Diversification Of Pepsi Co Inc Inna Voronenko 764

Diversification Of Pepsi. Co, Inc. Inna Voronenko, #764 Lisa Ishchenko, #870 Vera Olevskaya, #1031 Ken Ayigbe, #1064 Alex Gaidai #889 Date: 14. 11. 2012 1

Table of Contents: 1. What is Pepsi. Co, Inc. ? 2. What’s about Pepsi. Co M&A? 3. What are Pepsi. Co’s Portfolios & How they clustered? 4. What are the Brands of Fun-for-You Portfolio? 5. What are the brands of Better-for-You Portfolio? 6. What are the brands of Good-for-You Portfolio? 7. Why Pepsi. Co has chosen these 3 ‘portfolios’? 8. What are Pepsi. Co’s Mega Brands? 9. What we can say about strategic fit between the brands? 10. What we can conclude? 11. Sources List 2 WIUU Business Policy, 2012. N. Syrotiuk

What is Pepsi. Co, Inc. ? Pepsi. Co Inc. is an American multinational food and beverage corporation headquartered in Purchase, New York, United States, with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products. It operates in four divisions: • Pepsi. Co Americas Foods (PAF) • Pepsi. Co Americas Beverages (PAB) • Pepsi. Co Europe • Pepsi. Co Asia, Middle East, and Africa Indra K. Nooyi CEO of Pepsi. Co (AMEA) 3 WIUU Business Policy, 2012. N. Syrotiuk

What’s about Pepsi. Co M&A? Mergers • On June 8, 1965, the merger of Frito-Lay and Pepsi-Cola Company was approved by shareholders of both companies, and a new company called Pepsi. Co, Inc. was formed Partnerships • As of 2010, its partnerships include: Starbucks(Frappuccino, Double. Shot and Iced Coffee), Unilever's Lipton brand (Lipton Brisk and Lipton Iced Tea), and Dole (licensed juices and drinks) • With the acquisition of Wimm-Bill -Dann (WBD) Pepsi. Co plans to raise revenue from nutrition products from $10 billions to $13 billions 4 WIUU Business Policy, 2012. N. Syrotiuk

What are Pepsi. Co’s Portfolios & How they clustered? “By expanding our portfolio, we are making sure our consumers can treat themselves when they want enjoyable products, but are able to buy a range of appetizing and healthier snacks when they are being health-conscious. ” © Indira K. Nooyi Pepsi. Co doesn’t try to disguise its products as something that they are not. PEP has three very distinct portfolios of food and beverage: "Fun-for-You" • • Pepsi. Co’s core food & beverage business Products have some characteristics that are not favorable for healthy lifestyle "Better-for-You" • • In line with global dietary intake recommendations Includes fewer or no calories & less added sugar products "Good-for-You“ • • Includes products that deliver positive nutrition Some products provide functional benefit to athletes 5 WIUU Business Policy, 2012. N. Syrotiuk

What are the Brands of Fun-for-You Portfolio? The Fun-for-You portfolio has all the really tasty, salty, sugary staples, for example: - Mountain dew (is a carbonated soft drink brand produced and owned by Pepsi. Co. The original formula was invented in the 1940 s by Tennessee beverage bottlers Barney and Ally Hartman and was first marketed in Marion, Virginia) - Cheetos (is a brand of puffed cornmeal, cheese-flavored snack made by Frito-Lay, a subsidiary of Pepsi. Co) 6 WIUU Business Policy, 2012. N. Syrotiuk

What are the brands of Better-for-You Portfolio? The Better-for-You portfolio contains products that still have that staple name, without so much of the bad stuff, for example: - Fritos Bean Dip (fat-free, no gluten ingredients, no gluten & milk ingredients, No milk ingredients, Mono Sodium Glutanat free, Soy free) - Propel Zero (0 calories enhanced water beverage with antioxidant & vitamins) 7 WIUU Business Policy, 2012. N. Syrotiuk

What are the brands of Good-for-You Portfolio? The Good-for-You portfolio is downright wholesome, with products like: - G Series PRO (Originally developed exclusively for college and pro athletes, G Series Pro products are the ultimate in sports nutrition from Gatorade) - Naked Juice Smoothie (is an American brand of natural fruit juice drinks produced by the Naked Juice Company of Monrovia, California) 8 WIUU Business Policy, 2012. N. Syrotiuk

Why Pepsi. Co has chosen these 3 ‘portfolios’? What’s important about this separation is that: • Pepsi. Co doesn’t have to pretend to care about the sugar in Pepsi or the salt in Lay’s • It offers viable alternatives while keeping true to its mainstream brands. • Pepsi didn’t change its taste for the healthy consumer. • If healthy choices are here to stay, Pepsi. Co is well positioned to continue doing what they are doing with the healthier portfolios. 9 WIUU Business Policy, 2012. N. Syrotiuk

What are Pepsi. Co’s Mega Brands? Pepsi. Co has 19 Mega Brands that each generated $1 billion or more in 2010 in annual retail sales (estimated worldwide retail sales in billions): - Pepsi Cola - Mountain Dew - Lay’s Potato Chips - Gatorade - Tropicana Beverages - Quaker foods & snacks, etc. 10 WIUU Business Policy, 2012. N. Syrotiuk

What we can say about strategic fit between the brands? Fits/Why? Doesn’t fit/Why? • Pepsi. Co to find a good strategic fit in most of the businesses they have acquired. • In 2010 Net revenue declined 3% and volume declined 1% compared to previous year. The volume decline primarily reflects low-single-digit declines in Oatmeal and ready-to-eat cereals. • A key advantage for Pepsi. Co is that customers across the globe have similar tastes and this has assisted the company in implementing global strategies and being able to execute marketing and distribution similarly in all regions. • Unfavorable mix and net pricing also contributed to the net revenue decline. • An opportunity exists for Pepsi. Co in the good-foryou and better-for-you markets that they are just starting to implement across their products. 11 WIUU Business Policy, 2012. N. Syrotiuk

What we can conclude? ü Pepsi. Co diversified it’s brands into three conceptual portfolios (Fun-for- You, Better-for-You & Good-for-you)each of which are aligned in such product set, that satisfies consumer needs and can easily complement different people lifestyles; ü The most successful PEP brands that was generated as a result of M&A are: Lay’s Potato Chips, Gatorade, Tropicana Beverages, etc. ü Strategic Fit between Pepsi. Co’s brands was achieved with help of product & consumer taste similarities, which assists company in implementing they’re global strategies across the world without painstaking specification in each region. 12 WIUU Business Policy, 2012. N. Syrotiuk

Sources List: • Pepsi. Co 2010 Annual Report • http: //en. wikipedia. org/wiki/Pepsi. Co • http: //finance. yahoo. com/q/pr? s=PEP+Profile • http: //www. economist. com/node/15772138 • http: //seekingalpha. com/article/314185 -pepsico-good-for-you-and-yourportfolio 13 WIUU Business Policy, 2012. N. Syrotiuk