PepsiCo,Inc.

A. Introduction
PepsiCo, Inc., American food and beverage company that is one of the largest in the world,
with products available in more than 200 countries. It took its name in 1965 when the Pepsi-Cola
Company merged with Frito-Lay, Inc. The company’s headquarters are in Purchase, New York.

The first Pepsi-Cola was created by Caleb D. Bradham (1866–1934), a pharmacist in New

Bern, North Carolina. Hoping to duplicate the recent success of Coca-Cola, Bradham named his
sweet cola-flavoured carbonated beverage Pepsi-Cola in 1898. The drink proved so popular that in
1902 Bradham incorporated the Pepsi-Cola Company. After many years of moderate prosperity, the
company fell on hard times after World War I and was reorganized and reincorporated on several
occasions in the 1920s.

In 1931 the company’s trademark and assets were picked up by Charles G. Guth (1876–
1948), founder of the modern Pepsi-Cola. He established a new Pepsi-Cola Company, had a chemist
formulate a better drink, set up new bottling operations, and began merchandising a hugely
successful 12-ounce bottle for five cents. Guth was also president of Loft, Incorporated, a candy
manufacturer and soda-fountain chain (founded 1919), and in legal battles in 1936–39 he lost a
controlling interest in the Pepsi-Cola Company to the new management of Loft. When in 1941 the
Pepsi-Cola Company was merged into Loft, the name Loft, Inc., was changed to Pepsi-Cola Company.

In 1950 Alfred N. Steele (1901–59), a former vice president of Coca-Cola Company,

became chief executive officer. His emphasis on giant advertising campaigns and sales promotions
increased Pepsi-Cola’s net earnings 11-fold during the 1950s and made it the chief competitor of
Coca-Cola. (After Steele’s death, his wife, actress Joan Crawford, became an active director of the
company.) In 1965 Pepsi-Cola merged with Frito-Lay, Inc., the maker of snack foods such as Fritos,
Doritos, Lay’s potato chips, and Rold Gold pretzels. The newly enlarged company diversified further
with the purchase of three restaurant chains—Pizza Hut, Inc. (1977), Taco Bell Inc. (1978),
and Kentucky Fried Chicken Corp. (1986; now called KFC)—and Seven-Up International (1986), but
in 1997 the restaurant chains were spun off into a new, separate company called  Tricon Global
Restaurants, Inc. Looking to add more products that were considered healthier,
PepsiCo acquired the Tropicana and Dole juice brands from the Seagram Company in 1998, and in
2001 it merged with the Quaker Oats company to form a new division, Quaker Foods and
Beverages. With the merger, PepsiCo’s popular brands included Pepsi cola, Frito-Lay snack
products, Lipton Tea, Tropicana juices, Gatorade sports drinks, Quaker Oats cereals, and Rold Gold
pretzels.

In the early 21st century, PepsiCo focused on expanding its operations in other countries,
notably Russia, which was its second largest market. In 2008 it bought a controlling interest in JSC
Lebedyansky, Russia’s largest juice manufacturer, and three years later it completed its acquisition
of Wimm-Bill-Dann Foods. Those investments helped make PepsiCo the largest food and beverage
company in Russia.
 B. Products

C. Sales

Prior to the
"staple

products" in the market, it is evident that the company has had excellent sales in the past
two years, while recording an impressive revenue CAGR of 8.78% at the same time. In the
LTM alone, PEP reported remarkable revenues of $80.85B and gross margins of 53.4%,
representing a tremendous sales increase of 20.3% from FY2019 levels. Therefore, it is
evident that the pandemic has brought forward its revenue growth by easily three years, if
not more.

In addition, PEP reported impressive net incomes of $10.17B and net income
margins of 12.6% in the LTM, representing an increase of 39.1% and 1.7 percentage points
from FY2019 levels. Assuming that PEP is able to sustain its excellent sales moving
forward, we expect to see improved bottom-line profitability as well, thereby potentially
boosting and/or holding its stock price performance steady over time.

D. Future Outlooks
Belonging to the food, beverages and tobacco sector means this company will be
affected directly and indirectly by a number of disruptive opportunities and
challenges over the coming decades. While described in detail within Quantumrun’s
special reports, these disruptive trends can be summarized along the following
broad points:
 First off, by 2050, the world’s population will balloon far past nine billion
people; feeding that many people will keep the food and beverage industry
growing into the foreseeable future. However, providing the food necessary
to feed that many people is beyond the world’s current capacity, especially if
all nine billion demand a Western-style diet.

 Meanwhile, climate change will continue to push global temperatures

upward, eventually far beyond the optimal growing temperatures/climate of
the world’s staple plants, like wheat and rice—a scenario that can endanger
the food security of billions.

 As a result of the two factors above, this sector will collaborate with the top
names in agribusiness to create novel GMO plants and animals that grow
faster, are climate resistant, are more nutritious, and can ultimately produce
far greater yields.

 By the late 2020s, venture capital will begin investing heavily in vertical and
underground farms (and aquaculture fisheries) that are located close to
urban centers. These projects will be the future of ‘buying local' and have the
potential to significantly increase the food supply to support the world's
future population.

 The early 2030s will see the in-vitro meat industry mature, particularly when
they can grow lab-grown meat at a price less than naturally raised meat. The
resulting product will eventually be cheaper to produce, far less energy
intensive and damaging to the environment, and will produce significantly
safer and more nutritious meats/protein.
  The early 2030s will also see food substitutes/alternatives become a
booming industry. This will include a larger and cheaper range plant-based
meat substitutes, algae-based food, soylent-type, drinkable meal
replacements, and high protein, insect-based foods.

References
https://www.britannica.com/topic/PepsiCo-Inc

https://startuptalky.com/pepsico-subsidiaries/