strategic-management

242 JOHN AND SHERRY ROSS
cookies; Ritz, Premium, Triscuit, Wheat Thins, Cheese Nips, Honey Maid Grahams,
Teddy Grahams and Kraft macaroni and cheese crackers; Nabisco 100 Calorie Packs;
South Beach Living (under license) crackers, cookies, and snack bars; Planters nuts and
trail mixes; Handi-Snacks two-compartment snacks; Back to Nature granola, cookies,
crackers, nuts, and fruit and nut mixes; and Balance nutrition and energy bars.
As Kraft continues to improve in the coming years, it should become a stronger competitor
in all divisions. However, with long-term debt of $18.5 billion (LTD to common
equity of 83.73 percent), debt coverage could slow its progress.
Future Direction
Pepsi and Coke have fought the cola wars for decades, and Coke has generally beaten out
Pepsi for market share. However, today we see that PepsiCo is a larger and more diversified
company than Coca-Cola with numerous opportunities and directions for growth. Although
the market for colas nationally may be somewhat stagnant, the international markets for colas
and snacks continue to grow. In some countries, these have increased in double-digit figures.
Additionally, PepsiCo has continued to expand in noncola foods that seem to
enhance the opportunities for synergy between colas and salty snacks, water and sports
drinks, and breakfast and juices. These combinations and promotions allow PepsiCo’s bottlers
enhanced ability to gain retail shelf space. However, the proliferation of products for
specific market segments (light, sugar free, caffeine free, etc.) and the increasing use of
house brands by retailers will continue to force PepsiCo to innovate new products and at
the same time reevaluate current product offerings.
PepsiCo spent $650,000 in the second quarter of 2009 to lobby on sugar, food safety,
food labeling, patent reform, energy, taxes, and other issues. Besides Congress, PepsiCo
lobbied the Agriculture Department, Executive Office of the President, and other entities,
according to a report filed July 20, 2009, with the House of Representatives clerk’s office
in Washington, D.C.
In late 2009, PepsiCo acquired Amacoco Nordeste Ltda and Amacoco Sudeste Ltda,
Brazil’s largest makers of packaged coconut water drinks. PepsiCo is expanding its presence
in South America’s largest nation. These Brazilian companies make the Kero Coco
and Trop Coco drinks.
Also in late 2009, PepsiCo acquired and combined its two largest independent
bottlers for $7.8 billion–PepsiAmericas and the Pepsi Bottling Group. This forward integration
strategy has been a major initiative of PepsiCo for many months.
Develop a clear three-year strategic plan for PepsiCo.
Endnotes
1. J. Slater, “Coke, Pepsi Fight Product Contamination Charges in India” Wall Street
Journal (August 15, 2003): B1.