In 1993, beverages were 34% of what PepsiCo sold and 38% of profits gained. Beverage segment was responsible for production, development, bottling of the soft drinks, marketing and promoting the product as well as delivering to other outlets. Fifty percent of the bottling was mainly done by its franchisees. Pepsi-Cola International and Pepsi-Cola North America accounted for 84% and 68% of the sum amount of beverage sales and profits respectively in 1993.
During 1960 and 1970, the original Pepsi cola line expanded and established products like; Patio soft drinks, Diet Pepsi, Teem, Mug Root Beer, caffeine-free Pepsi, Slice and Mountain Dew, which was acquired from Tip Corporation.
In 1993, Diet Pepsi, Mountain Dew, Pepsi and Caffeine Free Diet Pepsi were among the top-selling soft drinks in the U.S.A. it had third of the U.S $ 47 billion soft drink market. At this point, PepsiCo wanted to enter into a full beverage business and in 1992, it partnered up with Thomas J. Lipton Company to bring Lipton’s ready to drink teas, some of them being flavoured. PepsiCo later on challenged ‘Gatorade’ in sports’ drinks with their ‘All Sport’ drink. It also ventured into water production with ‘H2Oh!’ as their product name.
Through agreements, Pepsi-Cola entered the natural fruit and still-water markets using Ocean spray and Avalon, though their major role was to distribute these products. PepsiCo’s aim is to have their products in their consumers’ reach. They were targeting new areas such as schools, food service stations, as well as airlines (Annual Report pg 7).
Pepsi-Cola was now in a position to acquire international companies. The first one was Seven-Up. Seven-Up was the third largest soft drink company, that was not based in the U.S. it was acquired in 1986.in 1992, the company had strengthened its international business through acquisitions valued at half a billion dollars (Ibid p8). Calloway believed that the best area for expanding the company’s beverage business was to venture into international markets.
PepsiCo, Inc. Annual Report, 1991,
Menzies, Hugh D., "The Ten Toughest Bosses," Fortune, April 21, 1980, p. 148
PepsiCo, Inc., 1992 Annual Report, p. 7.
Ibid, p 8.
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