Although there are many significant players in the beverage industry, Coca-Cola Co. and Pepsi Co. are the main players. Combined, they make up more than 70 percent of the market share in the United States across all channels. They have been the driving force in the carbonated soft drink industry that increased sales by 1.7 percent in volume. However, more and more flavored products are making their way onto store shelves. Some of these new products and opportunities are isotonics, juices, sports and energy drinks, and water.

According to financial reports, non-diet carbonated soft drinks are only expected to capture about 25 percent of the anticipated growth of four to five hundred cases per year on top of the now 12 billion cases of the U.S. soft drink industry with diet carbonated soft drink and non-carbonated making up the difference. This looks good for Pepsi because they have acquired the sports drink leader, Gatorade, and a major alternative beverage leader in the SoBe brand beverages.

A pharmacist from North Carolina named Caleb Bradham started Pepsi in 1898. He was experimenting with digestive aids and invented something his customers liked to call “Brad’s

The second strategy that they use is integration. PepsiCo is able to enhance their product line by carrying fruit drinks, Gatorade, and Frappuccino. This allows them to promote their products and services more efficiently while being able to reach a much broader group of individuals. Through integration, they are able to eliminate potential competitors, while creating a more diverse product line.

Although PepsiCo's name is synonymous with beverages, the bulk of the business is in snacks. PepsiCo's activity in the snack foods industry is under the brand Frito-Lay, which is the United States’ largest maker of salty snacks. As of 2002, PepsiCo paid for more shelf space in the grocery stores to put its product. In addition, PepsiCo is also focusing on creating healthier snacks by eliminating harmful trans-fatty acids from many of its chips. It plans to introduce a section in store aisles for so-called "better for you" products. PepsiCo wants to develop and enhance existing products to meet the nutritional needs of demographic groups such as seniors, women, teens and children.

4. Chura, Hillary. “Pepsi.” Advertising Age. August 6, 2001 v72 pS4.

Pepsi companies are spread all throughout the world. They currently are present in more than 190 countries serving them with an assortment of products. Still, more than 70 percent of their sales are from North America alone. Pepsi has enjoyed strong growth in the past five years. This has been attributed to their new product packaging, successful promotions and the introduction of new products.

The GeneratioNext campaign was launched in 1997, adhering to Pepsi’s energetic, youthful lifestyle position. In 2000, they launched the “Joy of Cola” campaign, and signed such stars such as Faith Hill, Sammy Sosa and Ken Griffey Jr. to appear in ads with Pepsi girl Hallie Eisenberg. In 2001, Pepsi hired pop princess Britney Spears to be the spokeswoman for the “Joy of Pepsi” campaign. The first ads were run during the 2001 Academy Awards, as well as online, where over 2 million visitors clicked to catch a glimpse of the spot. In 2002, Britney starred again in the “Pepsi Generations” campaign, which sought to reflect the teen target market’s interests, as well as to play on the current teen market’s fascination with nostalgia.

PepsiCo ended the quarter with $1.8 billion in cash. The current ratio of 1.17 and quick ratio of .82 shows no problem with short-term obligations. However, the debt to equity ratio is less encouraging. Total equities were $9.5 million whereas total liabilities at the end of the quarter were $14.3 billion. With a hefty ratio of 0.32, PepsiCo’s biggest problem with the balance sheet is with non-current debt. Fortunately, most of the non-current debt is long term isn’t due for several years. Also, since free cash flow is expected to be in excess of $2 billion for the next several years, the company’s debt leverage is an acceptable risk.

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