What enabled Adidas to be the Market Leader in the past__3_ by pptfiles


									    Primary Question for PepsiCo
Can PepsiCo continue their strong
performance in the North America market,
and also strengthen their presence in
developing markets, while at the same time
responding to changes in consumers’
                 Secondary Questions
•   What has PepsiCo done in the past to grow?
•   How is Pepsi structured and what are the relative
    performances of those divisions?
•   How are those divisions performing in various markets?
•   How is Pepsico performing in the snack foods industry?
Keys to PepsiCo’s Success and Growth

 Soft Drinks                  Salty Snacks

                Ability to
  Strategic                                  Relationships
               Build Strong                                     Growth
 Acquisition                                  with Retail
              PepsiCo Growth
• PepsiCo’s growth strategy has been mainly
  external focused.
  – Several successful mergers and acquisitions over
    the years.

• Adapting to changes in the external
  environment are critical to sustainable
                External Environment: PEST
    Category                               Issue                                 Threats/Opportunities

                                                                             Threat- not allowing PepsiCo to
                                                                              utilize Power of One Strategy
Political       FTC stipulations to merger of Quaker Oats                     with Gatorade. May impact             4
                                                                              their ability to acquire other
                                                                                   companies in future.
                                                                                Opportunity – increase in
Economic        Rising incomes in BRIC countries                             discretionary income will raise        5
                                                                              spend on drinks and snacks
                                                                              Threat to many of PepsiCo’s
                Change in customer preferences to healthier food and drink         existing products.
Social                                                                                                              4
                options in developed countries                               Opportunity for Quaker brands
                                                                              and new product innovation

                                                                                 Opportunity – improved
Technological   IT improvements in distribution network.                     relationships with retailers, less     3
                                                                                   chance of stock outs.
                  US Liquid Refreshment Market
   Beverage        Share of Total   Volume Growth   Pepsi Brand   Pepsi Market    Pepsi Market
                   US Beverages          Rate                        Share          Position
Carbonated Soft        48%              -2.6%         Several        31.1%       #2 behind Coke
    Drinks                                                                           (41.6%)
 Bottled Water         29%              6.9%         Aquafina         15%              #1

Fruit Beverages        13%              -3.3%        Tropicana        30%        #1, Coke Brand
                                                                                 Minute Maid #2
                                                                                     at 25%
 Sports Drinks         4.4%             2.5%         Gatorade         76%              #1

RTD Tea/Coffee          3%              14.3%        Lipton and      39.5%        #1, 4x Coke’s
                                                    Frappuccino                      Nestea
  Enhanced             1.7%             30.5%         Propel          40%              #1
 Energy Drinks          1%              24.6%          SoBe        Negligible    Negligible (Red
                                                                                 Bull #1 at 40%)

Pepsi trailing Coke in large but negative growth carbonated soft drinks. Also little
presence in high growth energy drinks. Possibly look to acquire Red Bull.

Pepsi dominating in the rapidly growing non-carbonated beverage categories which
position it well in North American market as consumers look for healthier drink options.
                   PepsiCo International Markets
                                                Country/Region   Carbonated      Salty Snack
   Country         Carbonated    Salty Snacks                    Market Share   Market Share
                   Soft Drinks   per month          India            49%            46%
                   per month
   United States   60 servings   6.6 servings       Russia           24%            43%

   Other           23 servings   4.0 servings       China            36%            16%
   Developed                                        Brazil           N/A            46%
   Developing      6 servings    0.4 servings
                                                   Mexico            N/A            75%

1. Great opportunity for growth in both developed and developing international
   markets, especially Brazil and China. Strong market share in many today, with
   exception of China

2. Pepsi should be focused on growing market share in China Salty Snacks,
   predicted to be largest market by 2010.

3. Power of One strategy could play well in international markets.
               Quaker Foods Brands
                                           Weak International Sales
                                            ($500 million total, 75%
                                               from 6 countries)

                   Strong sales
             (over ½) in better-for-you
            and good-for-you products

With exception of Gatorade, Quaker brands have limited success internationally.

Opportunity for growth in US and developed countries as consumers shift to
eating healthier.
      Quaker Foods North America
       Product         Volume           Market Share   Market
                       Growth Rate                     Position
       Quaker Oats     N/A              58%            #1
       Quaker Ready    Mid single       14%            #3 behind
       to Eat Cereal   digits                          Kellogg’s (30%)
                                                       and General
                                                       Mills (26%)
       Aunt Jemima     Slight decline   N/A            #1
       Rice-A-Roni     Double digit     33%            N/A

Many Quaker Foods brands have strong market share, but not
in the salty food or beverage markets. Majority of brands
compete in Ready to Eat Cereal space, against well-
established competitors Kellogg’s and General Mills.
PepsiCo Organizational Structure 2007
                                   PepsiCo Inc.

                            PepsiCo           Quaker Foods
    Frito Lay North                                                      PepsiCo
                        Beverages North       North America
    America (FLNA)                                                  International (PI)
                        America (PBNA)           (QFNA)

           29% Net             26% Net                                      40% Net
                                                  5% Net Revenue
           Revenue             Revenue                                      Revenue

        36% Operating       28% Operating          7% Operating          29% Operating
           Income              Income                Income                 Income

          28% Capital         20% Capital           2% Capital             50% Capital
         Expenditures        Expenditures          Expenditures           Expenditures

       22% Total Assets    24% Total Assets       3% Total Assets       50% Total Assets
   PepsiCo after 2008 Realignment
                                 PepsiCo Inc.

                                  PepsiCo              PepsiCo
                                Americas Foods      International

                                       Frito Lay
                                                       UK and Europe
                                    North America

                                    Quaker Foods
                                                         Middle East
                                    North America

                                    Latin America
                                                       Africa and Asia

Appears goal of realignment of divisions was to put more focus on
growth outside North America.

Question we have is did PepsiCo go far enough? Does not appear to
be much of a change.
             Question Facing PepsiCo

Carbonated           Healthy Snacks
How is Pepsico Performing in the
    Snack Foods Industry?
              Salty Snack Food Industry – Key Trends

• Due to these 3 key
industry trends, Pepsico
started developing new
flavors of salty snacks,
using healthier oils in
chips, & packaging
snacks in smaller bags.
•Pepsico should
differentiate its products
while staying committed      Indulgent Snacking
                                                                Growing Awareness
                                                                of nutritional content
to the industry trends.
          Frito Lay’s Commitment to Industry Trends

• Eliminating trans fats &
acquiring Flat Earth showed
FLNA’s commitment to the
publics growing awareness of
nutritional content.                Acquired Flat Earth         Eliminated Trans Fats from popular chips
                                (fruit & vegetable snacks)         (Lays, Fritos, Cheetos, Doritos, etc.)
•Introduction of new chip
flavors was a commitment to
the indulgent snacking trend.
•Did these commitments to
industry trends help or hurt
Pepsico’s market share of
convenience food?
                                                      Introduced indulgent
                                                   Doritos & Sun Chips flavors.
            U.S. Convenience Food Market Share

• Pepsico is the leading
manufacturer in the
market due to its                                Pepsico
commitment to industry               21%         Kraft Foods
trends.                                          Kellogg
•Their only close                                Master Foods
                                                 General Mills
competition seem to be                     12%   P&G
from Kraft Foods &                               Private Label
Hershey. But you cannot                          Others
count out the 37% of the              9%
market that “other”
manufacturers currently
Pepsico’s International Salty Snack Food Market Share
                      by Country
         Country            2006 % of Market     2010 Market
                            Share                Sizes (projected)
         Mexico             75                   #4
         Holland            59
         South Africa       57
         Australia          55
         Brazil             46                   #1 or #2
         India              46
         United Kingdom     44                   #3
         Russia             43                   #5
         Spain              41
         China              16                   #1 or #2

There is significant growth opportunity in international markets. Pepsico will
need focus on gaining more market share in the top 3 markets in 2010. They
will also benefit from an increase in servings per month in both developed and
developing international countries.

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