If PepsiCo has a chip on its shoulder about always being second in the cola market to Coke, at least the company puts it to good use. The biggest slice of PepsiCo's business now comes from Frito-Lay, the world's leading manufacturer of potato chips. The group was also far quicker than its rival to exploit the fast-growing non-carbonated market. Smart acquisitions such as Tropicana juice and sports drink Gatorade, a solid presence in bottled water with Aquafina and others, and globe-spanning partnerships with Unilever's Lipton and Starbucks have helped to counter its rival's strength in restaurant "fountain sales". However, PepsiCo has struggled in recent years to maintain growth in its carbonated drinks portfolio. A massive investment since 2008 in "Project Refresh", which aimed to completely rejuvenate the group's brands, yielded only limited results and the group was forced to combat activist investors calling for the drinks and snacks businesses to demerge as two separate companies. Combined revenues rose 5% in 2020 to $70.4bn; net income dipped slightly to $7.2bn. Beverages contributed roughly 45% of the global total and snacks the remaining 55%. That beverages business is stronger in the US than elsewhere - PepsiCo actually has a higher share of total US finished "liquid refreshment" retail sales than Coca-Cola, but the latter has virtual dominance of "fountain" sales in restaurants and bars. The group has a vast portfolio of brands. Gatorade and Tropicana both have a massive global footprint slightly behind Pepsi. Other brands include Mtn Dew, Sierra Mist and Propel, mainly in the US; global partnerships with Unilever for Lipton Ice Tea and with Starbucks for RTD products; 7Up outside North America, Mirinda, H2oh!, Sodastream sparkling water makers globally and Agusha, Chuda and Domik v Derevne dairy products in Eastern Europe. The vast global Frito-Lay snacks empire is partnered by Quaker Foods cereal and snack brands. The US alone accounts for 57% of sales and Mexico and Canada together for a further 10%. Russia is the group's 3rd largest market - famously Pepsi became in 1972 the first American consumer brand to be sold there, and PepsiCo is now the local leader in food and beverages as a result of purchases including fruit juice marketer Lebedyansky and juice and dairy giant Wimm-Bill-Dann. The UK is the 5th largest market through local subsidiairies Britvic and Walkers. Ramon Laguarta succeeded Indra Nooyi as CEO in 2018.
Capsule checked 16th August 2021
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Adbrands Daily Update 11th Aug 2021: In another strategic shift, PepsiCo is to dip its toe into alcoholic beverages in 2022 in a partnership with Boston Beer, makers of Samuel Adams and Angry Orchard. The two companies will team up to produce Hard Mtn Dew, a boozy version of PepsiCo's popular soft drink with 5% ABV. Boston Beer will make the drink, and PepsiCo will market and distribute it. Coca-Cola has already entered the flavoured alcoholic beverages sector with its Lemon-do brand in Japan and Topo Chico Hard Seltzer, a partnership with Molson Coors, in the US and Europe.
Adbrands Daily Update 3rd Aug 2021: In a surprise development, PepsiCo announced plans to sell Tropicana, Naked and its other fruit juice brands in North America to private equity investor PAI Partners in a deal valued at $4.5bn. PepsiCo will receive $3.3bn in cash and will retain a 39% stake as well as exclusive distribution rights. The business has been under pressure for several years. Sales in 2020 were around $3bn but profit margins have been slipping steadily, and PepsiCo wants to focus its attention on more lucrative lines. Tropicana was created in 1947 by Sicilian immigrant Anthony Rossi, who pioneered the invention of flash pasteurisation to allow a longer shelf life for fresh juice, which had previously been available nationally only in frozen concentrated form. It was acquired by Beatrice Foods in 1978, then by Seagram Company ten years later, before being acquired by PepsiCo in 1998.
Adbrands Daily Update 18th Mar 2021: It used to be just the sportswear companies that battled one another for multi-year, multi-billion-dolar endorsement contracts with sports stars. Now soft drinks are getting in on the act too. PepsiCo have signed basketball giant and pop cultural icon LeBron James to just such a deal, ousting Coca-Cola whose Sprite and Powerade he has promoted for almost two decades. No terms were disclosed. James' first outing for PepsiCo is the Mountain Dew energy spin-off Mtn Dew Rise. PepsiCo energy drinks CMO Fabiola Torres says Rise is aimed at people "looking for a morning boost with enhanced mental clarity and immune support that helps you conquer the morning to conquer the day. LeBron is the epitome of motivation and has achieved legendary status by seizing every morning. He not only continues to excel on and off the court but has dedicated his life to help others rise as well."
Adbrands Daily Update 10th Feb 2021: More than six months after it said it would change the name of its Aunt Jemima brand to eliminate racial stereotypes, PepsiCo's Quaker division unveiled the new name. The syrup and pancake range will adopt the name of its original creator, the Pearl Milling Company, which originally introduced the brand in 1889. Pearl Milling Company doesn't exactly roll off the tongue like Aunt Jemima, but it's the thought that counts.
Adbrands Daily Update 17th Jun 2020: Responding to the re-energised Black Lives Matter movement, PepsiCo and Mars have announced plans to review food products whose branding harks back to America's segregated past. PepsiCo's Quaker Oats division said it would change the packaging of its Aunt Jemima syrup and pancake mix range, acknowledging that the current mascot design was still "based on a racial stereotype". A change of name is also likely before the end of the year. "While work has been done over the years to update the brand in a manner intended to be appropriate and respectful, we realize those changes are not enough," said Quaker CMO Kristin Kroepfl. Mars was quick to follow, promising to evaluate "all possibilities" for its Uncle Ben's rice range. "As we listen to the voices of consumers, especially in the Black community, and to the voices of our Associates worldwide, we recognize that now is the right time to evolve the Uncle Ben's brand, including its visual brand identity," the company said. Colgate-Palmolve, too, said it would "review and evolve" the branding of its Asian toothpaste brand Darlie, known as Darkie until 1989. In China it is still marketed under a name that translates as "black person's toothpaste".
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