Evaluation and comparison of PepsiCo and the Coca-cola company

Evaluation and comparison of PepsiCo and the coca-cola companyToday Pepsi is a huge international and multi iodine million million dollar soft-drink and snack food company instant only to coca dummy. It is hardly what Caleb Bradley had in mind when he created a soft drink linguistic rule in his North Carolina pharmacy store in 1898. In its early days Bradley sold only the syrup needed to make the Pepsi drink. Today we have countless choices of drinks and snacks all under the Pepsi pick up.Caleb Bradley patented his formula in 1902 and started making and selling it out of his pharmacy. He had great success with it, and production increased almost exponentially. During World War I sugar began to be rationed and prices rose over 500%. Caleb had no choice but to decl ar bankruptcy and sell his business to Roy C. Megargel, and redactment banker, in 1928. notwithstanding Megargel had really little luck with the company as well and in 1931, just three socio-economic classs later declares bankruptcy himself.A company by the name of Loft Inc. purchases most of the Pepsi shares and blend ins a major shareholder of the corporation. After reorganizing, Pepsi begins to advertise on a massive scale. With the depression in full swing at the time Pepsi begins to sell 12 oz bottles of its product for just 5 cents compared to its competitor selling 6 oz bottle at the same price. It becomes known as the unequal mans drink.It began to aggressively look to the international market, especially in Canada and Mexico. In 1934 Pepsi was finally able to open its first distribution center in an international market, Canada. From that gratuity on the drink and the name had nowhere to go but up. New products were added to its list such as Diet Pepsi, Pepsi Free, etc.In 1965 Pepsi joined forces with a large snake food industry know as Frito Lay. Thanks to this merger the company was able to make for the first time $1 billion in sales, its first but certainly not its last. Peps i also become purchasing fast food restaurants such as Taco Bell, Kentucky Fried chickenhearted and Pizza Hut. But in 1997 it spun off these fast food chains into another company.Today Pepsi make over $40 billion a grade and this number is increasing every year. The brand name alone is worth over $12 billion which puts it in the top 20 most substantial names in the world. There seems to be no stopping this giant in the soft drink industry, but every company has a competitor and Pepsi has some very powerful ones.PepsiCo and The Coca Cola Company PerformanceRatio Comparisons PepsiCo IncFiscal Year 2009ProfitabilityGrowthCash Flow pecuniary HealthEfficiency RatiosRatio Comparisons The Coca Cola CompanyRatio ComparisonsProfitabilityGrowthCash FlowFinancial HealthEfficiency Ratios personal credit line Charts PepsiCo Inc3 month stock chart6 month stock chart1 year stock chart line of merchandise Charts The Coca Cola Company3 month stock chart6 month stock chart1 year stock chartStock Prices PepsiCo IncStock Prices The Coca Cola CompanyDevelopment PepsiCo IncProductAdd more than 200 product variations a year to keep up with changes in consumer savorNew Age beveragesSoBe No Fear (energy drink)SoBe Synergy (targeted to school-aged children)SoBe Fuerte (Hispanic market)Propel Fitness WaterObesity concernsLow-carb Doritos, Cheetos, and TostitosHealth concernsNatural and organic chipsHispanic marketsPopular brands from a Mexican subsidiary (Sabritones Chile and Lime puffed wheat snacks)CulturePepsi Refresh Project Pepsi is awarding grants from $5,000 to $250,000 to consumer-generated ideas that will make a positive ext dismiss to in the world. The program launched on January 13, 2010 and will award more than $20 million in 2010 to move communities forward.Aug 27, 2010 CVS Pharmacy and Boundless Playgrounds Join the Refresh challenge to Support Children of All AbilitiesCurrent DevelopmentsAug. 4, 2010 PepsiCo announces company is investing USD $3 million over ne xt three years to create Agriethnical Development revolve about of Peru (CEDAP), which will develop new varieties of potatoes and other tubers and roots.This is meant to develop new and healthier products and to encourage commercial cultivation of these species in ways that preserve biodiversityAug 16, 2010 PepsiCo announces plan to invest USD $250 million in Vietnam over next three years.New investment includes increasing manufacturing capacity, adding marketplace equipment, further strengthening brands, and broadening companys product portfolio via innovation market place Differentiation StrategyIndustry-leading Nutrition GoalsReduce the average saturated fat per serving in key global food brands in key markets by 15% by 2020Reduce the average added sugar per serving in key global beverage brands in key markets by 25% by 2020Reduce the average sodium serving in key global food brands in key markets by 25% by 2020Increase unhurt grains, fruits and vegetables, nuts, seeds, and lo w-fat dairy in its product portfolioEnvironmental GoalsProvide access to safe water to three million people in developing countries by the end of 2015Reduce packaging weight by 350 million pounds by 2012Work to eliminate all solid waste to landfills from PepsiCos production facilitiesCommit to an absolute lessening in greenhouse gas emissions across global operationsFuturePepsico hopes to revive Quaker with new productsPepsi plans to cut sodium by one-fourth in key brands in five years, and cut sugar per serving in drinks by 25 percent in the next 10 years.Development The Coca Cola CompanyProductCalorie concerns2006 Enviga, negative calorie green tea drink2007 Glaceau (Vitamin Water)2009 90-calorie mini can (7.5 fl oz)CultureLive Positively Cokes vagabond to help make a positive difference in the world through and through sustainability with focuses on climate protection, balanced living, education, and communityGive It Back recycle Program Coca Cola is asking for its consum ers to return the cans and plastic bottles of Coke they buy in order to make backpacks, t-shirts, rugs, etc.Aug 24, 2010 Coca-Cola workers strike in Bellevue house 1, 2010 Strike announced at Edmonton Coca Cola factoryCurrent DevelopmentsSept 7, 2010 Coca Cola Enterprises plans to sell its North American business to Coca Cola Co in the fourth quarterAug 30, 2010 Coca-Cola West (Japan) to buy vegetable juice maker Qsai for $421 millionCoca Cola FreestyleA resuscitate screen soda fountain with over 100 different Coca-Cola beverage products and custom flavors.Market Differentiation StrategyFutureCoca Cola drinks in Japan made from Kale, a nutrition but not very tasty vegetable, whitethorn turn up in storesCoca Cola buys major Russian juice producer NidanCompany ComparisonIn PepsiCos 2009 Annual Report to shareholders, it identifies a plethora of competitors. Notable competitors include Dr. Pepper Snapple Group, Inc., Nestl, and Kellogg. However, no controversy is longer or larger than the one between PepsiCo and Coca-Cola. Not only are these cardinal the first and second largest food and beverage companies in the world, these dickens have a vested interest in keeping the competition alive. In this industry, where margins and market share determine profitability, marketing plays a vital role in bringing in creating new loyal customers and maintaining the old ones. And both of these companies have benefited from the marketing of the other.Product ComparisonIts easy to compare these two companies given the law of similarity in their products. Both have well-known brands for soda, sports drinks, juices, and water. They both also see the benefit in vertically integrating their supply chain. enchantment PepsiCo chose to purchase its two largest bottlers, The Coca-Cola Company has continued to hold a large share in their bottling companies. These companies compete on a product by product basis as is detailed in the chart below. It is important to note that one key line is not included, popular snacks. PepsiCo has acquired a multitude of brand named snack companies including Frito-Lay succession Coca-Cola while having over 3,000 different beverages sells only that, beverages. This has helped PepsiCo diversify and increase its sales and market compared to Coca-Cola.PepsiCoThe Coca-Cola CompanyBottlingAcquired Pepsi Bottling Group and PepsiAmericasOwns 34% share of Coca-Cola Enterprises and 32% share of Coca-Cola FEMSAsodaPepsi, Mountain Dew, and MugCoca-Cola, Fanta, and SpriteSports DrinkGatoradePoweradeOrange JuiceTropicanaMinute MaidWaterAquafinaDasani and EvianSize and Profitability ComparisonAs much as PepsiCo tries to compete on the same grounds as The Coca-Cola Company, for the time being Coca-Cola is still the leader in many ways financially. For one, PepsiCo is portentously smaller than The Coca-Cola Company. In 2009, PepsiCos Market Capitalization was only 80% of Coca-Colas. Furthermore, the Coca-Cola Company has continued to sel l more efficiently than PepsiCo. In 2009, all of Coca-Colas profit ratios were significantly greater than PepsiCos. perhaps this is partially explained by the greater number of employees PepsiCo employees. PepsiCo is winning out on top line growth however, with more than $10B in sales last year alone.PepsiCoThe Coca-Cola CompanyStock TickerPEPKOHeadquartersPurchase, NYAtlanta, GA2009 Number of Employees203,00092,8002009 Market Capitalization$103 B$130 B2009 Sales$43.2 B$31.0 B2009 Gross Profit Margin53.5%64.2%2009 Operating Margin18.6%26.6%2009 Net Profit Margin13.8%22%Investment ComparisonAt first glance, PepsiCo and Coca-Cola may seem like they are about equal when it comes to what stockholders are looking at. Shareholders want a maximum return on their investment all through an increased stock price or dividends. Given that PepsiCo and Coca-Cola are both seen as value stocks by most investors, the amount they provide in dividends is of significant importance. Given PepsiCos hig her Dividends per Share in this category regardless of how small is worth noting.(2009)PepsiCoThe Coca-Cola CompanyDividends per Share$1.77$1.64EPS$3.86$3.18P/E16.6117.66Qualitative ComparisonBut a company is more than just its numbers. A companys qualitative features like its core values and growth plans for the future are of equal importance. Both PepsiCo and Coca-Cola are interested in expressing a commitment to health, but they do it in significantly different ways. PepsiCos interest in health is centered around sustainability. They cozy up their three commitments to human, environmental, and talent sustainability whereas Coca-Cola takes a more human centric view on health. It is specifically trying to promote a healthy lifestyle through education, nutrition information, and exercise. Both are trying to fight the obesity epidemic and offer healthier choices, but their ways vary.The Decision to InvestIndustry analytic thinkingBefore deciding whether or not to invest in PepsiCo, one must investigate if now is the time to investigate in its industry. The difficulty in studying PepsiCos industry is that it falls into a couple of industries. The Business Company Resource Center returned eight possible industries, but the most salient one and the one PepsiCo aligns most with is the Bottled Canned Soft Drinks Industry.The good news for PepsiCo is that the soft drinks industry is now and is intercommunicate to remain extremely concentrated. PepsiCo, along with Coca-Cola, are either the cause or effect of this trend and have helped lead the United States to be the number producer and consumer of soft drinks. But this market is heavily saturated, and the regions projected to be able to offer the most growth in the next decade are the Asian and South America markets. By targeting these groups and catering to their cultural expectations, significant returns can still be made.The biggest challenge for the industry going forward is addressing the growing concern th at soft drinks are causing an obesity epidemic. By offering healthier alternatives, or perceived healthier alternatives such as diet colas, juices, and bottled water, this can be overcome. The significant investment that Pepsi has made in its weightlift to promote a healthier lifestyle will also not go unnoticed.The number one ingredient in soft drinks may become more difficult to obtain. The supply of water, the largest ingredient in almost all of Pepsis products, could become more strained as pollution and droughts continue to plague the resource. developing a plan to share and conserve this resource and addressing all the growing concerns over its supply will be important for Pepsi.Management AnalysisNo company can be successful long term without the right management team. PepsiCos committed CEO has been with the company for almost two decades in a variety of strategic and operational leadership positions. She has a firm understanding of the industry as well the growth strategy that she has been implementing for years.Perhaps more important than what PepsiCos leadership is known for, is what they arent known for. No member has pass oned public attention for unethical financial decisions or misdoings.What else should be included here?Expert OpinionsFebruary 20, 2008 While many companies saw business decline in the fourth quarter, PepsiCo met expectations even after investing heavily abroad for growth. It posted a 17% gain in revenue and an 11% increase in operating profit as core brands came through. The company had double-digit growth in snacks and drinks in emerging markets. (article from 2008)http//articles.moneycentral.msn.com/ invest/CompanyFocus/WhyPepsiCoStockIsABuyNow.aspxApril 14, 2010 Coke or Pepsi Which stock to buy?The ability to leverage sales across a wider variety of products will be a powerful number one wood for PepsiCo here and overseas.This is referring to PepsiCo and snack itemshttp//articles.moneycentral.msn.com/learn-how-to-invest /coke-or-pepsi-which-stock-to-buy.aspxSummary