Porter’s Five Forces Analysis of Pepsi Co
|Industry||Food, Soft Beverages|
|Headquarters||Purchase, New York, USA|
|CEO||Ramon L. Laguarta|
|Revenues||US$79.47 billion, 2021|
|Competitors||Coca-Cola ,Red Bull, Keurig Dr Pepper|
PepsiCo, Inc. produces, markets, distributes, and sells beverages, meals, and snacks. It runs through the following commercial sectors: Latin America, Europe’s Sub-Saharan Africa, Frito-Lay North America, Quaker Foods North America, North America Beverages, and Asia, the Middle East, and North Africa. Snack foods are sold by the Frito-Lay North America segment. Cereals, rice, and pasta are all part of the Quaker Foods North America division. Fountain syrups, finished goods, and beverage concentrates make up the North America Beverages segment. The beverage, food, and snack industries in Latin America are covered under this category. The beverage, food, and snack products in Europe and Sub-Saharan Africa regions are included in the Europe Sub-Saharan Africa section. Snack food items are available in the Asia, Middle East, and North Africa region.It is ranked at 45 on Fortune 500 and ranked at 86 on Forbes 2000 and ranked at 2 on Forbes 2000 global largest food companies.Company was founded in 1902 and afterwards, in 1965, the Pepsi-Cola company merged with Frito-Lay Inc, to form PepsiCo
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is a popular framework for examining business strategies in light of the industry in order to lessen rivalry and increase profits. It was developed in 1979 at Harvard Business School by Professor Michael E. Porter.
Pepsi Rivalry among Existing Competitor
PepsiCo. operates through Frito-Lay North America, Quaker Foods North America, Latin America, North America Beverages, Europe Sub-Saharan Africa, and Asia, Middle East, and Africa. It is one of the most prestigious international food and beverage organizations. The company’s food division performs the best, while being best known for a soft drink. In 2021, Frito-Lay alone brought in about $20 billion in revenue, or about one-fourth of PepsiCo’s overall global revenue.
At US$238.13 billion in 2021, it was smaller than Coca-Cola, which had a market capitalization of US $282.86 billion. Between January 2016 and February 15, 2021, PepsiCo launched 342 new products, outpacing competitors like the Coca-Cola Company and Nestlé, both of which had 327 new product launches during that time period, in the non-alcoholic beverages industry in the United States. Its income increased from US$39.47 billion in 2007 to US$79.47 billion in 2021 if we look back over the last two decades.Its segment wise revenue as percentage of total revenue for 2021 is as follows: Frito-Lay North America 25%, Quaker Foods North America 3%, Latin America 10%, North America Beverages 32%, Europe 16% Africa Middle East and south Asia 8%,Aisa pacific , Australia, New Zealand and China 6%.Highest profit generated by Frito-Lay North America 44% and at 2ndNorth America Beverages 19% of total profit respectively for 2021.
Coca-Cola: It was founded in 1886, following is Coca-projected Cola’s 2021 global unit case volume by operating segment: Asia Pacific accounts for 23%, followed by Europe, the Middle East, and Africa (29%), Latin America (27%), North America (18%), and Global Ventures (3%).
Globally, the revenue of The Cola-Cola Company has fluctuated in recent years; beginning in 2017, Coke struggled as consumer preferences shifted away from sugary beverages. Even Coke’s diet brands experienced a decline as a result of the health risks associated with artificial sweeteners. However, thanks to their marketing and R&D efforts, low sugar beverages were able to recoup their sales momentum and, in their most recent fiscal year, they reached about US$40 billion. In contrast, Coca-Cola outperformed PepsiCo in terms of market capitalization, with a market value of $282.86 billion as opposed to $238.13 billion for PepsiCo. Additionally, PepsiCo made US$35.76 billion in 2021 compared to Coca-US$38.66 Cola’s billion in revenue from the beverage industry alone.
Red Bull: The business was founded in 1987, and Fuschl am See serves as its current Austrian headquarters. Eastern Europe (+22%), Brazil (+22%), and India (+30%) were the three fastest-growing markets. Due to a marketing strategy based on extreme sports, Red Bull has sold 75 billion cans worldwide since its 1987 debut. Three of the new organic sodas, including the energy drink’s new brand, were caffeine-free.
The company’s global revenue in 2021 is€8.87 billion. Red Bull was the most widely used energy drink in the nation in 2022. The company operates internationally in more than 166 countries. Red Bull was the second-most valuable beverage brand globally in 2021, with a brand value of around US$14.9 billion. Red Bull comes in second place for the most valuable soft drink brand globally, surpassing well-known brands like Pepsi or Lipton.
Keurig Dr Pepper: Keurig Dr Pepper, Inc. produces non-alcoholic beverages and sells them. It engages in the segments of coffee systems, packaged beverages, beverage concentrates, and latin American beverages. The company was founded in the middle of 2018 by the merger of Keurig Green Mountain and Dr Pepper Snapple Group, and it is headquartered in Burlington, USA. It has been observed that the following revenue growth is constant: US$5.53B in 2009 to US$12.8B in 2021. From 2017 through 2021, its revenue was $6 billion, $7 billion, $11 billion, $10 billion, and $10 billion, respectively.
Pepsi Threat of New Entrants
- Economies of Scale: When the major players in a sector reach the highest output level feasible on an international scale, which enables them to significantly reduce per-unit production and distribution costs, it becomes challenging for new entrants to compete on price. The global beverage market is predicted to reach US$223 billion in 2023, while Coca-Cola and PepsiCo now possess a 33 to 35% market share based on their respective revenues of US$38.65 billion and US$35.76 billion, respectively.
- Time to become established: Coca-Cola Enterprises Since it was founded in 1886 and PesiCo was established in 1902, the business has established global distribution networks that are particularly challenging for competitors to match. More than one billion people worldwide use PepsiCo products every day in more than 200 nations and territories.
Pepsi Bargaining Power of Suppliers
PepsiCo has a big variety of suppliers and a global footprint, thus their bargaining power is very low. In the United States, they spent more than US$1.6 billion on its diversified suppliers in 2021. This shows PepsiCo’s commitment to increasing the participation of diverse suppliers in our supply chain by including Tier 2 spend reported by non-diverse suppliers.
Pepsi Bargaining Power of Buyers
- Large number of users: As PepsiCodrink by huge number worldwide and its users is small individual in large numbers, so it reduces customer bargaining power significantly.
- Worldwide availability:As PepsiCo is available in more than 200 countries, so customers prefer PepsiCo over other beverages that do not have global presence.
Pepsi Threat of Substitute Products or Services
- Brand Value:The main opponent of the product is Coca-Cola, which has a long-running conflict with PepsiCo. The market leader, however, is Coca-Cola, which has a global brand value of almost US$35 billion compared to Pepsi’s US$21 billion.
- Product Diversity:It is challenging for competitors to obtain a competitive edge over the bulk of product lines because of product diversity. Coca-Cola is a significant rival in the soft drink business, but PepsiCo dominates the market by selling Frito-Lay North America, which is expected to produce US$19.87 billion in revenue in 2021 and generate the largest profit of any industry segment at 44% of total profit.
- PepsiCo, Profile, Fortune 500
- PepsiCo ranking at Forbes Global 2000, Forbes
- Forbes, Profile,see link here |Coca-Cola
- Forbes, Profile, see link here |Red Bull
- Forbes, Profile, see link here |Keurig Dr Pepper
- Coca-Cola Company – statistics & facts available at| Statista
- Most valuable soft drink brands worldwide in 2021, based on brand value(in million U.S. dollars) available at| Statista
- Coca-Cola Annual Reports available at| Coca-Cola
- PepsiCo – statistics & facts available at| Statista
- The 100 largest companies in the world by market capitalization in 2022(in billion U.S. dollars) available at| Statista
- Leading beverage companies worldwide in 2021, based on sales(in million U.S. dollars) available at| Statista
- Top companies in the non-alcoholic beverages* sector in the United States between 2016 and 2021, by number of new product launches available at| Statista
- Revenue of Red Bull worldwide from 2011 to 2021(in billion euros) available at| Statista
- Keurig Dr Pepper Revenue 2010-2022 | KDP available at| MacroTrends
- The World’s Largest Nonalcoholic Beverage Company available at| Coca-Cola
- Global Leader in Convenient Foods and Beverages available at| PepsiCo
- FORBESBUSINESSFOOD & DRINK, Forbes Global 2000: The World’s Largest Food Companies In 2022 at Forbes
- PepsiCo, Profile available at Forbes
- PepsiCo Annual report 2021 at OfficialWeb of PepsiCo
- PepsiCo’s net revenue worldwide from 2007 to 2021(in billion U.S. dollars) at Statista
- Beverages – Worldwide at statista
- Brand value of Red Bull worldwide from 2016 to 2022(in billion euros) at Statista
- Number of Red Bull cans sold worldwide from 2011 to 2021(in billions) at Statista
- Keurig Dr Pepper profile at Statista
- News and events, Keurig Dr Pepper Announces Successful Completion of the Merger between Keurig Green Mountain and Dr Pepper Snapple Group, Combination Creates a New Challenger in the Beverage Industry at Official web of KeurigDrPepper
- About PepsiCo at PepsiCo officialwebsite
- Brand value of the most valuable non-alcoholic beverage brands worldwide as of 2022(in million U.S. dollars) at Statista