PepsiCo Essay ⋆ Business Essay Examples ⋆ EssayEmpire

One of the major manufacturers in the world of carbonated and noncarbonated drinks, and also many other foods, the Pepsi-Cola Company was established in 1898 and only became PepsiCo after its merger with Frito-Lay in 1965.

The original founder of Pepsi-Cola was Caleb Bradham (1867–1934), who lived in New Bern, North Carolina. A pharmacist, he operated a soda fountain in his drugstore and made a variety of drinks including what was originally known as Brad’s Drink, first created in the summer of 1893, and five years later named Pepsi-Cola, probably because of the use of pepsin and cola nuts, although there are a number of other theories including the purchase by Bradham of the trade name Pep Kola, and also Pepsi-Cola was an anagram for Episcopal, Bradham’s drugstore being located opposite a large church.

Bradham gained the trademark in 1903 and ran the company successfully, expanding it greatly. In 1903 Bradham had to rent a nearby warehouse to produce the 7,968 gallons of syrup he sold that year. However, he had expected that after World War I, the price of sugar would rise. Instead, it fell and Bradham was forced out of business in 1923. The trademark was sold to Roy C. Megargel, but in 1931, it was again approaching bankruptcy. In that year, the company was bought by the Loft Candy Company. Its president, Charles G. Guth, was unable to make much of a success of it and offered to sell the company to Coca-Cola, but they turned him down. Gradually, the company was turned around and started to sell well, especially during the latter period of the Great Depression, with its price cut to $0.05. In 1938 the profits were double those only two years earlier.

In the 1940s, Pepsi expanded, but there were complaints that it had ignored the African American market in its advertising. The company responded by hiring an African American sales team and it was able to criticize Coca-Cola for its company chairman’s support for segregationist politicians. Gradually, Pepsi expanded and in 1963, the company used the slogan “Come Alive—You’re in the Pepsi Generation.” Richard Nixon was a supporter of Pepsi’s expansion, and during his presidency, Pepsi started marketing in the Soviet Union. However, it remained banned in India from 1970 for refusing to hand over a list of the ingredients. Pepsi was also involved in a major sales campaign against Coca-Cola and in 2004 the market share for Pepsi was 31.7 percent, as against 43.1 percent for Coca-Cola. Around the world, Coca-Cola outsells Pepsi. During the 1980s and early 1990s, with major marketing campaigns launched by Coca-Cola and PepsiCo, the “Cola Wars” were waged, with Pepsi promoting itself as “The Choice of a New Generation” and featuring the “Pepsi Challenge.”

As well as producing Pepsi-Cola, its most well-known product, PepsiCo also produced Diet Pepsi, some flavored Pepsi drinks, Mountain Dew, 7UP, and a range of other carbonated drinks. It also produces products under the Quaker Oats brand (especially breakfast cereals), having bought that brand in 2001; the Frito-Lay brand (potato chips and other snack foods); and is involved in partnerships with many other brands such as Lipton Iced Tea, which it markets. In 1977 PepsiCo bought Pizza Hut, followed by Taco Bell the following year, and a number of other restaurant chains. However, it sold all of these, most between May and October 1997—Pizza Hut and Taco Bell becoming a part of Tricon Global Restaurants. The company now has 185,000 employees, and it has net assets of $34.6 billion, with revenue of $29.5 billion, and net income of $5.7 billion (2007 figures). It has a market capitalization of $107 billion (2008). Its CEO is Indra Nooyi from India, who was ranked as fifth in Forbes Magazine’s 100 Most Powerful Women in 2007. There is also a separate company, the Pepsi Bottling Group, which handles bottling and distribution.

Bibliography:

Katrina Brooker, “The Pepsi Machine,” Fortune (v.153/2, 2006);
Stephanie Capparell, The Real Pepsi Challenge: How One Pioneering Company Broke Color Barriers in 1940s American Business (Free Press, 2008);
Robert Enrico, The Other Guy Blinked: How Pepsi Won the Cola Wars (Bantam, 1986);
Betsy Morris, “What Makes Pepsi Great? Fortune (v.157/4, 2008);
Packaged Facts, Energy Drinks in the U.S. (Packaged Facts, 2007);
Bob Stoddard, Pepsi-Cola 100 Years (General Publishing, 1997).

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