PEPSI

Topics: Coca-Cola, PepsiCo, Soft drink Pages: 64 (9270 words) Published: December 28, 2013

PEPSI COLA PAKISTAN:
FRANCHISING & PRODUCT LINE MANAGEMENT

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In July 1991, Irfan Mustafa faced several dilemmas. As West Asia area vice president and chief executive officer of Pepsi Cola Pakistan Incorporated (PCI), Mustafa was charged with developing a strategy to grow share and profitability across PCI sales but focusing particularly on 7-Up. Pepsi Cola International had shifted focus to its global brands and, since acquiring 7Up International in 1986, had withdrawn all marketing and technical support for Pepsi’s local Pakistani brand, Teem. As a country manager, however, Mustafa was evaluated on profitability, and Teem was a profitable brand. Mustafa knew that he would need to make important decisions about Teem in developing a brand strategy and marketing plan. Considering Teem’s success in Pakistan, Mustafa wondered how he should position the soft drink and whether to continue investing in it despite the loss of international support.

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PEPSICO INC.

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With PepsiCo’s acquisition of 7-Up International, arranging for 7-Up and PCI bottlers in Pakistan to merge also became a priority for Mustafa. The ability to coordinate strategies across all bottlers producing PCI brands would be essential. By August 1990, PCI had been able to merge 7-Up and PCI bottlers in three regions. As contracts expired over the next year or two, Mustafa would need to convince the remaining 7-Up bottlers to sell their plants to PCI bottlers as well. With the mergers complete, Mustafa’s next step would be to persuade bottlers to adopt an updated product line. However, since this would entail changes to Teem, a strong Pakistani brand that outsold 7-Up in some regions, Mustafa anticipated resistance.

Pepsi Cola International was owned by parent company, PepsiCo Inc. In 1990, PepsiCo’s numerous food and beverage brands were available in nearly 150 countries and accounted for an

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Unless otherwise noted, information in this case comes from interviews with Irfan Mustafa, West Asia area vice president and chief executive officer, Pepsi Cola Pakistan Incorporated (PCI), or data provided by PCI. Professor Wasim Azhar and Davina Drabkin (MBA ’03) prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 2008 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or request permission to reproduce materials, e-mail the Case Writing Office at: cwo@gsb.stanford.edu or write: Case Writing Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University, Stanford, CA 94305-5015. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means –– electronic, mechanical, photocopying, recording, or otherwise –– without the permission of the Stanford Graduate School of Business. This document is authorized for use only by Naveed Ilyas at Institute of Business Management until February 2014. Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860.

Pepsi Cola Pakistan IB84

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estimated $44 billion in retail sales. Net sales were almost $18 billion and net income was over $1 billion.2 In 1990, PepsiCo operated in three markets:




Soft Drinks: Pepsi Cola Company and Pepsi Cola International Snack Foods: Frito Lay Inc. and PepsiCo Foods International
Restaurants: Pizza Hut, Taco Bell, and Kentucky Fried Chicken (KFC)

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PepsiCo described itself as “first and foremost a growth company.”3 The company had a good year in 1990, demonstrating double-digit growth in all three of its markets (soft drinks 14 percent, snack foods 16 percent, and restaurants 26 percent). One out of every five sales dollars was from outside of the United States and, in every line of business, the company saw global...
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