PepsiCo SWOT Analysis 2024: An Ultimate Report With Advice

PepsiCo is recognized in all nations by almost all generations of people in different brand names, and instantly we realize how much and how long the company has been in our life.

In its almost 60 years of history, the company has built and not to mention all emotional connections with people through many strengths, weaknesses, opportunities, and threats, which we will get to know in this PepsiCo swot analysis.

PepsiCo: Company Overview

Even though the company “PepsiCo” was created in 1965 through the merger of Pepsi-Cola and Frito-Lay, the ‘real’ journey started long ago. A mere drug store owner named Caleb Bradham introduced a drink called “Brad’s Drink” in 1893 which later became the famous “Pepsi-Cola.”

The company operates in over 200 countries and territories worldwide, reported a total revenue of $86.392B, and has more than 315,000 workers in 2022. The company’s products include various beverages and snacks, including Pepsi, Gatorade, Tropicana, Quaker Oats, Lay’s, Doritos, and Cheetos, and providing consumers with convenient and tasty products that fit their changing lifestyles.

Product & Services of PepsiCo
Snacks | Soft Drinks | Dairy | Juices | Grains

PepsiCo Competitors
Coca-Cola | Keurig Dr Pepper | Monster Beverage Corp | General Mills | Conagra | Unilever | Nestlé | RedBull | Britvic | Danone

Did You Know?

PepsiCo made history by becoming the first American company to sell products in the Soviet Union just before the collapse of the Soviet Union in 1985.

Strengths – PepsiCo SWOT Analysis

Strong Brand Recognition: Under the PepsiCo umbrella, It has strong brand recognition, with many of its brands being household names. Pepsi is one of the most recognized and consumed soda brands globally, while Gatorade is a famous sports drink brand that has helped build and maintain brand recognition.

Diverse Portfolio: People might know PepsiCo because of its famous brands, but more are dominating the market, including beverages and snacks catering to various consumer preferences. Besides Pepsi and Gatorade, brands like Tropicana, Mountain Dew, Aquafina, and snacks brands such as Lay’s, Doritos, Cheetos, and Quaker Oats allowed the company a broader reach in the market.

Efficient SCM: To keep up with the market competition, the company had to maintain a highly efficient supply chain management system to streamline its operations and reduce costs. PepsiCo has implemented automation and a direct-store-delivery (DSD) model to deliver products directly to retailers, reducing the need for intermediaries.

Loyal Customer Base: It takes decades to build a loyal customer base, and PepsiCo didn’t make any mistakes in this case. Pepsi’s marketing campaigns and partnerships with sports and music events have helped the brand resonate with consumers worldwide. Additionally, PepsiCo has activated various loyalty strategies to increase customer retention.

Steady Finance: With consistent revenue growth and profitability, the company has demonstrated stable financial performance. The company reported net revenue of $86.392B, representing an 8.7% increase compared to the previous year, and a healthy profit margin, with a net income of $8.91B in 2022.

Strategic Campaigns: When it comes to promoting the brands and the company, PepsiCo has done an excellent job throughout the year with several strategic campaigns promoting products and engaging with consumers. One notable campaign was the “Live for Now” campaign, which aimed to appeal to millennials and featured high-profile celebrities like Beyoncé and Kendall Jenner. Another campaign was the “Do Us a Flavor” campaign, which encouraged consumers to submit ideas for new potato chip flavors, resulting in over 14M entries.

Weaknesses – PepsiCo SWOT Analysis

Unbalanced Revenue Portfolio: As you can guess, PepsiCo’s revenue portfolio is unstable, with a significant portion of its revenue coming from its beverage division, mainly carbonated soft drinks. As per the data, PepsiCo’s American beverage division generated around $12B in revenue, while the North American snack division generated $14B in 2022. The global number is almost identical, proving the concern.

Controversial Advertisement: The company has faced several backlashes because of its controversial ads. PepsiCo faced backlash for a Mountain Dew ad criticized for being racist and promoting violence against women in 2013. After that, in 2017, a controversial advertisement featuring Kendall Jenner was charged for trivializing the Black Lives Matter movement.

Recall Items: The company recalled products over the year for various reasons. The incident happened for certain Frito-Lay products due to potential Salmonella contamination in 2016. After that, PepsiCo recalled certain bottles of Aquafina bottled water due to a production error in 2018. And recently, in 2023, they had to do another Starbucks Frappuccino recall-incident items all over the USA, and the amount was 25,200 cases which is vast.

High Debt Ratio: The company had a debt-to-equity ratio of 2.06, higher than the industry average in 2022. Besides, PepsiCo took on additional debt to fund its acquisition of Rockstar Energy Beverages for $3.85B, which increased the debt amount and raised concerns about financing its operations and investments.

Opportunities – PepsiCo SWOT Analysis

Market Expansion: Even though PepsiCo faces cutthroat competition from international brands like Coca-Cola and other countries’ local brands and still takes a heavy beating, it tells that there is much more room to grow. As a result, the company has invested heavily in China, India, and other Asian countries, where demand for snacks and beverages is rising.

Offerings Diversification: People demand new things with change, no matter how many options there are in the market. To meet that demand, the company has the opportunity to diversify its offerings beyond traditional soda and snack products to include healthier options, such as low-calorie drinks and whole-grain snacks, and many more.

Better CSR Activities: Companies like PepsiCo, Coca-Cola, and other brands are facing a massive backlash because of the waste amount, and they have a lot to make up for. As a result, PepsiCo has a strong commitment to corporate social responsibility (CSR) and has implemented various initiatives to promote sustainability, community engagement, and ethical business practices.

Partnerships & Acquisitions: To survive and grow in the market, strategic partnerships and acquisitions are the way to expand its product portfolio and geographic reach. PepsiCo acquired Rockstar Energy Beverages and partnered with Beyond Meat to develop and distribute plant-based snacks and beverages.

More R&D Efforts: While PepsiCo invests heavily in marketing and innovation, its R&D efforts are lacking compared to its competitors. The company can treat the situation as an opportunity, increase its R&D investments, and develop new products that cater to changing consumer preferences, such as healthier and more sustainable options.

Threats – PepsiCo SWOT Analysis

Strong Competition: In the FMCG industry, the competition is cutthroat, and as for PepsiCo, the company faces intense competition from other global food and beverage companies. Coca-Cola is PepsiCo’s main competitor in the beverage market, with both companies competing for market share in the carbonated and sports drink segments. Besides, it competes with Nestle, Mondelez International, and Kellogg Company in the snack segment.

Health Perception: Consumers are becoming increasingly health-conscious and demanding healthier food and beverage options. Even with all the efforts to produce healthier alternative beverage options, soft drink sales have declined in recent years, highlighting the impact of health perception on consumer behavior.

Lawsuits: From false advertising claims to allegations of health risks associated with its products, PepsiCo has faced several cases over the years. PepsiCo settled a lawsuit that alleged its “Naked Juice products” was misleadingly marketed in 2017. And the company was sued by the US Equal Employment Opportunity Commission (EEOC) over allegations of hiring discrimination against African Americans.

Environmental Concerns: Concerns have been raised about the ecological impact of PepsiCo’s operations, particularly concerning the company’s use of packaging materials and carbon emissions. The company’s plastic uses 2.3B tons on average and 137K of plastic pollution. As a result, if the company adequately addresses these issues, it will hamper its reputation, and people will hold PepsiCo accountable.

Labor Issues: PepsiCo has faced labor issues, including allegations of human rights violations in its supply chain and exploitation of workers. Not to mention constant protests from the workers about low and unpaid wages, poor working conditions, and job security. All these issues not only delay and affect organizational efficiency but also hamper the company’s reputation.

[Bonus Infographic] SWOT Analysis of PepsiCo

Recommendations for PepsiCo

PepsiCo has been facing many issues for quite some time and needs to start working on those to stay competitive.

• PepsiCo should invest more in R&D to develop new products that meet the changing demands of its customers.
• The company must continue to invest in sustainable operations and practices to reduce its environmental impact.
• The company should diversify its product portfolio to include healthier options.
• Multiple CSR activities will help the company to reach a new dimension and increase brand recognition in a better way.
• More strategic partnerships and acquisitions will help the company to enter new markets.

Frequently Asked Questions (FAQs)

Final Words on PepsiCo SWOT Analysis

PepsiCo is a leading global food and beverage company with a diverse range of popular products worldwide. The company has a strong brand portfolio, recognition, an efficient supply chain, a loyal customer base, and steady finance. While its high debt ratio, lawsuits, environmental issues, and unbalanced revenue portfolio have been a concern, PepsiCo’s continued focus on delivering innovative and convenient products that meet changing consumer preferences and lifestyles positions it for continued success in the years ahead.

References

• Wikipedia contributors. (n.d.). PepsiCo. Wikipedia.
• Shetty, A. (n.d.). A study on Pepsico Distribution. Academia.edu.
• Askew, K. (2021, July 2). PepsiCo talks health and reformulation across drinks and snacks: ‘The key is to get a product that consumers choose because it tastes great.’ Food Navigator.
• Balakrishnan, A. (2015, March 26). Soft drink sales hit a decade of decline. CNBC.
• Yi, B. L. (2016, June 15). Exploitation, child labor found in Indonesia palm oil linked to PepsiCo: charities. Reuters.
• Edwards, J. (2022, December 15). $13M Pepsi settlement over unpaid wages following Kronos hack approved. Top Class Actions.