Pepsi Co.

PepsiCo Inc. was founded through the merger of Pepsi-Cola and Frito Lay. The
company was created by Caleb Brodham , a New Bern , N.C. Pharmacist in the
late 1890s. The Frito Company founded by Elmer Doolin in 1932 and the H.W.
Lay Company , founded by Herman.W.Law also in 1932 , merged together and
founded Frito-Lay Inc. Herman Lay , who was the former chairman and Chief
Executive Officer or Frito Lay was also the chairman of the board of directors of
the newly established company. The president and CEO of Pepsi-Cola was
Donald.M.Kendall. The new company reported sales of $510 Million and has
19000 employees. The major products offered by the new company are-

● Pepsi-Cola (formulated in 1898)

● Diet Pepsi (1964)
● Mountain Dew (Introduced by Tip Corporation in 1948)

PepsiCo Inc. is an American food and beverage company that offers its products in
more than 200 countries and is one of the largest MNCs in the world. The
headquarters of the company is in New York.

The first Pepsi-Cola was created in a hope to duplicate the recent success of
Coca-Cola. The founder Caleb D Bradham then named his sweet-cola flavoured
carbonated beverage Pepsi-Cola back in 1898.

Charles.G.Guth who became the founder of the modern Pepsi company ,

formulated a better drink and then set up new bottling operations. He was also the
president of Loft Inc. which was a candy manufacturer and soda fountain chain
(founded in 1919). Later in 1941 , the Pepsi-Cola company merged into Loft and
the name Loft Inc. was changed into Pepsi-Cola company.
PESTLE Analysis

PEPSI PESTLE analysis studies various external factors like:

● Political
● Economic
● Social
● Technological
which jolts its business along with legal and environmental factors.

Political Factors:

PepsiCo. is the world’s leading beverage brand and the company’s variants are
tested by FDA. So the company must adhere to the standards formulated by the
FDA. Even though PepsiCo. enjoys its popularity in developing countries like
China , India , etc. yet the company generated its major parts of its revenue from
the USA and other European countries. So any political anarchy in a country can
have a direct impact on the company’s operation and sales.

PepsiCo. had severely suffered in the UK because the country had withdrawn
itself from the European Union in 2020. This forced the company to make some
changes in its operational activities because of the new laws and government
policies. Even the government's viewpoint on issues regarding health can impact
PepsiCo. In case, the government launches some sort of health campaigns and
initiatives which discourage the consumption of unhealthy foods and aerated soft
drinks, it can adversely affect the business. But in the Indian Market, the
government has reduced the corporate tax from 35% to 25%. This will leave the
company with more cast at its disposal and they can increase their spending.

Back in 2017 , the US introduced a new taxation policy called Soda Tax.
According to this tax , the price of soda rose 3 cents per ounce. The point of this
new taxation policy is to discourage people to drink less soda. The company has
already been affected by this tax.
Economic Factors:

Macroeconomic factors like Inflation , Economic stability and taxes affect Pepsico.
According to the company , almost every other factor is manageable. It becomes
difficult for the company when its products are sold overseas. The company’s
product prices are affected by the local currency.

Pepsico generates a good share of its revenue from developing nations such as
Brazil , China , India , Russia , etc. So any macroeconomic change like economic
slowdown , Demonetization or fluctuation in price of raw material might hamper
the company’s financials and bedew its growth. That means , in the foreign market
the profit for Pepsi will be reduced if the value of the local currency with respect to
dollar Depreciates.

Countries like Saudi Arabia and France increased taxes on beverages which
contain sugar. All these hikes in tax could cause a concern for the company as it
will further force the company to hike up the price of its products in the market
which can decrease its sales.

Social Factors:

Some external factors can also affect Pepsico. These factors include change in
lifestyle of people , spending habits and consumption behaviour. These factors can
impact the sales and revenue of the company. All these factors are adversely
affecting Pepsico.

Nowadays , consumers are more inclined to make healthy lifestyle choices. Buying
and consuming soda is at its lowest right now. Infact , the top pick by consumers in
the category of beverages is now water. Not only is water healthy , people are also
using it as a base for artificial sweeteners.

After observing and analysing the consumer behaviour , Pepsico is reformulating

their product for healthy conscious consumers while they won’t change their oldest
and beloved product. They reduced the amount of sugar they put in their 7Up
products. Furthermore , they also launched probiotic drinks in order to enter into
the healthy juice market. The company is well aware that if they won’t adapt
according to current market conditions then there will be a time that they will no
longer exist.

So PepsiCo's consumers mainly lie in the age group between 15-44. The company
is well aware that it has its presence in those markets where the average age of the
country lies in this range. So their advertisements are mainly focused on pleasing
people who lie in the above mentioned age group. The company also launched an
ad campaign in2017 which aimed to address the “Black lives matter” movement.
The ad featured Kendal Jener who joins a group of people protesting against the
social atrocities which are prevailing in the society. In that ad , the star Kendal
Jenner puts an end to all the injustice just by offering a pepsi to a cop. The ad
campaign was heavily budgeted. Unfortunately , this campaign faced a lot of
criticism for undervaluing the whole movement and this led the company to pull
out its ad and was even forced to issue a formal apology for the same.

Technological Factors:

Even a well known company like PepsiCo needs to advertise. Those days are long
gone when a company simply throws up a 20 second advertisement on television
and could watch its sales skyrocket.

Social media platforms like youtube , instagram and facebook plays a vital role in
advertising and reaching out to the youth which is their target market. PepsiCo is
dependent on data and analytics to supply its retailer in more than 200 countries.
These countries further cater to more than one billion customers on a daily basis.

The ad campaign was run and initiated by PepsiCo. on Youtube “Back to School”
very aptly touches the Indian youth’s heart. The notarization of the song “ school
khatam ho raha hai par dost nahi” makes a strong impression on the audience.
Legal Factors:

PepsiCo and its competitors must adhere to legal requirements. PepsiCo and other
beverage companies have faced legal issues in the past regarding the use of
pesticides in its production as people in some countries use these aerated drinks as
a substitute to kill pests. The company must adhere to all the legal requirements as
it can destroy the brand image and sales as well. Other than maintaining health
standards PepsiCo also needs to follow the labour laws of the country it is
operating in.

Environmental Factors:

Plastic (for bottled packaging) is an unavoidable evil for a company like Pepsi.
Many people choose to drink from these bottles instead of glass ones since they are
easier to hold. However, utilising plastics gives the appearance that the corporation
is unconcerned about the environment and is not adopting sustainable production
methods.

People are becoming more environmentally conscious, necessitating the need for
businesses to adapt their operations in a way that minimises environmental impact.
People want to be associated with companies that care about the environment.
Furthermore, following the Paris Agreement of 2016, countries established severe
norms and guidelines, failing which corporations would be forced to submit