Overview of PepsiCo’s food business
PepsiCo Inc. (PEP) is a leading food and beverage company that manufactures and distributes its products in more than 200 countries. Food products that PepsiCo manufactures include chips, flavored snacks, cereals, rice, pasta, and dairy-based products. The company’s beverage product portfolio includes carbonated soft drinks, juices, ready-to-drink tea and coffee, sports drinks, and bottled water. Headquartered in Purchase, New York, the company employs around 274,000 people worldwide.
According to Information Resources, Inc. (or IRI), a market research company, PepsiCo owns nine of the 40 largest packaged goods trademarks in the United States. The company owns several brands, and 22 of them, including Pepsi, Lays, and Gatorade, generate more than $1 billion each in revenues.
A brief history of PepsiCo
PepsiCo was formed in 1965 with the merger of Pepsi-Cola Company and Frito-Lay, Inc. At that time, Pepsi-Cola Company was manufacturing Pepsi-Cola, Diet Pepsi, and Mountain Dew. Frito-Lay’s products included Fritos corn chips, Lay’s potato chips, Cheetos cheese flavored snacks, Ruffles potato chips, and Rold Gold pretzels. PepsiCo grew bigger with the 1998 acquisition of Tropicana and the 2001 merger with Quaker Oats.
The combination of these companies made PepsiCo a strong diversified consumer staples firm. In the next part of this series, we’ll discuss PepsiCo’s business model in detail.
PepsiCo competes with global, regional, and private companies across the food and nonalcoholic beverage space. In the food industry, the company’s rivals include ConAgra Foods, Inc. (CAG), Kellogg Company (K), Kraft Foods Group Inc. (KRFT), Mondelez International, Inc. (MDLZ), Snyder’s-Lance, Inc. (LNCE), and Nestlé S.A. (NSRGY).
In the nonalcoholic beverage industry, The Coca-Cola Company (KO) is PepsiCo’s closest rival. Other peers in the beverage industry include Dr Pepper Snapple Group, Inc. (DPS), Cott Corporation (COT), Red Bull GmbH, and Monster Beverage Corporation (MNST).
Investing through ETFs
Food and beverage companies like PepsiCo are part of the consumer staples sector. You can invest in this sector through exchange traded funds (or ETFs) such as the Consumer Staples Select Sector Standard & Poors depositary receipt (or SPDR) Fund (XLP). PepsiCo is also part of other ETFs such as the SPDR S&P 500 ETF (SPY) and the Vanguard Dividend Appreciation ETF (VIG).