PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase. PepsiCo’s business encompasses all aspects of the food and beverage market. It oversees the manufacturing, distribution, and marketing of its products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi Cola to an immensely diversified range of food and beverage brands. The largest and most recent acquisition was Pioneer Foods in 2020 for US$1.7 billion[3] and prior to it was buying the Quaker Oats Company in 2001, which added the Gatorade brand to the Pepsi portfolio and Tropicana Products in 1998.
As of January 2021, the company possesses 23 brands that have over US$1 billion in sales annually.[4] PepsiCo has operations all around the world and its products were distributed across more than 200 countries, resulting in annual net revenues of over US$70 billion. PepsiCo is the second-largest food and beverage business in the world based on net revenue, profit, and market capitalization, behind Nestlé. PepsiCo’s flagship product, Pepsi Cola has been engaged in a rivalry for generations with Coca-Cola; it is commonly referred to as the cola wars. Although Coca-Cola outsells Pepsi Cola in the United States, PepsiCo within the North American market is the largest food and beverage company by net revenue. Ramon Laguarta has been the chief executive of PepsiCo since 2018. The company’s beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in certain regions.
Pepsi has been repeatedly criticized by environmentalists for its relationship to negative environmental impacts of agriculture in its supply chain, and distributing operations such as palm oil-related deforestation and pesticide use, its use of water resources, and the negative impacts of its packaging—Pepsi’s packaging has consistently been one of the top sources of plastic pollution globally.[5] Similarly public health advocates have criticized Pepsi’s high-calorie, poor nutrition product lines along with other popular snack and drink manufacturers. In response PepsiCo has made public comments on its commitment to minimizing their impact but has not released public information documenting progress on most of its public commitments.
History
Origins
The soft drink Pepsi was developed by Caleb Bradham, a pharmacist and businessman from Duplin County, North Carolina. He coined the name “Pepsi-Cola” in 1898 marketing the drink from his pharmacy in New Bern, North Carolina. As his drink gained popularity Bradham founded the Pepsi-Cola Company in 1902 and registered a patent for his recipe in 1903.[6] The company was incorporated in Delaware in 1919. Bradham’s company experienced years of success leading up to World War I. However, sugar rationing during the war and a volatile sugar market in the war’s aftermath damaged the company’s financial health to such a degree that in 1923, Bradham declared bankruptcy and returned to running pharmacies in North Carolina.[7]
On June 8, 1923, the company trademark and secret recipe were purchased by Craven Holding Corporation. In 1931, Roy Megargel, a Wall Street broker, purchased the Pepsi trademark, business, and goodwill from Craven Holding in association with Charles Guth. Guth was also the president of Loft, Incorporated, a leading candy manufacturer based in Long Island City, New York. Loft ran a network with 115 stores across the Mid Atlantic at the time of Guth’s acquisition. Guth used Loft’s labs and chemists to reformulate the Pepsi syrup recipe, and he used his position as president of the company to replace Coca-Cola with Pepsi Cola at Loft’s shops and restaurants. Guth also used Loft resources to promote Pepsi, and moved the soda company to a location close by Loft’s own facilities in New York City.[8]
In 1935, the shareholders of Loft sued Guth for his 91% stake of Pepsi-Cola Company in the landmark case Guth v. Loft Inc. Loft won the suit and on May 29, 1941, formally absorbed Pepsi into Loft, which was then re-branded as Pepsi-Cola Company that same year. Loft restaurants and candy stores were spun off at this time.[citation needed]
In the early 1960s, Pepsi-Cola’s product lines expanded with the creation of Diet Pepsi and purchase of Mountain Dew.[9] In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc. At the time of its foundation, PepsiCo was incorporated in the state of Delaware and headquartered in Manhattan, New York. The company’s headquarters were relocated to the present location of Purchase, New York in 1970,[10] and in 1986 PepsiCo was reincorporated in the state of North Carolina.[11] After 39 years trading on the New York Stock Exchange, PepsiCo moved its shares to Nasdaq on December 20, 2017.[12]
Acquisitions and divestments
Between the late-1970s and the mid-1990s, PepsiCo expanded via acquisition of businesses outside of its core focus of packaged food and beverage brands; however it exited these non-core business lines largely in 1997, selling some, and spinning off others into a new company named Tricon Global Restaurants, which later became known as Yum! Brands, Inc.[13] PepsiCo also previously owned several other brands that it later sold so it could focus on its primary snack food and beverage lines, according to investment analysts reporting on the divestments in 1997.[14] Brands formerly owned by PepsiCo include: Pizza Hut,[15] Taco Bell,[15] KFC,[15] Hot ‘n Now,[16] East Side Mario’s,[17] D’Angelo Sandwich Shops,[18] Chevys Fresh Mex, California Pizza Kitchen,[19] Stolichnaya[20] (via licensed agreement), Wilson Sporting Goods,[21] and North American Van Lines.[22]
The divestments concluding in 1997 were followed by multiple large-scale acquisitions, as PepsiCo began to extend its operations beyond soft drinks and snack foods into other lines of foods and beverages. PepsiCo purchased the orange juice company Tropicana Products in 1998,[23] and merged with Quaker Oats Company in 2001,[24] adding with it the Gatorade sports drink line and other Quaker Oats brands such as Chewy Granola Bars and Aunt Jemima, among others.[25]
In August 2009, PepsiCo made a US$7 billion offer to acquire the two largest bottlers of its products in North America: Pepsi Bottling Group and PepsiAmericas. In 2010 this acquisition was completed, resulting in the formation of a new wholly owned subsidiary of PepsiCo, Pepsi Beverages Company.[26]
In February 2011, the company made its largest international acquisition by purchasing a two-thirds (majority) stake in Wimm-Bill-Dann Foods, a Russian food company that produces milk, yogurt, fruit juices, and dairy products.[27] When it acquired the remaining 23% stake of Wimm-Bill-Dann Foods in October 2011, PepsiCo became the largest food and beverage company in Russia.[28][29]
In July 2012, PepsiCo announced a joint venture with the Theo Muller Group which was named Muller Quaker Dairy. This marked PepsiCo’s first entry into the dairy space in the U.S.[30] The joint venture was dissolved in December 2015.[31]
On May 25, 2018, PepsiCo announced that it would acquire fruit and veggie snack maker Bare Foods.[32] It will also quarter-own allMotti in late November 2018 and it will be PepsiCo’s first owned Tech and Computer Service company.
On August 20, 2018, PepsiCo announced that it had entered into agreement to acquire SodaStream.[33][34] The purchase was completed in December 2018 as part of a strategic plan to steer Pepsi toward offering healthier products.[35][36][37]
In 2019, PepsiCo sued four small farmers in India US$142,000 each for growing a type of potato it says it owns.[38][39] Pepsi said they would end the suit if the farmers grew potatoes for them.[39] A number of Farmers’ associations are requesting that the government get involved in the case stating that Pepsi is attempting to intimidate people.[39] After pressure from the public as well as state and national governments, PepsiCo withdrew the lawsuit on May 2, 2019.
On October 3, 2019, PepsiCo announced that they will leave Indonesia after terminating their partnership with local distributor PT Anugerah Indofood Barokah Makmur (AIBM). Both companies stopped production of PepsiCo products on October 10. This has resulted in KFC and Pizza Hut chains in the country to switch to Coca-Cola products.[40][41]
On December 2, 2019, PepsiCo acquired the snacks brand, BFY Brands, who are going to be folded into the Frito-Lay division.[42]
In March 2020, PepsiCo announced that it had entered into agreement to acquire Rockstar Energy for US$3.85 billion.[43]
In January 2021, as a plan to fight global warming, PepsiCo announced that it is planning to achieve net zero greenhouse gas emissions by 2040, knowing that it had already started generating about 57 million metric tonnes of greenhouse gas emissions globally in 2019.[44]
On August 3, 2021, PespiCo announced that they have agreed to sell a majority stake in Tropicana, Naked and other North American juice brands to French private equity firm PAI Partners for US$3.3 billion, so that the company can concentrate on its healthy snack food business. Pepsi will hold a 39% stake in the joint venture as well as having exclusive rights to the brand in the USA.[45][46]
In August 2022, PepsiCo acquired a $550 million stake in the energy drink maker Celsius. [47] [48]
Competition
The Coca-Cola Company has historically been considered PepsiCo’s primary competitor in the beverage market,[49] and in December 2005, PepsiCo surpassed The Coca-Cola Company in market value for the first time in 12 years since both companies began to compete. In 2009, The Coca-Cola Company held a higher market share in carbonated soft drink sales within the U.S.[50] In the same year, PepsiCo maintained a higher share of the U.S. refreshment beverage market, however, reflecting the differences in product lines between the two companies.[50] As a result of mergers, acquisitions, and partnerships pursued by PepsiCo in the 1990s and 2000s, its business has shifted to include a broader product base, including foods, snacks, and beverages. The majority of PepsiCo’s revenues no longer come from the production and sale of carbonated soft drinks.[51] Beverages accounted for less than 50 percent of its total revenue in 2009. In the same year, slightly more than 60 percent of PepsiCo’s beverage sales came from its primary non-carbonated brands, namely Gatorade and Tropicana.[50]
PepsiCo’s Frito-Lay and Quaker Oats brands hold a significant share of the U.S. snack food market, accounting for approximately 39 percent of U.S. snack food sales in 2009.[50] One of PepsiCo’s primary competitors in the snack food market overall is Kraft Foods (now Mondelez International), which in the same year held 11 percent of the U.S. snack market share.[50] Other competitors for soda are RC Cola, Keurig Dr. Pepper, and independent brands varying by region.
Soviet Union
In 1959, the USSR held an exhibition of Soviet technology and culture in New York. The United States reciprocated with an exhibition in Sokolniki Park, Moscow, which led to the famous kitchen debate. One of the American products exhibited was Pepsi Cola. After obtaining a photo of U.S. President Richard Nixon and Soviet Premier Nikita Khrushchev sipping Pepsi, PepsiCo executive Donald Kendall was able to capture the attention of the Soviet people and, in 1972, negotiate a cola monopoly in the USSR. Due to Soviet restrictions on transporting roubles abroad, PepsiCo struck a barter deal whereby Stolichnaya vodka would be exchanged for Pepsi syrup. This deal lasted until 1990, when the USSR and PepsiCo re-negotiated a US$3 billion deal to exchange syrup for vodka and a small fleet of decommissioned Soviet warships including 17 submarines, a frigate, a cruiser and a destroyer.[52][53][54][55] This deal fell through before it could take place due to the fall of the Soviet Union and was renegotiated with the former nations of the USSR. The new trade deal included receiving cheese from Russia to supply its Pizza Hut locations and receiving double-hulled tankers from Ukraine.[56] The deal also originated an erroneous factoid which claims that, after acquiring the Soviet fleet, PepsiCo briefly possessed one of the most powerful navies in the world.[57] This is false as, not only did the deal ultimately not take place, it would have only granted PepsiCo “small, old, obsolete, unseaworthy vessels.”[57][58]