Pepsi’s New Strategy: Better-For-You Products
U.S. Consumption of carbonated soft drinks has steadily declined in the past decade.
Part of that comes down to the array of alternative beverages the market now offers. Part of it comes down to health concerns in a nation with an obesity problem.
But rather than buck the trend, Ms. Nooyi seeks to refocus Pepsi. “Lifestyles have changed,” she notes, “And we have to modify our products.”
In that spirit, she’s focusing the company more on water, juices, teas and sports drinks.
Pepsi’s top brands in those areas include Aquafina and Gatorade. And while it trails in soft drink sales, it leads the world in ready-to-drink teas through Lipton, while its Tropicana wins out in juices/nectars.
The company is betting big on creating healthy foods through its Quaker Oats, Gatorade and Tropicana divisions. And it just began the Global Nutrition Group to deliver breakthrough products.
Nooyi says the new Group “is part of our long-term strategy to grow our nutrition business from about $10 billion in revenues today to $30 billion by 2020.
To further that goal, Pepsi hired several well-known nutritionists to direct its efforts at reducing fat, sodium and sugar in its products. Already, Lay’s potato chips have 25% less sodium… and by 2011, they’ll be made from 100% natural ingredients.
As Caroline Levy, a CLSA analyst, noted, “PepsiCo is currently focused on better-for-you” products. Coke’s Consistent Strategy Wins the Cola War
Meanwhile, Coca-Cola doesn’t seem to care about what Pepsi has accepted. CEO Muhtar Kent not only continues to focus on selling soft drinks globally, but even vows to rebuild Coke sales in the U.S. market.
And admittedly, Coke’s beverage volume in North America dropped only 2% last year. 2009 was extremely difficult economically on top of a relatively cool summer.
In comparison, Pepsi’s beverage volume in the same region plunged 8%.
According to Beverage Digest,...
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