Pepsico Company Competitive Analysis
INDUSTRY AND COMPETITIVE ANALYSIS
PepsiCo positions itself as a global food and beverage company, it’s main industries are non alcoholic beverages (47% of revenue)(Fig 1.) and snack foods (57% of revenue).
Industry
The beverage industry is a mature, dynamic and fragmented industry. The biggest challenge facing the beverage industry today is the declining consumption of carbonated soft drinks in developed markets. Carbonated soft drink consumption is known to bear a high correlation with the incidence of obesity, diabetes and other related issues.
This is the primary reason behind the consistent decline in carbonated soft drinks volumes seen over the last decade in developed markets. Consumers in the developed markets are not only well-informed,
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Consumers have begun to seek out healthier alternatives. Both brands (PepsiCo and Coca-Cola)have seen recent decline amid increased competition, and analysts foresee a continued downward trend for the two main brands, although these two companies are expected to continue to dominate the overall beverage market.
PepsiCo is focusing on the innovation of new products across its food and beverage businesses. In 2014, PepsiCo spent $718 million on research and development costs, up 8% compared to the previous fiscal year. PepsiCo’s innovation is more focused on health and fitness products in both its snack food and beverage businesses as health-conscious consumers are looking to reduce their salt and sugar intake. In 2014, PepsiCo generated 20% of its revenue from its nutrition
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The soft drink companies distribute the beverages to these stores, for resale to the consumer. The bargaining power of the buyers is very evident and strong. Large grocers and stores buy large volumes of the soft drinks, allowing them to buy at lower prices. Restaurants have less bargaining power because they do not order a large volume. However, with the number of people are drinking less soft drinks, the bargaining power of buyers could start increasing due to decreasing buyer
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