SWOT Analysis of Pepsi – PepsiCo SWOT analysis

Pepsi is one of the most famous and liked FMCG brands across the world. It is an arch rival of Coca cola. Pepsi operates out of New york but has covered the globe and is most famous for its carbonated drink – Pepsi. However, Pepsi does have a huge product portfolio and generally targets the youngsters. Indra Nooyi is the current CEO of Pepsi at the time of writing this article.

Let us look into the SWOT analysis of Pepsi

Some major Brands under PepsiCo:

Strengths in the SWOT Analysis of PepsiCo :

• Brand equity: it is one of the most prominent and famous brands in the world in the food and beverage sector. It is also known as the brand of youth. It has a high brand recognition and reputation. It has a brand valuation of $19.4 billion and it is ranked 29 in the Forbes most valuable brands list.
• Product portfolio performance: 2015 saw a decrease in the sale of soft drinks. India as a country is evolving and becoming more health conscious. This can be noted from the 2015 analysis of top selling brands (in India) that the top 5 beverages are only juices and sweet syrups. There is no soft drink in the top 5.Pepsi has two products in the top 5 beverages sold in the country.The top 5 beverages are in order:

• So, even if Pepsi is second to Coca cola in terms of distribution of its Cola, there are other footprints which Pepsi has because of its product portfolio.
• Strong Leadership: Under the leadership of Indra Nooyi PepsiCo has been doing really well. It has managed to stay at number two position in the complete food and beverage sector only behind Nestle in that field.
• Customer Loyalty: PepsiCo has an extremely loyal customer base. In its beverage category all its soft drinks have an iconic taste and that’s why their customers do not prefer to shift brands. They have emerged as a very strong brand when it comes to juices and bottled water category. Frito-Lay has been one of the top-selling brands in the world with brands under it such as Doritos, Lay’s, Funyuns, Uncle Chips, Cheetos, Tostitos and Walkers. They had managed to grab 6 slots in the top 10 global snack brands with topping the charts (all 3 spots) as well.
• Strong distribution: Pepsi has a global presence in more than 200 countries providing them with a very good distribution network.
• Supply Chain: It has one of the best supply chain networks in the world, making the products available throughout the world. Apart from this they also have a very efficient reverse logistics associated with it.
• Tie-Ups: They have tie-ups with sports events and music concerts which keeps them in the lime light and thereby increasing the brand recall. They have sponsorships to major sports teams thereby standing with what the brand is known for, youth and energy.
• Clear target audience: Pepsi, unline Coca Cola has always had a clear target audience – the young crowd. It always targets youngsters through its ads and generally the youngsters are shown to be smarter then the old ones. The message is clear – Pepsi is the in thing.

Weaknesses in the SWOT analysis of Pepsi :

• Competition: It has heavy competition from Coca-Cola in their soft drinks category. They are always neck to neck with each other. This competition thereby provides a room for not so loyal customer base to switch brands quickly.
• Products perceived as unhealthy: Most of the soft drinks of the PepsiCo is perceived as unhealthy.
• Product Dependence: They are only present in the food and beverage industry which may be harmful in the longer run. They need to diversify their business to other product segments to become a global leader.
• Failed Products: Many failed products such as ‘Crystal Pepsi’ which hurts the brand image of the PepsiCo and thereby giving room to the competitors to grow.
• Brand Ambassadors: Wrong remarks or ill performance by the famous personalities/celebrities, in turn, might damage the brand image of PepsiCo as they are the face of the organisation. Over dependence on celebrities for endorsements is a huge risk.
• Value addition: Pepsi is known to have advertisements which are targeted towards youngsters. However, it is not known to display Value advertising which is a characteristic of Coca cola. Coca cola has time and again focused on the positive values of life, something which Pepsi can learn from them.

Opportunities in the SWOT analysis of Pepsi :

• Healthy Options: It should work more on improving the health implications of their products and make the customer aware of the same. Diet Pepsi is a positive move towards that direction.
• Diversification: Business diversification into different market segments is a huge opportunity. They have the talent, resources and financial backing to do the same. This can also be done by acquisitions.
• CSR: They can do more CSR activities to tackle the negative remarks that hurt the brand image of the organisation and benefit the local people.
• R&D: Recently PepsiCo came out with healthier options in a soft drink. To make 7Up by using the substitute of sugar called Stevia. This can prove to be a game changer. More such research needs to be done. Focus more on the diet drinks category. They have recently released a variant of their cola sweetened with Stevia and sugar called Pepsi Next.
• Flavors: A brand which has risen strongly in the recent years is Paperboat. Paperboat is known for its various flavors such as watermelon, raw mango etc. Bringing in such flavors even in carbonated beverage form can help Pepsi attract a larger market.

Threats in the SWOT analysis of PepsiCo :

• Competitors: PepsiCo’s main competitors are Coca-Cola, Kraft foods, Nestle, Dr Peppers Snapple Group and Mondelez.
• Health Factor: The unhealthy factor associated with its products can take a toll on the health conscious customers and might lose them. This can be clearly seen by the fall of soft drinks sale.
• Economic Slowdown: With the recent reforms in the country PepsiCo might see a drop in its sales due to a cash crunch in the economy. Other factors such as recession and inflation may also impact sales of the company.
• Government Norms: Different norms of different countries might prove difficult to handle and compliance with it as well.