PepsiCo

PepsiCo is known throughout the world for soft drinks such as Pepsi and Mountain Dew and for salty snacks such as Fritos, Lay’s potato chips, and Doritos. PepsiCo also produces Quaker Oats products, Gatorade, and Aquafina bottled water. In 2023, PepsiCo reported net revenues of over $91 billion, nearly half of which were earned outside the United States. PepsiCo boasts more than five hundred different brands, including twenty-three brands that generate at least $1 billion. Over 1 billion PepsiCo products are consumed around the world on any given day. Though the company is constantly being challenged by rival Coca-Cola, PepsiCo prides itself on being one of the largest food and beverage companies in North America, as well as in other regions of the world. Globally, PepsiCo had 318,000 employees in 2023, with the early years of the twenty-first century characterized by massive global growth and the development of a social consciousness under the leadership of CEO (2006–18) and board chair (2007–19) Indra Nooyi, who was consistently ranked as one of the most powerful businesswomen in the world during her twelve-year tenure as the head of the company. She was replaced by Ramon Laguarta after stepping down in 2018.

Brief History

In 1902, Caleb Davis Bradham, a pharmacist living in New Bern, North Carolina, established the Pepsi-Cola Company after selling his pepsin and cola concoction as a fountain drink at his drug store for several years. In 1932, Charles Elmer Doolin founded the Frito Company, and H. W. Lay established the H.W. Lay Company. The two snack companies merged into Frito-Lay in 1961. Four years later, the Pepsi-Cola Company merged with Frito-Lay to form PepsiCo. Donald M. Kendall, then-head of Pepsi-Cola, became president and chief executive officer, and Herman Lay, then-head of Frito-Lay, became chair of PepsiCo’s board of directors. At the time, PepsiCo employed 19,000 people and had reported annual revenues of $510 million.

Until the mid-twentieth century, Pepsi-Cola was the chief product of the Pepsi-Cola Company. In 1948, Mountain Dew was introduced, and Diet Pepsi followed in 1964. Frito-Lay went from producing only Fritos corn chips and Lay’s potato chips to adding Cheetos cheese puff snacks in 1948, Ruffles potato chips in 1958, Red Gold pretzels in 1961, and Doritos tortilla chips in 1966. In the mid-sixties, new facilities were opened in Europe and Japan, and by 1970, Pepsi became the first American consumer product offered for sale in the Soviet Union. That same year, PepsiCo’s headquarters were relocated from New York City to Purchase, New York, where the 144-acre PepsiCo campus remains.

In the late 1970s, PepsiCo expanded its scope and acquired national fast-food restaurant chains Pizza Hut (1977) and Taco Bell (1978). Kentucky Fried Chicken (KFC) became part of PepsiCo in 1986. By 1995, PepsiCo’s food franchise accounted for 37 percent of the company’s overall revenues.

By the mid-1980s, PepsiCo had expanded to 150 countries and territories. At the end of the decade, PepsiCo acquired British-based Walker’s Crisps and Smith, and expansions continued into the following decade with PepsiCo forming partnerships with Dutch company Unilever to sell tea-based drinks and Seattle, Washington-based Starbucks to sell coffee products. The Cracker Jack brand was acquired in 1997 and Tropicana drink company in 1998. By the late 1990s, in addition to its continued North American popularity, Frito-Lay had become the top-selling producer of snack chips in South and Central America.

Topic Today

PepsiCo had seven business units in the early 2020s: PepsiCo Beverages North America; Frito-Lay North America; Quaker Foods North America; Latin America; Europe; Africa, Middle East, South Asia; and Asia Pacific, Australia/New Zealand, and China. In 2018, Ramon Laguarta was appointed as PepsiCo's CEO, taking the position after Nooyi stepped down. Laguarta had worked for the company for twenty-two years before his appointment as CEO.

PepsiCo began the twenty-first century by acquiring a major stake in South Beach Beverage, the maker of SoBe products. In 2001, PepsiCo and Quaker Oats merged, providing PepsiCo with a line of products that had already been accepted by health-conscious consumers. In 2003, the carbonated soft drink Sierra Mist was introduced, and Frito-Lay announced that it was removing all trans-fat from its snack line. Izze fruit drinks, Naked Juice, Bluebird Foods, and Stacy’s Pita Chips were added to PepsiCo’s line of products in 2006. Two years later, PepsiCo announced that it was investing $1 billion in expanding its brands in China and formed a partnership with the Japanese company Calbee Foods. In 2010, PepsiCo acquired Wimm-Bill-Dann, Russia’s leading beverage company, and a year later bought the Brazilian snack company Mabel. By that time, PepsiCo had also developed a presence in twenty-nine Middle Eastern markets.

Advertising has always been a major component of PepsiCo’s success, with the company introducing the world’s first advertising jingle in 1939. In 2010, PepsiCo’s first global advertising campaign was shot featuring American rapper Nicki Minaj, who became a spokesperson for the company. PepsiCo spends hundreds of millions of dollars annually on sponsoring entertainment venues such as the Super Bowl and has forged strong relationships with professional baseball, football, and basketball organizations. Innovation consistently plays a key role in PepsiCo’s marketing tactics. In May 2014 at the National Restaurant Association Show, PepsiCo introduced the Pepsi Spire, a state-of-the-art beverage dispenser that uses a touch screen to combine from 40 (Pepsi Spire 1.1) to 1,000 (Pepsi Spire 5.0) beverage shots into a single selection. PepsiCo also sponsors the Pepsi Refresh Project, which awards grants to individuals and groups that work to improve communities around the world.

In the early twenty-first century, PepsiCo’s North American market beverage sales suffered in response to greater consumer emphasis on health and demands for sustainable practices. In addition to increasing automation in its manufacturing plants and closing one hundred facilities, PepsiCo began placing greater emphasis on making healthier beverage products through the use of alternative sweeteners, offering 7.5-ounce mini cans and 12-ounce glass bottles, improving packaging, and introducing a range of new products such as Pepsi Throwback, Wild Cherry Pepsi, and Pepsi Vanilla, which were all made with sugar rather than high-fructose corn syrup. In October 2014, the company announced its newest cola product, Pepsi True, which boasts 30 percent less sugar than regular Pepsi and no artificial sweeteners. Instead, the drink contains some sugar and stevia, a Paraguayan plant used for many years as a sweetener and found to have therapeutic uses as well, such as helping to control hypertension.

In the late 2010s and early 2020s, PepsiCo bought and sold subsidiaries as part of its strategy to expand its products and offer healthier snacks to its consumers. In 2018, it acquired Bare Foods and SodaStream. The following year, it bought BFY Brands, known for its PopCorners snack product, which became part of Frito-Lay North America. In 2020, PepsiCo bought Rockstar Energy for $3.85 billion. In 2021, the corporation sold its majority stake in juice brands, including Tropicana and Naked, for $3.3 billion. The company also sought to expand its global reach through its acquisition of subsidiaries such as Hangzhou Haomusi Food Company, a Chinese snack company, and Pioneer Foods, a South African food and beverage company; both were purchased by PepsiCo in 2023.

PepsiCo also continued to work toward its sustainability goals. In 2023, the company announced it was more than three-quarters of the way to its 2025 target of reducing added sugars, sodium, and saturated fats across its portfolio of brands. Additionally, it announced two new goals that year, to be accomplished by 2030, including for at least 75 percent of its global convenient foods portfolio to meet or be below recommended sodium levels.

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