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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

Pepsi: Resurgence of the Second Fiddle

Pepsi: Resurgence of the Second Fiddle

LEE Seung-Hyeon

Aug. 6, 2009

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Originally released on June 4, 2009

PepsiCo's Transformation

Starting as a cola company in 1902, PepsiCo grew rapidly into the world's second largest food and beverage company after Nestle. However, it was only in 1997 when PepsiCo really started to expand in size. Comparing the sales revenues in 1997 and 2007, PepsiCo doubled its sales revenue from US$20.9 billion to US$39.4 billion. The company's net profit also grew fourfold from US$1.5 billion to US$5.7 billion during the same period. Even with the worsening global financial crisis in 2008, PepsiCo pulled off a 10% year-on-year growth in sales revenue to US$43.3 billion.

Throughout the years, PepsiCo transformed itself from a soft drink company to a total food and beverage company. PepsiCo currently owns 18 mega brands, 6 of which are soft drinks and 12 are health drinks and snacks, and together these brands raise over US$1 billion in annual revenue. Many of the company's popular brands such as Gatorade (sports drink), Tropicana (juice) and Frito Lay (snacks) hold No. 1 positions in the global market. In PepsiCo's sales revenue for 2008, carbonated drinks accounted for merely 20% while 47% of the company's operating profit came from snack brands such as Frito Lay, Doritos and Quaker Oatmeal.

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