History of the growth of pepsico worldwide


PepsiCo was formed in 1965 by the merger of Pepsi-Cola and Frito-Lay (#1 maker of snack chips in the world). The company's popular drink, Pepsi-Cola had been invented in 1898. In a bid to generate faster growth for the company, PepsiCo diversified into the restaurant business through a series of takeovers. It purchased Pizza Hut in 1977, Taco Bell in 1978 and Kentucky Fried Chicken in 1986. Soon, PepsiCo emerged as a world leader in the restaurant business.

In 1986, PepsiCo was reorganized and decentralized by combining its beverage operations under PepsiCo Worldwide Beverages and snack food operations under PepsiCo Worldwide Foods. In 1986, PepsiCo purchased 7-Up International, the third largest franchise soft drink outside the US. In 1988, the company reorganized along geographic lines - East, West, South and Central regions - each with its own president and senior management staff. Over the years, PepsiCo took several steps to bring its three restaurant chains together into a single division so that they could grow rapidly. The company brought all operations under a single senior manager and combined many back office operations like payroll, accounts payable and data processing, purchasing real estate, construction, and information technology.

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The company also took up aggressive re-franchising to improve financial returns and restaurant operations. With revenues of $17.80 bn, in 1990, PepsiCo was ranked among the top 25 of the Fortune 500 companies. By 1995, PepsiCo's sales had crossed $30.42 bn, and with 480,000 employees, Pepsi had become the third largest employer in the world after Wal-Mart and GM.

PepsiCo announced plans, in early 1997, to restructure its business. As a first step, the company decided to spin-off its restaurant business as an independent publicly traded company. PepsiCo also decided to sell-off its food distribution company.

Justifying his decision to spin-off the restaurant business, Enrico said that when the company acquired the restaurant business in the 1970s, the company had many reasons to do so. PepsiCo had enough cash, quality people, and the ability to build restaurant brands. When PepsiCo bought them, the brands like Pizza Hut and Taco Bell were very small businesses. The company allocated its resources to them and soon became the leader in the restaurant business. According to the executives of PepsiCo, the restaurant business had sufficient cash and quality personnel working for it. However, the restaurant culture and processes did not align with PepsiCo's organizational culture. Another reason for the spin-off was the management's efforts to make PepsiCo a focused packaged foods company, to compete with its archrival Coca-Cola

In September 1998, in continuation of its restructuring efforts, PepsiCo decided to separate its bottling operations from the company. PepsiCo's Pepsi-Cola business included two units - a bottling company and a concentrate company. The bottling operations, which were called Pepsi Bottling Group (PBG) after the spin-off, consisted of certain North American, Canadian, Russian, and other selected overseas bottling operations.

With sales of more than $7 bn, PBG was the world's largest Pepsi Cola bottler accounting for more than half of Pepsi Cola's North American volume. The concentrate company focused on product innovations and marketing Pepsi Cola's brands. It manufactured and sold beverage concentrate syrup to PBG and other Pepsi-Cola bottlers. The company also supported PBG and other bottlers in advertising, marketing, sales, and promotion programs. Analysts felt that PepsiCo's decision to spin-off its bottling operations would help the company compete more effectively in the beverage business and serve its retail customers better. PepsiCo was also expected to improve margins on its beverage operations, as bottling operations were less profitable than the supplying of beverage concentrate.

Through the spin-off of the restaurant business and bottling operations, PepsiCo aimed to bring consistency in financial performance and improve market performance. In the fiscal 1998, Pepsi Cola's volume grew by 7% worldwide with a growth of 10% in North America.

This growth was attributed to the strong sales of Pepsi One, Mountain Dew, Brand Pepsi, Aquafina, and Lipton Brisk. The volume growth of Frito-Lay was 5%, in the same year. Although the restructuring resulted in lower sales for the first year it led to higher profits. The margins and return on investment were also high. After spinning-off the bottling business, PepsiCo's return on equity increased from 17% in the fiscal 1996 to 30% in the fiscal 1998. According to the executives of the company, the company had strengthened its financials and wanted to concentrate on innovations and productivity improvements.

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The PepsiCo challenge is to keep up with archrival The Coca-Cola Company never ends for the world's soft-drink maker. PepsiCo's soft drinks (including Pepsi, Mountain Dew, and Slice) make up about one-quarter of its sales. (Bottling operations are run independently). Pepsi Co also owns Frito-Lay, the world's number 1 maker of snacks such as corn chips (Doritos, Fritos) and potato chips (Lay's, Ruffles). PepsiCo sells its Gatorade sports drink and Tropicana orange juice brands through other divisions. The company also sells Aquafina bottled water, Dole juices (licensed), Lipton ready-to-drink tea, and Rold Gold pretzels. Pepsi's mission is to be the world's premier consumer products company focused on convenient foods and beverages.

PepsiCo India

PepsiCo established its business operations in India in the year 1989

It is now the 4th largest consumer products company in India

PepsiCo has invested more than USD 1 billion in India since its establishment

PepsiCo has a diverse range of products from Tasty Treats to Healthy Eats

It provides direct and indirect employment to 150,000 people in India

It has more than 36 bottling plants including 13 Company & 23 Franchise owned ones

It has 3 state-of-the-art food plants in Punjab, Maharashtra and West Bengal

PepsiCo India's expansive portfolio includes iconic refreshment beverages such as Pepsi, 7UP, Nimbooz, Mirinda, Slice and Mountain Dew; in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks - Gatorade, Tropicana 100%, Tropicana Twister fruit juices.

PepsiCo's foods division Frito-Lay is the leader in the branded salty snack market and all it's products are free of trans-fat and MSG. It manufactures Lay's Potato Chips, Cheetos extruded snacks, Uncle Chips and traditional snacks under the Kurkure and Lehar brands. The company's high fibre breakfast cereal, Quaker Oats and low fat and roasted snack options like Aliva enhance the healthful choices available to consumers.