SHRI GURU RAM RAI UNIVERSITY

DEHRADUN

“PROJECT REPORT ON COMPARATIVE ANALYSES :

COCO-COLA COMPANY AND PEPSI COMPANY”

SUBMITTED IN THE PARTIAL FULFILMENT OF THE

DEGREE:
‘BACHELORS OF BUSINESS ADMINISTRATION (BBA)

(2020-2023)

UNDER THE GUIDENCE OF OF:

MRS. VAISHALI PRAKASH

SUBMITTED BY :
ANMOL JAMWAL
(BBA-5-A) MARKRTING
(ENROLLMENT NO : R200425021)

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 DECLARATION

I ANMOL JAMWAL student of bachelor of Business Administration from SHRI

GURU RAM RAI UNIVERSITY hereby declare that I have completed the summer

training project on “Comparative Analyses : Coco-Cola Company and Pepsi

Company”, as part of the course requirement.

I further declare that the information presented in this project is true and original to

the best of my knowledge.

DATE : BBA class of

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 CERTIFICATE

I hereby certify that Anmol Jamwal of Bachelor of Business Administration at SHRI

GURU RAM RAI UNIVERSITY has completed summer training project on

“COMPARATIVE ANALAYISE : COCO-COLA COMPANY AND PEPSICO”, under

my guidance

FACULITY GUIDE
MRS. VAISHALI PRAKASH

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 ACKNOWLEDGEMENT

A summer project is a golden opportunity for learning and self development. I consider

myself very lucky and honoured to have so many wonderful people lead me through in

completion of this project.

I would like to thanks Vaishali Prakash for her efforts and help provide to me to get

such excellent opportunity.

Last but not the least there were so many who shared valuable information that helped

in successful completion of this project.

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 TABEL OF CONTENT

PATRICULARS PAGE NO.

TITLE PAGE 1

DECLERATION 2

CERTIFICATE 3

ACKOWLEDGEMENT 4

CH-1 introduction 6-9

CH-2 Data Analysis of Coco-Cola Company 10-21

CH-3 Data Analysis of Pepsi Company 22-37

CH-4 Competitive Position – Coco-Cola Vs Pepsi 38-42

Conclusion 43

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Chapter - 1

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 Introduction

The main objective of this report is to analyze and compare two multi-national companies Coca-
Cola Company and PepsiCo. Firstly, this paper will present historical background of both
companies with financial performance and determine the strongest performer. Both companies
produce, distribute, and market non-alcoholic beverages on a worldwide scale and Coca-Cola
always holds market leading position in the Carbonated Soft Drink industry. This report will
scrutinize many other issues related with the business operation of these companies, for instance,
mission, vision, corporate culture, strength, weakness, opportunities, threats, growth estimates,
organizational structure, marketing mix, competitive position, and ratio analysis. However, this
report will concentrate more on the Coca-Cola Company, but it will include sections about Pepsi
Co in order to discuss the competitive position of these two beverages companies.

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 Background of the Coca-Cola Company

Coca Cola has established in 1886 by John Pemberton, and now it is the world’s largest soft drinks
manufacturer, which produces and delivers a broad range of non-alcoholic beverages for all major
customer segments and offers different type of drinks. According to the report of Task (2010) and
Yahoo Finance (2011), Coca Cola is the top brand among all multinational companies in the world
and its value is $70,452.0 million; however, PepsiCo is not in the top ten lists.
It produces more than 500 non-alcoholic brands in their portfolio, and it operates in 200 countries
and for its global network of sales, in 2009 its net sales was totalled $ 32.14 billion and net income
was $7.58 billion (Yahoo Finance, 2011). This company serves more than 54 billion beverage of
all types consumed in the global market each day; however, the financial overview of the Coca
Cola for four years has outlined below for assessing its performance in recent years.

Financial Overview of Coca-Cola Company FY FY FY FY

2006 2007 2008 2009

Financial Indicators (All Figures in USD Millions)

Total Revenues $24088.0 $28857.0 $31944.0 $30990.0

Cost of Goods-Sold $8160.0 $10392.0 $11374.0 $11088.0

Gross-Profit $15928.0 $18465.0 $20570.0 $19902.0

Total General-sales and Admin-Expenses $9431.0 $10945.0 $11774.0 $11358.0

Other Operating-Expenses $9431.0 $10945.0 $11774.0 $11358.0

Operating-Income $6497.0 $7520.0 $8796.0 $8544.0

Net Interest-Expense $-27.0 $-220.0 $-105.0 $ -88.0

Earnings of continued-Operations $5080.0 $5981.0 $5807.0 $6824.0

Net-Income $5080.0 $5981.0 $5807.0 $6824.0

Table 1: Financial Performance of the Coca-Cola Company. Source: Self-generated from
Bloomberg Businessweek (2011)

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 Background of PepsiCo
The carbonated soft drink company PepsiCo started its journey in 1893 and the brand Pepsi has
developed in 1908 and now the company generates a revenue of about US$ 60 billion per annum
along with its 285,000 employees and enhancing global operation (PepsiCo, 2010, p-1).

Yoffie (2002, p.1) pointed out that the US people consume almost fifty-three gallons of beverage
in each year and the beverage giant Coca-cola and Pepsi-Cola has been fighting against each other
with an irrevocable war for more than a century while the companies are gaining almost 10%
usual market growth both in home and abroad. Following table demonstrates key financial
indicators of PepsiCo for years –

Let`s start

Financial Overview of Coca-Cola Company FY FY FY FY

2006 2007 2008 2009

Financial Indicators (All Figures in USD Millions)

Total Revenues $35,137.0 $39,474.0 $43,251.0 $43,232.0

Cost of Goods-Sold $12,873.0 $14,152.0 $15,486.0 $15,053.0

Gross-Profit $19,375.0 $21,436.0 $22,988.0 $23,133.0

Total Other Operating-Expenses $12,873.0 $14,152.0 $15,486.0 $15,053.0

Operating-Income $6,502.0 $7,284.0 $7,502.0 $8,080.0

Net Interest-Expense $-66.0 $-99.0 $-288.0 $-330.0

Net-Income $5,642.0 $5,658.0 $5,142.0 $5,946.0

Table 2: Financial Performance of the PepsiCo. Source: Self-generated from Bloomberg

Businessweek (2011)

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Chapter - 2

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Mission and Vision of Coca-Cola

Mission
The main objective of this company is to refresh the world and the other aim of the company is –

Figure 1:
Mission of Coca-Cola. Source: Self generated from Coca-Cola (2011)

Vision
Coca-Cola’s vision is separated into six points and the company should focus on and accomplish
this vision in order to carry on its growth; however, the following figure illustrates its corporate
vision –

Figure 2: Vision of Coca-Cola. Source: Self generated from Coca-Cola (2011)

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PEST Analysis of Coca-Cola

Political/legal Factors
According to the annual report 2009 of Coca-Cola, the legal action against this company has
increased due to the frequent change of regulations in all over the world, for instance, it has to
follow the recommendation and guidance of European Commission to conduct business in EU
member states.

At the same time, political issues can play a vital role in the entire process of Coca Cola’s business
operation by influencing production allocation, and retail activities to the final consumers, so, the
changes in political environment could change these companies accordingly through both direct
and indirect way. Norden, Koch, and Pronk (2008, p.8) stated that Coca-Cola took legal action
against Pepsi in 1938 by arguing that this company had infringed trademark regulation, but the
honourable court held that there is no offense.

On the other hand, some other factors like changes of accounting standards, political violence,
state of emergency, taxation policy, alteration of non-alcoholic business environment, the Federal
Trade Commission Act, environmental and labour laws, governmental instabilities in foreign
countries, strikes, globalisation, and so on have affect on these two companies.

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Economic Factors
Despite negative GDP growth of the US people, Coca-Cola Company had not suffered any severe
hindrances in this market or global market as the impact of the global economic downturn was not
excessive to this company. On the other hand, PepsiCo had suffered significantly by the recession
from its operations in the European market and rest part of the world (PepsiCo, 2009).

However, the following comparative basic chart demonstrates that the share price of Coca-Cola
always better than Pepsi; however, this share price of both companies faced a sudden slump in
2009.

Figure 3: Basic Chart of Coca-Cola and PepsiCo. Source: Yahoo Finance (2011)

In spite of these tough situations, PepsiCo produced a quite remarkable development in the income
and started to revive back its stock prices in the fiscal year 2011.

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Socio-cultural Factors
The following table shows that 20.2% of total population is children who are the large target
market of Coca-Cola and Pepsi in the US market.

However, Norden, Koch, and Pronk (2008, p.6) reported that a significant part of total population
is middle-aged people who are health conscious, and 7% of total population has suffered in
diabetes, and more than 6.3 million people are not aware about their health problem. It is
important to mention that California banned on the sale of soft drinks in order to protect the people
from obesity and other health problem (Norden, Koch, and Pronk, 2008, p.6).

Age Percentage Male Female

0 to 14 years 20.2% 31,639,127 30,305,704

15 to 64 years 67% 102,665,043 103,129,321

65 years and over 12.8% 16,901,232 22,571,696

Table 3: Age Configuration of the US People. Source: Self-generated from Indexmundi (2010)

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Technological Factors
Curd (2010, p.4) pointed out that Coca-Cola has already launched a new lightweight bottle in
order to decrease the quantity of waste plastic, and according to the annual report it is using
technical equipment, for instance, coolers, fountain machinery as well as vending tools.

Moreover, Norden, Koch, and Pronk (2008, p.8) stated that Coca-Cola concentrates on the
development of information technology, so, IT department constantly works for ensuring the
greatest technological assistance. In addition, it is imperative to note that the company has hi-tech
instruments that help to increase production level with less human efforts in the global market;
therefore, Coca-Cola successfully reduced the operating cost by reducing 20% employees.

On the other hand, PepsiCo has introduced agricultural technology in order to guarantee the
highest crop yields and quality standards; in addition, it has developed Sustainable Engineering
Guidelines and maintained innovative environmental management system to examine water
(PepsiCo, 2009).

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 Organisation Structure of Coca-Cola

Coca-cola has maintained the cooperative (M-Form) of the multi-divisional structure as it

generates more than 90% of total profits from beverage sector though it is not earning from a
single product but the production material is shared each other. However, the following figure
shows the organisational structure of Coca-cola where CEO controls six separate departments in
different business zone, such as, human resources department, R&D, Bottling Investments,
Marketing Strategy and Innovation, Finance and Control department.

Figure 4: Organizational Chart of Coca-Cola. Source: Self generated from Puravankara

(2007, p.20)

On the other hand, PepsiCo is highly diversified company, so, it has to maintain complicated
organizational chart as it has more than 203,000 employees.

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SWOT Analysis of Coca-Cola

Figure 5: SWOT Analysis of Coca-Cola Company. Source: Self generated from Kotler &
Keller (2006)

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Strengths
Reputation
Coca-Cola has excellent historical background, brand awareness, and eminent image, which helps
the company to increase its profit day by day and to be market leader among all multinationals. It
maintains well-trained employees to produces widely diversified product ranges starting from
juices to carbonated drinks and possess strong distribution channel (Puravankara, 2007)

Worldwide Operation
Moreover, Coca-Cola has business operation in two hundreds countries and has strong financial
condition to expand further in many underdeveloped economies; on the other hand, PepsiCo
operates only in forty countries.

Financial Position
According to the annual report 2009, Coca-Cola is the one of the leading global business with a
sturdy financial position such as its profits were $6824.0 million in 2009 while this figure was
$5807.0 in 2008.

CRM
Customer relationship management of Coca-Cola is another strong side because this company
considers that all customers are loyal, so new customers are also getting importance besides
regular customers to develop its market segments. On the other hand, it has popularity for its
superior customer service as it concentrates on the customer’s health conditions by providing safe
and healthy drinks to retain and attract customers (Coca-Cola, 2009).

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Weakness
Cost
According to the annual report 2009 OF Coca-Cola, it spends comparatively a large part of the
budget for advertisement and promotional actions that increases its operating expenses.

Health
Curd (2010, p.3) stated that Coca-Cola has effects on the teeth, and long addiction of soft drinks
negatively affect public health, for instance, it may cause to increase diabetes patient.

Implementation of Strategy
It is arguable that in many cases Coca-Cola’s marketing activities created immense controversies
in the countries where it has operation. Curd (2010, p.3) further added that this company failed to
implement sufficient strategies to address the cultural factors, which has negative impact of its
global business operation.

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Opportunity
Recover market position
The Coca-Cola can gain competitive advantages over the competitors in terms of technological
experience by increasing the budget for research and development, which help the company to
diversify product range. On the other hand, the number of distributors is rising and the demand for
Coca Cola’s beverages are increasing by a fast pace after the recovery of the economic condition
from the financial crisis.

Noncarbonated Drinks
Public interest for noncarbonated drinks is increasing dramatically while Coca-Cola captured 7%
share and PepsiCo hold 8% market share; as a result, Coca-Cola has unlimited scope to expand its
business in this sector.

Pure Water
Puravankara (2007, p.31) pointed out that Coca-Cola can increase sales profit by selling bottled
pure water as the demand has increased 8.5% in this segment due to serious water pollution in
some countries.

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Threats
The following factors show the threats.

Health consciousness
According to the annual report of Coca-Cola, customers, government or health officials are
becoming more anxious about the public health issues because the researchers show the negative
impact of soft drinks on the health, for instance, sugar-sweetened beverages, with HFCS is
harmful for health.

In addition, water pollution is another problem to maintain high quality of the products as water is
the most important ingredient, so Coca-Cola has to invest large amount to get pure water, which
rising production costs and affecting sales revenue.

Recessionary Impact
Both Coca-Cola and Pepsi experienced the adverse impact of global economic downturn on the
annual revenue, for instance, Coca-Cola has reduced the pension fund of the employees, and
PepsiCo’s earning from European zone has decreased due to recession.

Competitors
Increasing number of competitors is another threat for the Coco-Cola because strong competitors
can reduce the market, for example, Coca-Cola faced intense competition in 1980s, and the
following figure compares the situation

Figure 6: Comparison of
exclusive drinkers. Source: Cold Wars

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CHAPTER – 3

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MISSION AND VISION OF PEPSCO

Mission
As one of the largest food and beverage companies in the world, our mission is to provide
consumers around the world with delicious, affordable, convenient and complementary foods
and beverages from wholesome breakfasts to healthy and fun daytime snacks and beverages
to evening treats. We are committed to investing in our people, our company and the
communities where we operate to help position the company for long-term, sustainable
growth.

We are committed to conserving precious natural resources and fostering environmental

responsibility, in and beyond our operations; considering those who make them— striving to
support communities where we work and the careers of generations of talented PepsiCo

employees.

Vision

At PepsiCo, we're committed to achieving business and financial success while leaving a
positive imprint on society – delivering what we call Performance with Purpose.

In practice, Performance with Purpose means providing a wide range of foods and beverages
from treats to healthy eats; finding innovative ways to minimize our impact on the
environment and reduce our operating costs; providing a safe and inclusive workplace for our
employees globally; and respecting, supporting and investing in the local communities where
we operate.

Wherever we do business, Performance with Purpose is our guide. We believe that delivering
for our consumers and customers, protecting the environment, sourcing with integrity and
investing in our employees are not simply good things to do, but that these actions fuel our
returns and position PepsiCo for long-term, sustainable growth.

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PEST Analysis of PEPSICO

Political factors: Soda taxes are killer

A leading dominator in the soda industry is PepsiCo. Their (only worthy) rival is Coca-Cola.
Although they’re often on one end of the boxing ring, in 2017 both companies grappled over
a new American tax called the soda tax. The price of soda rose 3 cents per ounce when
adopted by Philadelphia. Although this soda tax originated in 2015, it’s only now coming to
light. And since Philadelphia’s adoption, Oakland, Seattle (Washington), San Francisco, and
Boulder Colorado have also integrated this change.

The point of this law? For people to drink less soda. PepsiCo has already taken hits now that
society is focusing on improving their health. Sugary drinks just don’t fit in anymore. That
hasn’t stopped collaborations with governments overseas though. Not to mention Pepsi spent
over $2.3 million on lobbying.

Want to know the truth? Consumer buying power is the only factor of success in business. If
a customer isn’t buying, you’ve no sales, revenue, or profit. And with so many studies linking
artificial sugar consumption to debilitating health conditions like diabetes, consumers are
saying “Goodbye!” to carbonated drinks. They’re on the lookout for healthy alternatives and
so far, PepsiCo hasn’t met the demand. Now, this soda tax, which studies show reduces soda
consumption, will only worsen matters for the company.

Health-conscious laws are springing up all over the United States — and there’s nothing
PepsiCo can do. Sure, they can toss millions towards marketing to change public opinion. But
with health organizations (backed by the government) continuing to push for smart, healthy
choice-making, PepsiCo will find their backs against the wall. They’re not out for the count,
but they need to do something big sooner than later.

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Economic factors: The dollar working against them
PepsiCo isn’t worried about the past recession impacting their sales. No, they fear the
strength of the dollar and consumer opinion. Both caused a 0.4 percent loss in PepsiCo’s
revenue within one year.

Inflation, economic stability, and taxes affect PepsiCo. And that, mostly, is manageable. It
becomes trickier when so many of their products are bought overseas. Their prices are
affected by the local currency. But PepsiCo felt the first signs of trouble between 2015 and
2016.

The foreign-exchange rate can be a hit or miss for any company, PepsiCo especially. They
offer products all over the world after all. But the state of the dollar put pressure on PepsiCo
in 2016. The dollar was strong, but that only worsened matters for overseas ventures. Trouble
also appeared in Venezuela because the company couldn’t exchange the local currency.

The negative media image associated with their carbonated drinks impacted revenue that year
too. People shied away from soda, causing nearly a $1 billion dollar loss between 2015 and
2016 for PepsiCo.

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Social factors: Moving along with the times
PepsiCo is affected by the changes in their target market. Meaning, fluctuations in lifestyles,
money spending, and buying behavior impact sales and revenue. For any company, these
changes can be positive or negative. Lately, for PepsiCo, it’s been on the negative end.

Consumers are focused on making healthy lifestyle choices. Besides exercising, this often
means improving their diet. Buying and drinking soda is at an all-time low right now. In fact,
the beverage of choice for consumers is now water (overtaking soda). It’s not just that bottled
water is healthy and convenient. People are using the water as a base for artificial sweeteners.

Artificial sweeteners are powder or liquid flavors added to water to “jazz it up” — without
transforming the drink into hundreds of calories. Although more studies about the dangers of
artificial sweeteners are appearing, the public believes these flavor alternatives are a smarter
choice than soda. And that’s adding up for PepsiCo (as mentioned in the political and
economic sections above).

PepsiCo sees these changing trends. They know their consumers are looking to consume less
“bad” sugars. While they won’t change their oldest and beloved products, they are
reformulating and offering new products for the health-conscious consumers. They’ve
reduced the amount of sugar in their 7Up products. They’ve also launched a probiotics drink
line to branch into the healthy juices market. PepsiCo knows if they don’t get with the times,
there will be a time they no longer exist.

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Technological factors: Everything they could ever want is
at their fingertips
Even a company as well-known as PepsiCo still needs to advertise. Gone are the days of
throwing up a 20-second ad on television and seeing sales skyrocket. Thanks to the lovely
development of the internet, PepsiCo can now take advantage of online advertisements, social
media, and video marketing (YouTube).

We’ve seen other big name companies take advantage of online marketing. Remember the
Coca-Cola name campaign? They put random people’s names on their iconic coca cola glass
bottles. Customers went out, bought these bottles, and posted images all over social media. It
was fun, quirky, and easy. It made people think this bottle is for me!

It was a brilliant and wholesome marketing approach. PepsiCo had the means to accomplish
the same if they had so wanted. With their funds, PepsiCo can take advantage of the newest
technological advancements regarding artificial intelligence, machine learning, and digital
bots.

There’s no better way to connect with customers than through online marketing. It’s
especially easy for companies like PepsiCo, who are recognized all over the world. They
don’t have to compete with new companies who struggle to find their place in business.

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 PepsiCo’s Organizational Structure

PepsiCo’s organizational structure has been reformed several times to address changing
global market conditions. The company’s current corporate structure reflects the business
aims of global expansion and leadership. These aims highlight PepsiCo’s mission and vision
statements. PepsiCo’s strategies are also manifested in how its organizational structure
supports international growth. A firm’s organizational structure defines the system and design
of business components, and how these components interact to fulfill the firm’s mission and
vision. In PepsiCo’s case, the organizational structure enables control over the expansive
reach of the company around the world, considering significant differences among market
conditions..

Features of PepsiCo’s Organizational Structure

PepsiCo originally had a hierarchical organizational structure in its early years. However,
after a number of key mergers and acquisitions, along with global expansion, the company
has changed its organizational structure accordingly. The following are the main
characteristics of PepsiCo’s organizational structure:

1. Market divisions
2. Functional corporate groups/offices
3. Global hierarchy

Market Divisions. The most prominent feature of PepsiCo’s organizational structure is its
market divisions. These divisions are based on two variables: business and geography. In
terms of business, PepsiCo’s maintains one global division for Frito-Lay and another global
division for Quaker Foods. In terms of geography, the company has divisions for the
Americas, Europe, and other regions. The following are the market division in PepsiCo’s
organizational structure:

1. PepsiCo Americas Beverages

2. Frito-Lay
3. Quaker Foods
4. Latin America Foods
5. PepsiCo Europe
6. PepsiCo Asia, Middle East & Africa

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 Functional Corporate Groups/Offices. This characteristic of PepsiCo’s organizational
structure refers to basic business functions. The company has global or corporate offices for
these functions. PepsiCo’s objective in having functional groups is to ensure corporate
control and rapid implementation of policies and strategies. An Executive Vice President or
Senior Vice President heads each of these groups. The following are the main functional
corporate groups/offices at PepsiCo:

1. Global Categories and Operations

2. Global Research and Development
3. Human Resources
4. Finance
5. Government Affairs and Legal
6. Talent Management, Training and Development
7. Communications

Global Hierarchy. PepsiCo’s organizational structure also features a hierarchy that spans the
global organization. A hierarchy typically supports monitoring, control and governance at the
global/corporate level. PepsiCo has maintained considerable hierarchy for top-down
communications, monitoring and control. This characteristic of the organizational structure
also provides a means through which PepsiCo minimizes deviations from its policies and
strategies.

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SWOT Analysis of PEPSICO

SWOT Analysis of Pepsi

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PepsiCo’s Strengths
1. Best Global Brand – According to Forbes 2019 ranking, PepsiCo is ranked # 29 most
valuable brand with a brand value of $18.8 Billion. In 2020, PepsiCo was ranked 87th
largest company in the world in Forbes’ Global 2000.

2. Power of One Strategy – Selling “Food & Snacks” (Frito Lays, Cheetos, Doritos,
Kurkure) and “Beverages” (Pepsi, Gatorade, Tropicana) under one umbrella makes PepsiCo
a stronger and diversified business. Its food business accounted for 54%, and beverages
accounted for 46%.

Image source: PepsiCo annual report 2019

3. Highly Diversified Portfolio – The main strength of PepsiCo lies in the large number of
brands under its portfolio spanning across the food and beverage sector. PepsiCo has 22
brands, such as Pepsi, Diet Pepsi, Pepsi Max, Fritos, and others; each generates more than $1
billion in annual retail sales. While other companies struggled to meet their forecasts due to
market uncertainties, PepsiCo managed to meet and beat its forecasts thanks to its diversified
portfolio. Surging demand for its snacks like Lays and Doritos offset the decline in demand
for soft drinks.

4. Strong Global Presence – PepsiCo has exploited the benefits of a strong global presence
by partaking in more than 200 countries across the world. PepsiCo’s overwhelming presence
in markets across the world has enhanced global awareness and recognition of the brand
among consumers. One of the strengths that has enabled PepsiCo to go head-to-head with
competitors, such as Coca Cola.

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Image source: PepsiCo annual report 2019

Image source: PepsiCo annual report 2019

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 ensures faster restock better in-
store promotion and maximum visibility.

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6. Market Dominance: The marketplace favors superior and dominant businesses giving
them room to dictate terms. According to Information Resources, in 2019, Pepsi accounts
for 22 %, and Coca Cola accounts for 20% of the U.S. liquid refreshment beverage category.
It exploits its dominance to nurture favorable relationships with retailers gaining significant
and easily accessible shelf space.

7. Effective Marketing Strategy: Pepsi understands the importance of marketing evidenced

by the fact that it has been sponsoring the Super Bowl halftime show for seven years,
reaching an audience of 100 million people in 2019.  In 2020, Pepsi Super Bowl LIV
Halftime Show featured renowned performers and drew 104.1 million viewers. 

8. Iconic Youthful Brand: Pepsi’s target audience has always been a younger generation.
Pepsi has nurtured its image as an iconic youth brand. Historically, many iconic ads were
targeted towards pre-teens/ teens with the fun element of sports, music, etc.

9. Effective Supply Chain Management: In the current highly globalized marketplace,

businesses operate in different markets across the world to attain cost-efficiency, which can
be challenging without an effective supply chain management.

10. Marketing through Sports: Partnerships with sports clubs and organizations provides an
invaluable opportunity to advertise directly to consumers in sporting arenas..

11. Strong Corporate Social Responsibility: PepsiCo Foundation (philanthropic division)

works with hundreds of international, national, and community-based organizations to
enhance resource sustainability and tackle challenges facing societies across the world.

For example, PepsiCo has partnered with the Inter- American Development Bank (IDB) in
projects providing clean drinking water and improved sanitation in Latin America.

12. Customer Loyalty:  PepsiCo has an extremely loyal customer base, particularly among
the younger generation who love the iconic taste of the company’s soft drinks.

Recently, Pepsi has launched a first-ever cash back loyalty program “PepCoin” to reward
their loyal customers with cash prizes for pairing their favorite soft drink and snack.

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PepsiCo’s Weaknesses
1. Overdependence on Food and Beverages: Over dependency on carbonated soft
drinks and packaged foods undermine companies’ flexibility and agility in case of turmoil
in that segment. PepsiCo decided to go against the wise men by putting its eggs in one basket
– food and beverages. The company should diversify to avoid the possibility of losing
everything.

2. Products Perceived as Unhealthy: Perception is everything when it comes to consumer

products such as soft drinks and snacks. Most of PepsiCo’s carbonated soft drinks
contain high sugar concentrates while its snacks are excessively salted with chemical
additives and flavors. This a major weakness, particularly in the current health-
conscious consumer markets.

3. Effects of Failed Products: Failure in any venture is a weakness. PepsiCo’s failed

products such as Crystal Pepsi (Colorless Cola), Pepsi Blue, etc. demoralized employees
and portrayed them as incompetent in the public sphere giving room for the competition to
grow.

4. Controversial Advertisements: Companies are required to use their elevated position to

advance society’s common good. Unfortunately, in 2017, PepsiCo’s advert featuring Kendall
Jenner was criticized for trivializing the Black Lives Matter movement. The ad was pulled
after one day.

The company released this statement:

“Pepsi was trying to project a global message of unity, peace, and understanding. Clearly,
we missed the mark, and we apologize. We did not intend to make light of any serious issue.
We are removing the content and halting any further rollout. We also apologize for putting
Kendall Jenner in this position.”

This is a major weakness compared to the positive values of life, such as family get-togethers
consistently advocated for in most of Coca Cola’s advertisements.

5. Poor Environmental Record: PepsiCo was named one of the world’s top three plastic
polluters by Break Free from Plastic. The company has failed to adopt meaningful measures
to increase the recycling of its bottles.

6. Racially-Insensitive Products: The national debate over racial inequality in the US

brought attention to PepsiCo’s racially-insensitive products. The company was forced to
change the name and brand image of its Aunt Jemima after it was singled out as racist by
Black Lives Matter protesters. PepsiCo is also considering changing other products like
Uncle Ben’s.

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PepsiCo’s Opportunities
1. Product Diversification: Diversification into different segments enables businesses to
exploit benefits beyond their traditional field of operation and attain stability. Even though
PepsiCo has 22 brands under its portfolio, all these brands are concentrated within the food
and beverage industry. PepsiCo can exploit benefits in other segments by diversifying its
products portfolio into other sectors beyond food and beverages, such as sportswear, through
the acquisition of a small but established sportswear brand. PepsiCo can also diversify its
product portfolio to include alcoholic beverages. The company recently announced that it was
considering expanding into the alcoholic market after Coca-Cola Co announced they would
be introducing an alcoholic drink in the US market in 2021.

2. Expand E-Commerce: More customers are using digital channels for online shopping.
PepsiCo has the opportunity to exploit the benefits of online shopping by expanding its e-
commerce (mobile apps) and grow sales through these channels.

3. Enhance Alliances and Partnerships: In a globalized marketplace, businesses that seek

and nurture strong alliances and partnerships are more successful. For example, PepsiCo can
extend the current partnership with Starbucks into other areas to harness all benefits of their
partner’s numerous coffee outlets.

4. Increase Consumer-Driven R&D: Adaption to changes in the marketplace is the key to

success. PepsiCo has the resources to increase investment in research and development,
manufacturing, and go-to-market capabilities and attain an edge over competitors in the
changing consumer and retail landscapes. In FY2019, PepsiCo spent over $710 million on
research and development, with its R&D expenses ranging between $665 million and $760
million in the past seven years.

5. Expanding Operations in Emerging Market: The rapid growth and improved economic

situation in emerging markets in Africa, Asia, and South America provide PepsiCo with an
invaluable opportunity to expand its operations in these markets and grow its customer base.

6. Efforts towards Health-Conscious customers’ needs: PepsiCo has increased its focus on

reducing sugar, salt and fat in 75% of its food products by 2025 to less than 100 calories of
added sugar per 12 ounces, 1.3 milligrams of sodium per calorie and less than 1.1 grams of
saturated fat per 100 calories.

7. Increase Healthy Options: The fact that most of the soft drinks and snacks offered by
PepsiCo are considered as unhealthy implies that there is room for improvement.
Only 44% of PepsiCo’s beverage portfolio has under 100 calories per serving, which are
high and unhealthy. The company can exploit the opportunities presented by an increasing
number of health-conscious consumers by broadening product lines to include healthy
options such as milk or vegetable-based shakes.

8. Introduce New Flavors: Companies need to adapt to changes in consumer preferences

and tastes by ensuring consistent top-line growth. PepsiCo can introduce new flavors in the
soft drinks and snacks offered to the market and expand its customer base. The company

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recently introduced new flavors, including Pepsi Café that combines the flavorful taste of
coffee with Pepsi Cola.

9. Enhance Corporate Social Responsibility: Consumers’ decisions are influenced by

sentimental and emotional values. PepsiCo can enhance its corporate social
responsibility activities to enhance the sustainable use of renewable resources and tackle
issues affecting consumers directly, which strengthens loyalty while attracting new
customers. It joined consumers and other companies in condemning Facebook’s inaction
against hate speech and racism. PepsiCo pulled millions of ad dollars from Facebook as part
of its CSR to its customers.

10. Acquisition of Energy Drink– In March 2020, PepsiCo announced its plans to

acquire Rockstar Energy Beverages for $3.85 Billion to compete with its biggest
competitors Monster Beverage in energy drink space. PepsiCo also finalized the purchase of
South Africa’s Pioneer Foods for $1.7 billion.

11. At home Soda Machine – The company further expanded its push into healthier fare
with the $3.2 billion acquisition of at-home seltzer maker SodaStream and subsequently
launched of sparkling water brand Bubly.

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PepsiCo’s Threats
1. Stiff Competition: PepsiCo’s profitability and market share are threatened by stiff
competition from Coca Cola, Nestle, Dr. Peppers, Unilever, and so on. The competition
also threatens long-term sustainability and profitability because it increases the cost of
protecting market share through adverts, promotions, and discounts to retain customers.

2. Economic Slowdown or Recession: Even though food and beverage consumer markets
are going strong, the possibility of a slowdown or recession soon cannot be ruled out. In case
of a recession, PepsiCo can incur losses because its product portfolio is concentrated with
products, which are usually among the first expenses to be dropped by consumers during
economic hardship. In the 2008-09 recession, Pepsi had to cut over 3300 jobs due to a
decrease in soft drink sales. The company was forced to scrap its full-year forecast for the
2020-2021 fiscal year due to uncertainties in the market. It scrapped its projection of 4%
revenue growth for the year in the first quarter of 2020 after its net income fell to $1.34
billion from $1.41 billion a year earlier.

3. Competitors Adopt Technology More Effectively: In the current technologically

advanced and highly competitive business arena, the success or failure of businesses depends
on the adoption rate of emerging technologies. PepsiCo can lose competitive advantage to
competitors if they adopt game-changing technologies more effectively.

4. Changes in Demographics: Changes in demographics and economic situation transforms

target markets, which can impact businesses negatively. For example, the demographics of
Nordic nations such as Sweden (median age 41.1 years) have shifted with an increase in
older consumers and a decreased number of youths. These changes can threaten PepsiCo’s
profitability and sustainability because a large portion of its customer base consists of the
youth.

5. Increase in Trade Tensions: Uncertainty and instability impede effective operations. In

the past two years, US-China trade tensions have increased uncertainty and instability in
global markets. PepsiCo’s global operations can be undermined if trade tensions escalate,
leading to trade war, isolationism, and protectionism in the company’s markets overseas.

6. Government Laws and Regulations: In the recent past, governments have increasingly
adopted pro-health regulations to reduce lifestyle diseases and illnesses attributed to junk and
unhealthy products. Escalation of this trend in the future can undermine profitability,
sustainability, and even the existence of PepsiCo since its product portfolio consists mainly of
unhealthy soft drinks and snacks.

7. Increasing Health Consciousness: The fact that most of the soft drinks and snacks
offered by PepsiCo are considered as unhealthy implies that increasing health consciousness
in consumer markets is a threat (Cannibalism) to the company.

37
Chapter - 4

38
 Competitive Position – Coca-Cola Vs Pepsi
In 2010, Coca Cola’s total sales revenue was 32.14 billion, net income was 7.580 billion, and
gross margin was 65.57%. It has about 92,800 employees whereas its direct competitor Pepsi has
about 203,000 employees and DPS has only 19,000 staff. However, the subsequent picture
demonstrates direct competitors of Coca Cola –

Figure 7: Direct Competitor Comparison. Source: Yahoo Finance (2011)

Coca-Cola has strong presence in the international market; for instance, it has successfully
captured 51% share of the US market, 61% share of Mexican market, 56% share of German
market, and 51% of Brazilian market. On the other hand, PepsiCo has better position only in the
Middle East where Coca Cola created some controversy through their advertisement and lost their
market share in this zone.

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Product
Norden, Koch and Pronk (2008, p.14) stated that Coca Cola mainly focused on the beverages
sector and 40% of the products related with carbonated soft drinks, 20% of the products occupied
with juices, and rest of the parts also linked with soft drinks and water.

Figure 8: Product mix of

Coca cola. Source: Norden, Koch and Pronk (2008, p.14)

According to the annual report 2009 of PepsiCo, about 63% of its profit comes from food sector
and only 37% of total revenue generates from beverage sector. It is important to note that only
48% of its total profit comes from outside of the US market; so it should need to follow brand
expansion strategy to earn more from international market.

Figure 9: Mix of net revenue of

PepsiCo. Source: PepsiCo (2009, p.6)

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Network
The Coca-Cola Company and PepsiCo possess a rather complicated networking system. As global
distributors, both the companies went through an intricate process of networking in order to
deliver their products to the final consumers. However, a brief illustration of the networking is
shown in the figure below:

Figure 10: Common distribution channel of Coca-Cola and PepsiCo. Source: Self generated

41
Recommendations

Both Coca-Cola and Pepsi should develop its corporate social responsibility in
order to gain customers’ confidence as use of pesticides into the soft drinks
demonstrate that these companies not bother for public health issues but to making
profit with harmful product, particularly Indian people suffered health injury due to
consuming products of Coca-Cola.

According to the annual report 2009 of Coca-Cola and Pepsi, Global Financial
Crisis has reduced their sales in some extent, as people were busy to meet their
necessity rather than luxury; as a result, these companies should reduce operating
costs to avoid adverse impact from this situation.

It should note that Coca-Cola has already taken few fruitful initiatives, which help
the company to sustain as a market leader while Pepsi faced serious problem in
Chinese market and some other countries; so, this company should increase budget
for research to overcome such position.

As the customers’ choices are changing gradually, Coca-Cola should introduce new
products considering the market demand of the population by launching delicious
drinks with distinct flavours and tastes; in addition, it would be profitable for the
company to enter food market as PepsiCo enjoys competitive advantage in this
sector.

However, strong brand image is one of the main strength of the Coca-Cola but this
company had created some controversial issues; for example, its alignment towards
Israeli rather than Arabs reduced its market shares, Nazi affiliation to genocide of
470 workers in Colombia, and implementation of governmental policy of the US in
case of global operation created hindrance.

As a result, it should try to be more focus on the compliance of local rules and
regulatory barriers in Middle East and other Asian countries, and need to shape its
behavioural conduct to increase its market shares.

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Conclusion

In the changing pace of globalization, the international soft drinks market is going

through a massive change in terms of competitiveness in the market. Even in such

antagonistic environment, it is arguable that in many instances, the Coca-Cola

Company was able to uphold its reputation as the most successful beverage sellers

in the market.

Owing to the fact that the industry faces strong contention from a number of soft

drinks producers throughout the world, the industry giants like Coca-Cola

Company and PepsiCo constantly needs to come up with innovative ideas and

strategic approaches in order to remain the most significant choice of the large-scale

consumers.

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THANKYOU

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