Major Challenge of PepsiCo

Table of contents

The lifestyle changing fact

Nowadays, since the lifestyle has changed, it influences the concept of eating habits. A market statistics research on healthy food & beverage in America showed that there are 61% of Americans have visited at least a natural foods store in 2012. From this market research, we can see that a majority of people care about their health. Keeping fitness and healthier is the things that people mostly concern about. So, due to the changes of lifestyle, these trend isn’t good for the industry of soft drink companies such as PepsiCo. People tend to drink and eat beverage and food that contained more nutritional value inside.

The new challenge of PepsiCo – Yogurt drinks

As the fact mentioned above, consumers like to change their eating habits into a healthier way. In this point, the new challenge raised up to face against PepsiCo and other sweetened soft drink companies in the market. Yogurt drinks are marked as the beneficial digestive beverage that keeps our digestive system clean.

The opportunity in Yogurt drinks

From the marketing research, Americans consume lesser yogurt than Europeans. This is an opportunity and room for growth toward PepsiCo. They forecast there will have a growth with slower 5.9 percent average rate for the next five-year time. The growing rate is double the overall expected growth of packaged food.

The joint venture between PepsiCo and Germany’s

Theo Muller Group To maintain its brands and statue in the market, PepsiCo are trying out something new in other related products like Yogurt drinks. In 2013, PepsiCo has partnered with a stalwart of the European dairy industry named Germany’s Theo Muller Group. Theo Muller Group is a multinational organization that producing mostly focus on yogurt drinks.

Yogurt plant investment in Western NY

In order to make yogurt products, PepsiCo has invested a 350,000-square-foot plant near Batavia. It is believed that it will boost the local dairy farm economy and help the companies earn profit in the future.

Broad strategic plan implementation

PepsiCo is facing a challenge that its stated profit target wasn’t reached this few years. Indra Nooyi has laid out a broad strategic plan to overcome the challenge. The strategy is about to cut a number of jobs in the organization in order to save the manufacture costs. They are stating the new cost-cutting plan in 2014 throughout around 30 countries. The costs saved down will be spending on advertising and marketing aspects. They endeavour to increase the stakeholders’ value within five-year time.

The strategies and actions taken in PepsiCo

Indra Nooyi realizes the challenges are becoming bigger. Initially, when PepsiCo started their business, they produced and designed its “fun-for-you” products which are Frito and Mountain Dew for consumers. However, since the lifestyle has changed, PepsiCo are trying to change their strategy to emphasize nutritious by producing some “good-for-you” products. Therefore, the company made some changes in their previous corporate strategy of business. Even though the market has changed, they never gave up.

They remained using their diversification strategy to put attention in other related nutritious products. Although PepsiCo has a majority of market share in this market, but it failed to hit the stated profit targets in PepsiCo. For examples, Quaker and Gatorade which are the oatmeal and sports drinks can help to gain profits and create more market share because these products correspond the demand of consumers in the future. Other than that, yogurt market is also included in the related diversification strategy. PepsiCo is trying to provide a range product-line that conclude meals, snacks and desserts to satisfy consumers’ needs.

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