsiCo removed millions of advertising dollar away from Facebook in its commitment to CSR commitment to its customers.
10. Purchase of energy Drinking: March of 2020 PepsiCo revealed its plan to purchase Rockstar Energy Beverages for $3.85 Billion to be able to compete with the biggest rivals of Monster Beverage in energy drink space. PepsiCo has also concluded the purchase from South African’s Pioneer Foods for $1.7 billion.
11. At-home Soda Machine: The company has further expanded its efforts to healthier foods through the $3.2 billion purchase of the at-home Seltzer producer SodaStream and later the launch its sparkling waters brand Bubly.
Pepsi Threats – Pepsi SWOT Analysis
1. Stiff Competition: PepsiCo’s profits as well as market share is being threatened with fierce competitors from Coca Cola, Nestle, Dr. Peppers, Unilever, and the list goes on. This competition could also affect long-term sustainability and profitability as it adds costs to protecting market share with advertisements promotions, discounts, and other advertisements to attract customers.
2. Economic Recession or Slowdown Food and beverage: Markets are booming but there is a possibility that a recession or slowdown is not far away. If there is slowdown, PepsiCo can incur losses due to the fact that its portfolio of products is comprised of products that are often among the first expenditures that consumers will cut during times of economic stress. In the recession of 2008-09, Pepsi had to eliminate more than 3,300 positions because of a decline in sales of soft drinks. Pepsi was forced eliminate its full-year projection for 2020-2021’s fiscal year due to uncertainty on the markets. The company canceled its forecast of 4% growth in revenue for the entire year in the initial quarter of the year 2020 following its net earnings dropped to $1.34 billion, down from $1.41 billion the year before.
3. Modifications in Demographics: Changes in demographics or economic circumstances affects target markets and can have a negative impact on businesses. For instance those in the population of Nordic countries like Sweden ( median age of 41.1 years) have changed with the rise of older consumers and a decrease in youngsters. This could impact PepsiCo’s profits and long-term viability due to the fact that a large percentage of its customer base is comprised of youth.
4. Trade wars: The increase in tensions between the two countries Uncertainty and instability hinder efficient operations. Over the last couple of years the trading tensions have heightened uncertainties as well as instability on the global market. PepsiCo’s global operations may be damaged if trade tensions grow, which could lead to isolationism, trade wars and protectionism in its international markets.
5.Regulations and laws: Regulations and Laws of the State in the past governments have been increasingly adopting policies that promote health to combat health problems and diseases linked to unhealthy and junk food products. A further expansion of this trend in the near future could affect sustainability, profitability as well as the very existence of PepsiCo because its portfolio of products is mostly comprised of harmful beverages and snack foods.
7. Health awareness: Growing Health Awareness A major part all soft drinks, snacks and other beverages sold by PepsiCo are deemed to be unhealthy suggests that the increase in awareness of health in the market poses risky (Cannibalism) for the business.
Pepsico SWOT Analysis Template
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