Pepsi is one of the world’s most recognizable brands. Formed by the merger of two companies, namely the Pepsi-Cola Company and Frito-Lay Inc, PepsiCo was formed in 1965, and since then has continued towards building an enduring legacy with brands such as Lays, Mountain Dew, Starbucks and obviously Pepsi. Judging by sheer volume, PepsiCo is the largest food, snack and beverage corporation that operates across the continents.
Things are, however, taking a turn for this giant of the industry. With rising health concerns regarding fast foods and carbonated drinks, PepsiCo has seen its share of profits sliding in recent years. As the various macro-economic factors continue to change across the world, this PESTLE analysis of PepsiCo aims to study the various opportunities that PepsiCo may avail of, together with taking a view of the threats it might have to face in the global marketplace.
Political Factors Affecting PepsiCo
Political factors play a big role in the success of PepsiCo. A stable government together with a developed (or even developing) economy can help PepsiCo climb the profits charts to success. At the same time, however, the FMCG giant must be mindful of the latest health regulations that are imposed on it, together with compliance issues.
Changing political landscape of countries can also contribute to the rise or fall of PepsiCo, depending on whether the governments support the proliferation of fast foods and soft drinks, or whether they formulate laws and impose taxes to reduce the consumption of such foodstuff (as was recently done in the US).
Economic Factors Affecting PepsiCo
Developed or developing economies with a large, young working population provide ample business opportunities for PepsiCo to expand their operations. As the purchasing power of the people increases, lifestyles become more eclectic, and this may work in favor of consumption of the foods and beverages that PepsiCo markets.
On the other hand, economic crises, such as the ongoing trade wars between the US and China, are bound to have a negative impact on the revenue of PepsiCo. With changes in international exchange rates and swaying economic conditions, the fate of PepsiCo depends largely on economic stability across the globe.
Social Factors Affecting PepsiCo
Recently the world has seen a cultural shift from the fast-food loving crowds to a population that is more health-conscious than ever. With more and more individuals opting for healthier diets, PepsiCo’s fast food products are certainly under threat of becoming redundant. As more and more people shift from carbonated drinks to flavored water and other alternatives, PepsiCo has seen a fall in their fortunes recently.
Yet there is hope. This is scope for the company to create a new line of healthier products that can cater to the needs of the current market. PepsiCo has already taken steps in this direction with the release of diet versions of their drinks which are lower in sugar and calorie content. With the population focusing on healthy and nutritious food items, PepsiCo must reinvent its product line to remain relevant and in sync with the times.
Technological Factors Affecting PepsiCo
As a company, PepsiCo is well placed to take advantage of the latest technological disruptions. Using big data analytics and machine learning capabilities, PepsiCo can streamline their R&D processes and launch more targeted, focused marketing campaigns across the entire gamut of digital media.
Automation technologies can also help the company increase the efficiency of their production and logistics processes. Advancements in artificial intelligence can help the company optimize their supply chain and build a better infrastructure for catering to its patrons.
Legal Factors Affecting PepsiCo
PepsiCo has to navigate through government regulations and tax laws in order to maintain a profitable operation. While regulatory compliance is one facet of the company’s legalities, copyright infringement is another factor that it needs to tackle on a regular basis. Together with restrictions on the use of certain ingredients and increasing taxes, PepsiCo certainly has a lot on its legal plate.
Environmental Factors Affecting PepsiCo
Changing climatic conditions and an environment-conscious consumer base must inspire PepsiCo to adopt sustainable practices in all facets of its business and fulfill its corporate responsibility. By adopting practices such as greater focus on recycling, sustainable waste disposal and reduction in their carbon footprint the company can create a model that others would follow.
Final Thoughts of PESTLE Analysis of PepsiCo
In conclusion it can be said that while PepsiCo does face threats from political instability and economic downturns, an improved, health-oriented product line and sustainable business practices can help the global giant maintain its top position in the market and even expand into newer territories
Image by Pascua Theus