CASE 21

PepsiCo’s Diversification Strategy in 2014

John E. Gamble
Texas A&M University–Corpus Christi

P

epsiCo was the world’s largest snack and beverage company, with 2013 net revenues of approximately $66.4 billion. The company’s portfolio of businesses in 2014 included Frito-Lay salty snacks, Quaker Chewy granola bars, Pepsi soft-drink products, Tropicana orange juice, Lipton Brisk tea, Gatorade, Propel, SoBe, Quaker
Oatmeal, Cap’n Crunch, Aquafina, Rice-A-Roni,
Aunt Jemima pancake mix, and many other regularly consumed products. The company viewed the lineup as highly complementary since most of its products could be consumed together. For example,
Tropicana orange juice might be consumed during breakfast with
COMPANY HISTORY
PepsiCo, Inc., was established in 1965 when PepsiCola and Frito-Lay shareholders agreed to a merger between the salty-snack icon and soft-drink giant.
The new company was founded with annual revenues of $510 million and such well-known brands as Pepsi-Cola, Mountain Dew, Fritos, Lay’s, Cheetos, Ruffles, and Rold Gold. PepsiCo’s roots can be traced to 1898 when New Bern, North Carolina, pharmacist Caleb Bradham created the formula for a carbonated beverage he named Pepsi-Cola.
The company’s salty-snack business began in 1932 when Elmer Doolin, of San Antonio, Texas, began manufacturing and marketing Fritos corn chips