1) Losing market share to its competitors
Pepsi’s main competitor, Coca-Cola has twice as many vending machines, dominated fountains, had more shelf space in retailer and is competitively priced. Coca-cola dominates fountains at fast food restaurants such as McDonalds and Subway.
2) Saturated market in the United States
The beverage industry in the US is no longer expanding because it is saturated with competitors such as Coca-Cola and Cadbury Schweppes. In addition, market share is actually decreasing as more consumers are looking to healthier options. This is due to the fact that consumers are more aware of their health and living healthier lifestyle. Consumption of carbonated soft drinks in the US has been in steady decline over the past decade, in part because of the abundance of alternative beverages available in the market, from still water to sports drinks, and in part out of health concerns in a nation with an obesity problem.
3) Overdependence on the United States market
Despite its international presence, 52% of its revenues originate in the US. This concentration does leave PepsiCo somewhat vulnerable to the impact of changing economic conditions, and labor strikes. Large US customers could exploit PepsiCo’s lack of bargaining power and negatively impact its revenues.
4) Image Damage Due to Product Recall
Recently (2008) salmonella contamination forced PepsiCo to pull Aunt Jemima pancake and waffle mix from retail shelves. This followed incidents of exploding Diet Pepsi cans in 2007. Such occurrences damage company image