Pepsico Troubleshooting Essay

673 Words3 Pages
Introduction: Pepsi is the second largest beverage company in the world, with annual sales of around 65 million dollars and owns world famous brands like Quaker Oats, Tropicana and Frito-Lay. The company, along with Coca Cola, dominates the global beverages market. Pepsi also has huge snack foods divisions which are growing faster than the overall business. However, Pepsi’s performance in the recent past has not been good, and its margins have been falling. The stock has underperformed consumer goods companies like Coca Cola. Problems: 1. Health issues Obesity has become one of the major problems for US and there is already growing awareness to take urgent action against this issue. Pepsi is the largest seller of sugary, carbonated drinks and fatty snacks in the US, and faces a tough regulatory future. 2. debt The company’s Net Debt at around $22 billion is quite high compared to other consumer goods companies. The company’s net debt has increased by more than around 30% in the last couple of years. Though Pepsi does not face any liquidity or dividend risk from its current debt load, the growing debt is a concern. 3. Developed markets slowdown The company gets a majority of revenues from the developed markets. However developed region like USA, Japan, and Europe are experiencing a GDP slowdown which is badly affecting most consumer goods players. 4. Competition is growing from new entrants Pepsi and Coca Cola form a duopoly that dominates the global soda market. However, Pepsi is facing threats from entry of new players into this markets which threaten its fat margins. For example, Sodastream has already made impressive gains by selling “at-home” sodamakers. Other companies might also enter the market seeing the success Sodastream in the soda market. Measures: 1. Facing the health issues, PepsiCo’s CEO, Nooyi, has boldly changed

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