Pepsi SWOT Analysis (2021)

There’s nothing better than a refreshing beverage on a hot day, but Pepsi offers more than just soda. This corporation is a food and beverage empire with numerous lucrative brands, including sodas, waters, potato chips, juices, sports drinks, snacks, and more. Its global reach and massive presence on supermarket shelves should be the perfect recipe for success, but there are some pitfalls that may plague this company if left unchecked.

Let’s look at the strengths, weaknesses, opportunities, and threats facing Pepsi.

Strengths

1. It is a valuable brand across the globe.
The Pepsi-Cola company may have been founded in the United States, but its impact reaches across the planet. The corporation is actually made up of seven divisions that operate various segments of its business, and several of those segments exclusively service international markets.

Pepsi’s brand value is $11.1 billion. (Statista)

2. It features a massive array of popular consumer labels.
PepsiCo does not just offer Pepsi. In addition to its flagship soda brand, the company is actually a merger between the original Pepsi company and the Frito-Lay company, which is known for potato chips and other salty snacks. All told, the Pepsi-Cola company owns or operates more than 100 consumer brands.

It previously owned several restaurant chains as well, and although it has since divested those assets, that is one example of how Pepsi’s influence reaches far and wide.

PepsiCo holds approximately 500 patents. (Market.US)

3. It commands a strong global presence.
Its international divisions make operating a worldwide enterprise that much easier, rather than focusing on a single corporate headquarters. This also allows each business unit to better serve its respective markets by aligning its product delivery and development with local consumer demands. When the sales success of more than 100 brand names and labels are at stake, this is a major benefit.

PepsiCo is one of the 100 largest companies in the world. (Statista)

4. It has mastered supply chain management.
It is not enough to simply be known for a vast array of brands; those products must actually be produced and shipped all over the world. Pepsi has mastered this art in order to meet consumer demand around the world. Its supply chain processes ensure that shelves are never empty and that Pepsi can meet customer cravings at any time.

PepsiCo was established in 1965. (Market.US)

5. It utilizes a direct-to-store delivery model.
Many companies with a massive sales footprint rely on enormous distribution centers placed around key sales regions, which house their inventories and allow them to make regional deliveries more quickly. However, this does create an additional logistical step that costs time and money.

Pepsi utilizes a model that ships directly from the manufacturer to the store, eliminating a transitional step in the process. This does put the burden on Pepsi to meet demands directly, but it has figured out how to do so without causing delivery bottlenecks.

Pepsi had $30.89 billion in worldwide sales. (Statista)

6. It has a powerful marketing strategy.
Consumer advertising and marketing are major parts of PepsiCo’s promotional efforts. From print to television, radio to social media, and more, it manages the delicate balance of juggling dozens of stalwart brands and flavors while simultaneously promoting new options. Building such a marketing machine takes constant refinement, and Pepsi has done so.

PepsiCo spent $3 billion on advertisements in one year. (Statista)

7. Its target audience is young.
Despite the fact that the core Pepsi brand has been around for more than a century, Pepsi’s target audience is younger and more socially engaged. The Pepsi-Cola company knows this and targets much of this advertising to this growing demographic that will continue to command more buying power as time goes on. It has taken advantage of this natural buyer preference to great benefit to sales and revenues.

PepsiCo is the leading salty snack company. (Statista)

8. It makes good use of endorsements and sponsorships.
PepsiCo, like many companies, routinely engages in celebrity endorsements to promote its brands. It also participates in sponsorships with athletic teams and other corporate partnerships to ensure a growing presence in the market. Such sponsorships and partnerships mean that Pepsi has become the provider of choice for many organizations that offer food and beverage products.

Pepsi has been one of the top ten featured brands on Twitter. (Statista)

Weaknesses

1. It is locked in a rivalry with Coca-Cola.
One can hardly mention PepsiCo without thinking of its main rival, Coca-Cola. The so-called “cola wars” have raged for decades, and one company is always trying to outdo the other – or find some way to mimic the other’s success. Each brand has its niches and specialties, but such a rivalry cannot be avoided in the eyes of the public and must always be top of mind for Pepsi.

The Pepsi-Cola company is the fourth-largest beverage company in the world. (Statista)

2. Its model is dependent solely on food and beverage.
It may seem counterintuitive to think that Pepsi should diversify its offerings, given its robust brand library. That being said, relying solely on food and beverage could become a problem in the future if other companies decide to move into additional service lines. Further brand acquisitions, a return to the restaurant market, or another corporate shakeup could be potential for unexpected growth if it can find the right winning move.

Fifty-five percent of PepsiCo’s net revenue comes from food sales. (Statista)

3. Its products are mostly considered unhealthy.
Many of the products Pepsi sells are considered by health experts to be unhealthy. Many who go on diets or seek to improve their personal habits will cut out sugary drinks and salty snacks as a first step, meaning that if more people consider dietary changes, sales drops could follow. While Pepsi’s offerings are refreshing and satisfying, it needs to consider the impact those products have on the well-being of its consumers.

The original recipe for Pepsi-Cola was developed in the 1880s. (Market.US)

4. Some of its products have failed.
Occasionally, a company that relies on a winning core product will make a huge gamble on a new product. PepsiCo has done so several times in the past with items like Pepsi Crystal and Pepsi Clear, and unfortunately, those gambles have not paid off. Such failures continue to resonate with consumers today, which can cause negative feelings about the brand.

Mountain Dew, owned by the Pepsi-Cola company, has a 6.1% market share in the United States beverage market. (Statista)

5. It has experienced public relations problems.
Some of Pepsi’s advertising campaigns have struck the wrong chord with consumers and caused a massive backlash. Taking the time to ensure that all campaigns have been carefully thought out is critical to avoid public relations nightmares that can lead directly to decreased sales revenues. Minimizing these debacles is very important to a company that has such an enormous marketing presence.

PepsiCo’s worldwide net revenues are nearly $70.4 billion. (Statista)

Opportunities

1. It could diversify its product offerings.
Again, this may seem like an unnecessary step for such a successful company. But every corporation can continue to grow and improve, and it must look beyond itself to find new avenues for growth. Pepsi can explore additional product lines it may not have acquired and expand into those markets.

Twenty-three of Pepsi’s brands generate more than $1 billion each in annual sales. (PepsiCo)

2. It could expand corporate partnerships.
Some corporate partnerships have already garnered great success for PepsiCo, and it can always be on the lookout for new ways to improve the bottom line in this way. These moves could be as subtle as local partnerships to provide food and beverage service, or as bold as acquisitions of restaurant brands or even athletic teams in order to guarantee preferred vendor status. The possibilities are endless if the potential is right.

PepsiCo’s net revenue grew 78% from 2007 to 2020. (Statista)

3. It could expand into emerging markets.
Moving into emerging markets could be a relatively easy game-changer for Pepsi. It already has a strong presence in various international markets, and identifying key new markets to move into would not be as difficult since the corporate infrastructure is already present in this way. It can capitalize on the existing goodwill from neighboring nations or regions, gaining critical early access to new groups of consumers.

PepsiCo has a 14.3% profit margin. (Statista)

4. It could move into health-conscious products.
As more buyers seek out healthier options and avoid sugary or unhealthy choices, PepsiCo could ride this wave of consumer preference and even become market leaders. It could develop healthier options for its core product lines, or even acquire brands that are already known to be health-conscious. These kinds of moves can offer new avenues for growth and success for a company mostly known for its unhealthy alternatives.

PepsiCo employs 291,000 people around the world. (Statista)

5. It could offer new flavors for its core products.
Offering new flavors or variants should be a carefully considered move since radical departures may not make a positive impact on the market landscape. However, PepsiCo already does this quite well by offering different flavor variations on many of its brands. Continuing this diversification and growth will be vital in meeting consumers’ demand for something new and exciting while still maintaining momentum for its established options.

Pepsi-Cola had a 7.8% market share in the United States beverage market in 2020. (Statista)

6. It can start relying more on consumers for its R&D processes.
Rather than focus solely on efforts by paid researchers, consumers could be consulted directly for their opinions and ideas around new product offerings. This could be as simple as continuing and increasing focus group testing, but the company could also move into a dedicated consumer testing group that provides regular feedback and input on products that are in development. This ensures that consumer tastes and preferences are being taken into account when considering what products to launch next.

PepsiCo spent $719 million in product research & development in 2020. (Statista)

Threats

1. It faces fierce market competition.
In addition to the aforementioned rivalry with Coca-Cola, Pepsi faces competition from companies that rival its other brands. Every market segment must be taken into consideration, and each brand should carefully watch other outside brands that may encroach on their respective markets. Such competition is simply part of doing business, and PepsiCo must remain on top of these challenges to its dominance in the marketplace at large.

PepsiCo is one of the world’s top 50 most valuable brands. (Forbes)

2. Its demographics could easily change.
Although it has a natural appeal to younger buyers, Pepsi must recognize that tastes for this market segment change easily and sometimes quickly. It must strike the delicate balance of appealing to more secure customer bases while reaching out to new buyers in strategic ways that have better chances for success. Furthermore, moving too deeply into one segment could be a costly gamble if the bet doesn’t ultimately pay off.

More than 6,000 people in the United States search online for “Pepsi” every day. (Kalinax)

3. It faces some international trade issues.
As a company that has regional headquarters in many different nations, Pepsi must abide by all applicable national and international trade laws. This can become problematic when those laws directly affect manufacturing or distribution processes because they can ultimately prevent the end goal of getting products on store shelves.

The North American beverage market accounted for 33% of PepsiCo’s total revenue share in 2018. (Market.US)

4. It can fall prey to government regulations.
In addition to overarching trade laws, government regulations can cause problems for any company – but especially one that deals strictly in food and beverage creation. Some governments have gone so far as to place limits on the amount of certain unhealthy ingredients that can go into certain classes of foods or have required certain disclosures about what goes into the end product. While such disclosures are essential for corporate transparency and a responsibility to the consumer, these moves could cause issues for a company that relies heavily on snacks and sodas.

More than 36 billion cases of carbonated beverages were sold worldwide in 2020. (Statista)

5. It may not appeal to health-conscious customers.
Sugary, salty, and fatty content does not sit well with consumers who are focused on healthy options. Many of PepsiCo’s offerings can cause damage to people’s physical well-being if consumed in excess or for long periods of time, and this is bad news for a company that focuses much of its marketing appeal on curbing cravings for refreshing and satisfying snacks. Some customer attrition is going to be unavoidable, but mitigating these kinds of losses will be critical as PepsiCo looks to continued consumer trends in this direction.

PepsiCo’s brand value stood at $18.2 billion in 2021. (Forbes)

6. An economic downturn could be damaging.
While a can of soda or a bag of chips may seem inexpensive for a single purchase, any kind of economic downturn may cause many consumers to take a closer look at their buying habits. In some cases, one of the first purchases buyers may skip is the extra snack or drink at the register, which can accumulate into hefty losses to Pepsi’s bottom line.

PepsiCo accounts for 24% of the United States market for carbonated beverage sales. (Statista)

The Pepsi-Cola company seems poised for permanent growth and success, with over 100 successful and established brands and an almost guaranteed presence across the globe. However, consumer trends away from unhealthy options and competition with existing core products could cause trouble for the bottom line in the future. By responding in positive ways to changing consumer tastes, expanding and diversifying its product offerings, and avoiding public relations issues wherever possible, PepsiCo can remain a juggernaut in the food and beverage industry for decades to come.