VIEWS: 3 PAGES: 17 POSTED ON: 2/17/2013
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’ preferences? 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 Complementary Soft Drinks Salty Snacks Goods Strong Ability to Strategic Relationships Build Strong Growth Acquisition with Retail Brands Partners 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 growth. External Environment: PEST Ranking Category Issue Threats/Opportunities (1-5) 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 Water 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 decline 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 PepsiCo Americas Americas Foods International Beverages Frito Lay UK and Europe North America Quaker Foods Middle East North America Latin America Africa and Asia Foods 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 DOES Non- Complementary Carbonated Healthy Snacks Goods Drinks How is Pepsico Performing in the Snack Foods Industry? Salty Snack Food Industry – Key Trends Convenience • 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 Hershey trends. Kellogg 37% •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 have. 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.
Pages to are hidden for
"What enabled Adidas to be the Market Leader in the past__3_"Please download to view full document