PepsiCo

PepsiCo

Type	Public (NYSE: PEP)
Industry	Food Beverages
Founded	New Bern, North Carolina, U.S. (1890)
Founder(s)	Caleb Bradham Donald M. Kendall Herman W. Lay
Headquarters	Purchase, New York, U.S.
Area served	Worldwide
Key people	Indra Nooyi (Chairperson and CEO)[1]
Products	Pepsi Diet Pepsi Mountain Dew AMP Energy Aquafina Sierra Mist SoBe Starbucks Frappuccino Lipton Iced Tea 7up Mirinda Izze Tropicana Products Copella Naked Juice Gatorade Propel Fitness Water Quaker Oats Company Lay's Doritos Cheetos Kurkure Fritos Rold Gold Ruffles Tostitos Slice
Revenue	US$44.3 billion
Operating income	US$7.3 billion
Net income	US$6.24 billion
Total assets	US$39.8 Billion (FY 2009)[2]
Total equity	US$16.8 Billion (FY 2009)[2]
Employees	203,000 (2010)
Divisions	PepsiCo Americas (PepsiCo Ameri Food, PepsiCo Americas Beverages), PepsiCo International
Website	PepsiCo.com

PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500, American multinational corporation headquartered in Purchase, New York, with interests in manufacturing and marketing a wide variety of carbonated and non-carbonated beverages, as well as salty, sweet and cereal-based snacks, and other foods. Besides the Pepsi brands, the company owns the brands Quaker Oats, Gatorade, Frito-Lay, SoBe, Naked, Tropicana, Copella, Mountain Dew, Mirinda and 7 Up (outside the USA).

Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006. During her time, healthier snacks have been marketed and the company is striving for a net-zero impact on the environment.^[3] This focus on healthier foods and lifestyles is part of Nooyi's "Performance With Purpose" philosophy.

Today, beverage distribution and bottling is undertaken primarily by associated companies such as The Pepsi Bottling Group (NYSE: PBG) and Pepsi Americas (NYSE: PAS). PepsiCo is a SIC 2080 (beverage) company.

History

Headquartered in Purchase, New York, with Research and Development Headquarters in Valhalla, The Pepsi Cola Company began in 1898 by a NC Pharmacist and Industrialist Caleb Bradham, but it only became known as PepsiCo when it merged with Frito Lay in 1965. Until 1997, it also owned KFC, Pizza Hut, and Taco Bell, but these fast-food restaurants were spun off into Tricon Global Restaurants, now Yum! Brands, Inc. PepsiCo purchased Tropicana in 1998, and Quaker Oats in 2001. In December 2005, PepsiCo surpassed Coca-Cola Company in market value for the first time in 112 years since both companies began to compete. [2]

Corporate governance

Pepsi-Cola Venezuela

Current members of the board of directors of PepsiCo are Indra Nooyi C.E.O., Robert E. Allen, Dina Dublon, Victor Dzau, Ray Lee Hunt, Alberto Ibargüen, Arthur Martinez, Steven Reinemund, Sharon Rockefeller, James Schiro, Franklin Thomas, Cynthia Trudell, and River King.

On October 1, 2006, former Chief Financial Officer and President Indra Nooyi replaced Steve Reinemund as chief executive officer. Nooyi remains the corporation's president, and became Chairman of the Board in May 2007.

Mike White is the President of Pepsi-Co International Division.

Former top executives at PepsiCo

• Steven Reinemund
• Roger Enrico
• D. Wayne Calloway
• John Sculley
• Michael H. Jordan
• Donald M. Kendall
• Christopher A. Sinclair
• Alfred Steele

Lobbying

In the US, working with its competitor Coca Cola Company, PepsiCo is a major lobbying force working to gain favorable legislation for the beverage industry. In 2005, PepsiCo spent $740,000 on lobbying, in 2006, $880,318, in 2007, $1 million, and in 2008, $1,176,000. In 2009, lobbying expenses rose to $4.2 million or nearly a 300 percent increase. Much of the increased lobbying expenses are due to the industry’s fight against increased taxes on soft drinks.^[4] For 2009, PepsiCo has 31 lobbyists at 8 different firms lobbying on its behalf.^[5]

Pepsi Music

• Pepsi Music is a promotional music label that is seen on Yahoo. It has many parts like the Pepsi Mic Pass, the most famous in Houston, Texas. It also contracts artists to advertise with Pepsi and other PepsiCo products.

• Pepsi Musica is seen on the Latino channel Mun2, on the show, Pepsi Musica.

• Green Label Sound is Mountain Dew's record label that gives free downloads promoting unsigned artists.

PepsiCo brands

PepsiCo owns 5 different billion-dollar brands. These are Pepsi, Tropicana, Frito-Lay, Quaker, and Gatorade. The company owns many other brands as well.

• Pepsi, Caffeine-Free Pepsi, Diet Pepsi/Pepsi Light, Caffeine-Free Diet Pepsi, Caffeine-Free Pepsi Light, Wild Cherry Pepsi, Pepsi Lime, Pepsi Max, Pepsi Twist and Pepsi ONE.
• Other U.S. carbonated soft drinks, including Mountain Dew, Crush, Mug Root Beer, Sierra Mist, Tropicana Twister Soda and Frawg,
• 7 Up (Globally, outside the USA)
• Other U.S. beverages, including Aquafina (Flavor Splash, Alive, and Twist/Burst), Tava, Dole, Gatorade, Izze, AMP Energy, Propel Fitness Water, SoBe, Quaker Milk Chillers, and Tropicana
• Beverages marketed outside the U.S.: Alvalle, Concordia, Copella, Evervess, Fiesta, Frui'Vita, Fruko, H2OH!, Ivi, Junkanoo, Kas, Loóza, Manzana Corona, Manzanita Sol, Mirinda, Paso de los Toros (drink), Radical Fruit, San Carlos, Schwip Schwap, Shani, Teem, Triple Kola, and Yedigun
• Frito-Lay brands: Baken-ets, Barcel, Bocabits, Cheese Tris, Cheetos, Chester's, Chizitos, Churrumais, Cracker Jack, Crujitos, Doritos, Fandangos, Fritos, Funyuns, Gamesa, Go Snacks, James' Grandma's Cookies, Hamka's, Lay's, Miss Vickie's, Munchies, Munchos, Nik Naks, Ollie's Meat Snacks, Quavers, Rold Gold, Ruffles, Rustler's Meat Sticks, Sabritas, Sabritones, Sandora, Santitas, Smartfood, The Smith's Snackfood Company, Sonric's, Stacy's Pita Chips, Sun Chips, Tor-tees, Kurkure, Tostitos, Walkers, and Wotsits
• Quaker Oats brands: Aunt Jemima, Cap'n Crunch, Chewy Granola bars, Coqueiro, Crisp'ums, Cruesli, FrescAvena, King Vitaman, Life, Oatso Simple, Quake, Quisp, Rice-A-Roni, and Spudz
• In 2005 PepsiCo launched Sting Energy Drink (carbonated) in Vietnam^[6], and in some Asian countries in 2010 including Pakistan, Philippines & Malaysia.
• In 2007, Nooyi spent $1.3 billion on healthier-alternative brands like Naked Juice, a California maker of soy drinks and organic juice.

Pepsico has also recently acquired a 50% stake in U.S.-based Sabra Dipping Company.^[7]

Partnerships

PepsiCo also has formed partnerships with several brands it does not own, in order to distribute these or market them with its own brands.

• Frappuccino
• Starbucks DoubleShot
• Starbucks Iced Coffee
• Mandarin (license)
• D&G (license)
• Lipton Brisk
• Lipton Original Iced Tea
• Lipton Iced Tea
• Ben & Jerry's Milkshakes
• Dole juices & juice drinks (license)
• Sunny Delight (produced by PepsiCo for Sunny Delight Beverages)

Discontinued lines

• Teem, Pepsi's answer to Sprite and 7up, discontinued after PepsiCo bought 7up.
• All Sport, a line of sports drinks. All-Sport was lightly carbonated; in contrast, rivals Gatorade and Coke-owned POWERade were non-carbonated. The 2001 purchase of Quaker Oats (in effect acquiring Gatorade) made All Sport expendable, and the brand was sold to another company.
• Aspen Soda, an apple-flavored soft drink (late 1970s-early 80's)
• Crystal Pepsi, a clear version of Pepsi-Cola.
• FruitWorks: Flavors were Strawberry Melon, Peach Papaya, Tangerine Citrus, Apple Raspberry, and Pink Lemonade. Two other flavors, Passion Orange and Guava Berry, were available in Hawaii only.
• Josta: launched 1995, "with Guarana," the first energy drink launched by a major soft drink company in the US.
• Matika: Run in August 2001, it was a tea/juice alternative beverage, sweetened with cane sugar & containing Ginseng. Dragonfruit Potion, Magic Mombin, Mythical Mango, Rising Starfruit, Skyhigh Berry
• Mazagran: launched 1995
• Mr. Green (SoBe)
• Patio (soda): line of flavored drinks (1960-late '70s)
• Pepsi Edge, a mid-calorie version of Pepsi-Cola.
• Pepsi Blue, a berry-flavored, blue version of Pepsi-Cola.
• Pepsi Kona: launched 1997, a coffee-flavored version of Pepsi-Cola.
• Smooth Moos: launched 1995, a flavored milk-based drink.
• Storm: launched March 15, 1998, replaced by Sierra Mist.
• Miranda Lime: Launched in the second half of the 1990 decade(in India) but failed

Former brands

PepsiCo owned a number of restaurant chains until it exited that business in 1997, selling some, and spinning off others into a new company Tricon Global Restaurants, now known as Yum! Brands, Inc.. PepsiCo also previously owned several other brands that it later sold.

• California Pizza Kitchen (bought 1992, sold back to original founders in 1997)
• Chevys Fresh Mex (bought August 1993, sold May 1997 to J. W. Childs Equity Partners)
• D'Angelo Sandwich Shops (sold August 1997 to Papa Gino's)
• East Side Mario's (United States franchises – bought December 1993, sold early 1997)
• Hot 'n Now (bought in 1990, sold in 1997)
• Jollibee (bought in 1994,sold in 1997)
• KFC (bought October 1986 from RJR Nabisco, spun off October 1997 to form TriCon, later Yum! Brands)
• North American Van Lines
• Pizza Hut (bought in 1977, spun off October 1997 to form TriCon, later Yum! Brands)
• Stolichnaya
• Taco Bell (bought in 1978, spun off October 1997 to form TriCon, later Yum! Brands)
• Wilson Sporting Goods

Diversity

PepsiCo received a 100 percent rating on the Corporate Equality Index released by the LGBT-advocate group Human Rights Campaign starting in 2004, the third year of the report.^[8]

Tampering

During the summer of 1993, PepsiCo managed to stave off a runaway hoax pertaining to alleged product tampering. Syringes were claimed to have been found in cans of Diet Pepsi—first in Seattle, then throughout the U.S. over the next few days. With the arrests of several of the fraudulent claimants, reports of found hypodermic needles ceased. By June 15, 1993, consumers reported finding a bullet, pins and screws in their Diet Pepsi. PepsiCo's subsequent handling of the situation via carefully-worded press releases and VNRs is frequently cited as a textbook example of how exactly to handle falsely spread rumors about a company.^[9]

Criticisms

PepsiCo in India

PepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991, when the use of foreign brands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994.^[10] Others claim that firstly Pepsi was banned from import in India, in 1970, for having refused to release the list of its ingredients and in 1993, the ban was lifted, with Pepsi arriving on the market shortly afterwards. These controversies are a reminder of "India's sometimes acrimonious relationship with huge multinational companies." Indeed, some argue that PepsiCo and The Coca-Cola Company have "been major targets in part because they are well-known foreign companies that draw plenty of attention."^[11]

In 2003, the Centre for Science and Environment (CSE), a non-governmental organization in New Delhi, said aerated waters produced by soft drinks manufacturers in India, including multinational giants PepsiCo and The Coca-Cola Company, contained toxins, including lindane, DDT, malathion and chlorpyrifos — pesticides that can contribute to cancer, a breakdown of the immune system and cause birth defects. Tested products included Coke, Pepsi, 7 Up, Mirinda, Fanta, Thums Up, Limca, and Sprite. CSE found that the Indian-produced Pepsi's soft drink products had 36 times the level of pesticide residues permitted under European Union regulations; Coca Cola's 30 times.^[12] CSE said it had tested the same products in the US and found no such residues. However, this was the European standard for water, not for other drinks. No law bans the presence of pesticides in drinks in India.

The Coca-Cola Company and PepsiCo angrily denied allegations that their products manufactured in India contained toxin levels far above the norms permitted in the developed world. But an Indian parliamentary committee, in 2004, backed up CSE's findings and a government-appointed committee, is now trying to develop the world's first pesticides standards for soft drinks. Coke and PepsiCo opposed the move, arguing that lab tests aren't reliable enough to detect minute traces of pesticides in complex drinks.

As of 2005, The Coca-Cola Company and PepsiCo together hold 95% market share of soft-drink sales in India.^[13] PepsiCo has also been accused by the Puthussery panchayat in the Palakkad district in Kerala, India, of practicing "water piracy" due to its role in exploitation of ground water resources resulting in scarcity of drinking water for the panchayat's residents, who have been pressuring the government to close down the PepsiCo unit in the village.^[14]

In 2006, the CSE again found that soda drinks, including both Pepsi and Coca-Cola, had high levels of pesticides in their drinks. Both PepsiCo and The Coca-Cola Company maintain that their drinks are safe for consumption and have published newspaper advertisements that say pesticide levels in their products are less than those in other foods such as tea, fruit and dairy products.^[15] In the Indian state of Kerala, sale and production of Pepsi-Cola, along with other soft drinks, was banned by the state government in 2006,^[16] but this was reversed by the Kerala High Court merely a month later.^[17] Five other Indian states have announced partial bans on the drinks in schools, colleges and hospitals.^[18]

Soft drinks market in India

India is one of the top five markets in terms of growth of the soft drinks market. The per capita consumption of soft drinks in the country is estimated to be around 6 bottles per annum in the year 2003. It is very low compared to the corresponding figures in US (600+ bottles per annum). But being one of the fastest growing markets and by the sheer volumes, India is a promising market for soft drinks.

The major players in the soft drinks market in India are PepsiCo and Coca-Cola Co, like elsewhere in the world. Coca-Cola acquired a number of local brands like Limca, Gold Spot and Thums Up when it entered Indian market for the second time. Pepsi Co’s soft drink portfolio also consists of Miranda and 7Up along with Pepsi. The market share of each of the company is more or less the same, though there is a conflict in the estimates quoted by different sources ^[19]

The major ingredient in a soft drink is water. It constitutes close to 90% of the soft drink content. Added to this, the drink also contains sweeteners, Carbon dioxide, Citric Acid/Malic acid, Colors, Preservatives, Anti Oxidants and other emulsifying agents, etc.^[19]

Consumption patterns in India

In Tier 1, 2 and 3 cities in India, 29% of Indian consumers report consuming carbonated beverages/soft drinks during a fixed time of the day suggesting consumption has become a routine part of their day, with most consumption taking place during the 'afternoon to evening' time period. Not surprisingly, consumption is highest in Tier I cities such as Mumbai, Delhi, Kolkata, Chennai, Hyderabad and Bangalore. The level of consumption is seen to increase with rising household incomes (with the exception of the highest income level) while decreasing with age.^[20]

The Indian soft drinks market is not under any regulation. Prevention of Food adulteration act 1954 does not include soft drinks. None of the BIS standards that existed before August 2003 had any guidelines or set criteria for the residue levels of pesticides in the soft drinks. But different lie agencies have set standards for the residue levels of pesticides. The European Economic Community (EEC) sets the maximum admissible concentration of individual pesticides and related products in drinking water at 0.1 parts per billion to ensure that the toxicity is not dangerous to human beings. For a few pesticides like aldrin, dieldin and heptachlor epoxide the admissible limit is even more stringent, i.e., 0.03 parts per billion.^[19]

PepsiCo in Burma

From 1991 until 1997, PepsiCo is one of the most notable companies to do business in Burma. PepsiCo's business partner, Thein Tun, was a noted business partner of the ruling Burmese military junta, which has been alleged to be responsible for some of the worst human rights violations in the world.

PepsiCo's involvement prompted one of the biggest Burma-related boycotts in history. The campaign was on a par with those against Texaco and Unocal, running around the same time, and currently against Total Oil.

PepsiCo formally began their investment in Burma in November 1991 when they opened a bottling plant in the then-capital Rangoon, despite the call by Aung San Suu Kyi and the National League for Democracy for companies to avoid doing business in Burma until it returned to democracy. The campaign against Pepsi was initiated by the Asian-based Burma Rights Movement for Action. The campaign later gained growing strength in the West as Burmese human rights groups focused on campaigns against companies in Burma, including the oil giants Texaco, Unocal, Amoco, and Petro-Canada.^[21]

When Petro-Canada left Burma, Canadian and U.S. based Burmese democracy groups sharpened their focus on PepsiCo. The campaign received a massive boost when, in 1996, the Free Burma Coalition took the lead in forcing Pepsi out of American universities. This included the scrapping of a multi-million dollar deal at Harvard.

The campaign also spread to Europe, where the UK-based organization, Third World First, adopted the boycott. In response, in 1996, PepsiCo attempted to step out of the spotlight by selling its share of its Burmese joint venture to its partner but retaining its Burmese franchise agreement. Aung San Suu Kyi responded, "As far as we are concerned, Pepsi[Co] has not divested from Burma" and both human rights and environmental groups continued the pressure on Pepsi. Eventually, with the Burmese regime holding violent anti-democracy rallies and pressure from around the world mounting, PepsiCo announced in January 1997 that it would cut all ties with Burma. However, to this day, PepsiCo has not admitted that it was morally wrong to invest in Burma as some other companies have upon leaving the country.

PepsiCo in Israel

Until 1991 PepsiCo was not sold in Israel, for which it was criticised by many in the United States who believed it was supporting the Arab boycott of Israel. PepsiCo always denied this allegation, saying Israel was simply too small to support a franchise. As a result, the Israeli market was taken over by Pepsi's rival Coca Cola, and to this day Pepsi has a very small market share in Israel.^[22][23]

Pepsi Bottlers

The Pepsi Beverages Company logo.

On August 4, 2009 PepsiCo announced that it had reached a final merging agreement with its two largest bottlers The Pepsi Bottling Group, Inc and PepsiAmericas, Inc both of which it had previously spun off in the 1990s. The total cost of the transaction is estimated at $7.8 billion.^[24]

The merger was approved by shareholders of both bottling companies on February 17, 2010 and was completed on February 26, forming a new wholly-owned division of the PepsiCo North American Beverages unit, Pepsi Beverages Company (PBC). Also included in the merger was a new agreement with the Dr Pepper Snapple Group in which PBC would soon be taking over the bottling and distribution of the Dr Pepper, Schweppes and Crush brands in those markets where they were formerly distributed by PBG and PAS through a 20-year licensing deal (PBC's predecessors have been bottling and distributing Crush in most of their markets since February 2009). It is currently unknown if and when PBC will also distribute Dr Pepper and Schweppes in the rest of its territory (as those markets, such as the Chicago market, also have DPS-owned bottlers serving those areas). Additionally, in those areas of the US that are served by PBC- and DPS-owned bottlers, the bottling rights to certain other DPS-owned brands such as Vernors and Hawaiian Punch would be transferred to the DPS bottlers. The international operations of both former bottlers were transferred directly to the wholly separate PepsiCo International unit.

See also

• Pepsi Stuff
• Cola wars
• Pepsi Challenge
• List of Pepsi types
• Indra Nooyi
• Caleb Bradham
• Coca-Cola

Notes and references

External links

• Official website
• PepsiCo India
• PepsiCo UK
• PepsiCo Benelux (Belgium/Netherlands/Luxembourg)
• PepsiCo France
• PepsiCo Germany
• PepsiCo Spain
• PepsiCo Canada
• Yahoo! – PepsiCo, Inc. Company Profile
• ‘349’ consumer activist cleared in libel case filed by Pepsi
• Coalition 349 Website - Philippines
• http://www.sirpepsi.com/pepsi11.htm
• Animation TV commercial - 15 sec campaign (Hungary)