PepsiCo

• 1. Introduction

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  PepsiCo sells its products across more than 200 countries and territories. As of January 2021-23 of its brands each brought in over 1 billion dollars a year. Only Nestlé ranks ahead of it among the world's food and beverage businesses. Yet the company takes its name from a soft drink invented by a North Carolina pharmacist.

  How does a bankrupt cola business turn into a global maker of snacks, juice, oatmeal and sports drinks? Why does a company named for one drink earn most of its money from something else? And what happens when a business of this size draws the attention of rival cola makers, regulators, activists and critics around the world?

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• 2. The Pharmacist's Drink

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  In 1898, a pharmacist named Caleb Bradham coined the name Pepsi-Cola for a drink he sold from his shop in New Bern, North Carolina. Bradham came from Duplin County and worked as a businessman as well as a pharmacist. The name pointed to pepsin, an enzyme that helps with digestion.

  As the drink grew popular, Bradham founded the Pepsi-Cola Company in 1902 and registered a patent for his recipe in 1903. The company was incorporated under Delaware law in 1919. Success lasted until World War I. Then sugar rationing during the war, followed by a volatile sugar market afterward, damaged the firm so badly that Bradham declared bankruptcy in 1923. He went back to running pharmacies in North Carolina.

  On the 8th of June 1923, Craven Holding Corporation bought the trademark and the secret recipe. In 1931, Wall Street broker Roy Megargel purchased the Pepsi trademark, business and goodwill from Craven, working with a man named Charles Guth. Guth was also president of Loft, Incorporated, a leading candy maker based in Long Island City, New York. Loft ran a network of 115 stores across the Mid-Atlantic.

  Guth put the candy company to work for Pepsi. He used Loft's labs and chemists to reformulate the syrup. He replaced Coca-Cola with Pepsi at Loft's shops and restaurants, promoted the drink with Loft's resources, and moved the soda company close to Loft's own facilities in New York City.

  Loft's shareholders objected. In 1935 they sued Guth over his 91 percent stake in the Pepsi-Cola Company, in the landmark case Guth v. Loft Inc. Loft won. On the 29th of May 1941, Loft formally absorbed Pepsi, and the combined business was rebranded as the Pepsi-Cola Company that same year. The restaurants and candy stores were spun off. The reborn soda company would, within a few decades, find a partner that sold something entirely different.

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• 3. Merger and Move

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  In 1961, the Frito Company and the H.W. Lay Company merged into a snack business that would go on to produce the top-selling line of snack foods in the United States. Around the same time, Pepsi-Cola was widening its own range. In the early 1960s it created Diet Pepsi and bought Mountain Dew.

  Then, in 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc. The new company was incorporated under Delaware law and headquartered in Manhattan. Its address was 500 Park Avenue in Midtown. PepsiCo had paid 2 million dollars in 1956 for the earlier building on that site, and it built 500 Park Avenue in 1960.

  In 1966, New York mayor John Lindsay began a private campaign to persuade PepsiCo to stay in the city. Six months later, the company announced a move to 112 acres on the grounds of the Blind Brook Polo Club in Purchase, New York. The headquarters relocated there in 1970. In 1986, PepsiCo was reincorporated in North Carolina, the state where the drink began.

  The Purchase campus was one of the last architectural works of Edward Durell Stone. It consists of seven three-story buildings, each joined to its neighbor at a corner. The grounds hold the Donald M. Kendall Sculpture Gardens, with 45 contemporary sculptures open to the public. Works there include pieces by Alexander Calder, Henry Moore and Auguste Rodin. In 2010, Westchester Magazine ranked the main building among the ten most beautiful in Westchester County.

  The garden's namesake, Donald M. Kendall, was a PepsiCo executive whose deal-making reached far beyond Westchester County.

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• 4. Pepsi in Moscow

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  In 1959, the Soviet Union held an exhibition of its technology and culture in New York. The United States answered with its own exhibition in Sokolniki Park, Moscow. That event produced the famous kitchen debate. Among the American products on display was Pepsi Cola.

  Kendall obtained a photograph of US vice president Richard Nixon and Soviet premier Nikita Khrushchev sipping Pepsi. The image helped him win the attention of the Soviet public. In 1972 he negotiated a cola monopoly in the USSR, and Pepsi became the first US consumer product produced and marketed there.

  Soviet rules restricted taking roubles out of the country, so PepsiCo arranged a barter. Stolichnaya vodka would be exchanged for Pepsi syrup.

  By 1989, vodka sales were declining. PepsiCo bartered instead for two new Soviet oil tankers, a frigate, a cruiser, a destroyer and 17 decommissioned submarines, priced at 150,000 dollars each. The goal was to resell the ships for currency from outside the Soviet Union. The tankers were leased out through a Norwegian company. The other ships were sold immediately for scrap.

  A deal struck the following year would have brought PepsiCo 85 ships worth nearly 3 billion dollars over the next 10 years. Only 10 additional ships arrived before the Soviet Union fell in 1991. The arrangement was renegotiated with the former Soviet nations. It then included cheese from Russia for PepsiCo's Pizza Hut locations and double-hulled tankers from Ukraine.

  These deals gave rise to a persistent myth. It claims that PepsiCo briefly held one of the most powerful navies in the world. In reality, the only warships it acquired were described as "small, old, obsolete, unseaworthy vessels".

  The Pizza Hut restaurants that received that cheese belonged to PepsiCo, though the company would leave the restaurant business in 1997.

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• 5. Buying and Selling

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  In 1997, PepsiCo largely exited the non-core businesses it had gathered since the late 1970s. It sold some and spun others off into a new company called Tricon Global Restaurants, later known as Yum! Brands. Investment analysts reporting on the divestments said the aim was to focus on snacks and beverages.

  The list of former PepsiCo brands is long. It includes Pizza Hut, Taco Bell, KFC, Hot 'n Now, East Side Mario's, D'Angelo Sandwich Shops, Chevys Fresh Mex and California Pizza Kitchen. It also includes Wilson Sporting Goods, North American Van Lines and, through a licensed agreement, Stolichnaya.

  Tropicana Products, the orange juice company, joined PepsiCo in 1998. In 2001 came the Quaker Oats Company. That deal brought the Gatorade sports drink line, along with Chewy Granola Bars and Aunt Jemima.

  In August 2009, PepsiCo offered 7 billion dollars for its two largest North American bottlers, Pepsi Bottling Group and PepsiAmericas. The purchase closed in 2010 and created a wholly owned subsidiary named Pepsi Beverages Company. In February 2011 came its largest international acquisition, a majority stake in the Russian milk, yogurt and juice maker Wimm-Bill-Dann Foods. After buying the remaining 23 percent in October 2011, PepsiCo became the largest food and beverage company in Russia.

  A joint venture with the Theo Muller Group, announced in July 2012 and named Muller Quaker Dairy, marked PepsiCo's first entry into dairy in the United States. It was dissolved in December 2015. On the 20th of December 2017, PepsiCo moved its shares to Nasdaq after 39 years on the New York Stock Exchange.

  The 25th of May 2018 brought news of a deal for Bare Foods, a maker of fruit and vegetable snacks. On the 20th of August 2018, PepsiCo announced an agreement to buy SodaStream, completed that December as part of a plan to steer the company toward healthier products. In December 2019 it acquired the snacks brand BFY Brands and folded it into Frito-Lay.

  In March 2020, PepsiCo agreed to buy Rockstar Energy for 3.85 billion dollars. Pioneer Foods that same year cost 1.7 billion dollars.

  Then the direction partly reversed. On the 3rd of August 2021, PepsiCo agreed to sell a majority stake in Tropicana, Naked and other North American juice brands to the French private equity firm PAI Partners for 3.3 billion dollars. PepsiCo kept a 39 percent stake in the joint venture. The stated reason was to concentrate on healthy snack foods.

  Buying resumed in August 2022 with a 550 million dollar stake in the energy drink maker Celsius. On the 1st of October 2024, PepsiCo announced it would buy Siete Foods for 1.2 billion dollars, and the deal was completed on the 17th of January 2025. In March 2025 it announced a purchase of the prebiotic soda brand Poppi for more than 1.6 billion dollars.

  On the 8th of December 2025, PepsiCo said it would cut nearly 20 percent of its U.S. product lineup by early 2026. The plan came from a deal with the activist investor Elliott Investment Management. It aimed to simplify the portfolio, focus on core brands and lower prices to boost sales. Three manufacturing plants would close, production lines would shut down, and an unspecified number of employees would be laid off.

  The rivalry with Coca-Cola, however, had been shaping PepsiCo's choices long before any activist investor arrived.

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• 6. Cola Wars and Snacks

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  In December 2005, PepsiCo passed The Coca-Cola Company in market value for the first time in 12 years. The contest between the two colas has run for generations and is commonly called the cola wars. Coca-Cola outsells Pepsi Cola in the United States, yet PepsiCo is the largest food and beverage company by net revenue across North America.

  The reason lies in what PepsiCo sells besides cola. In 2009, Coca-Cola held the larger share of U.S. carbonated soft drink sales, while PepsiCo held the larger share of the broader refreshment beverage market. That same year, beverages made up less than 50 percent of PepsiCo's total revenue. Slightly more than 60 percent of its beverage sales came from non-carbonated brands, chiefly Gatorade and Tropicana.

  By 2015, the product mix was 53 percent foods and 47 percent beverages. In 2023, PepsiCo Beverages North America produced 30.2 percent of sales, just ahead of Frito-Lay North America at 27.2 percent.

  Frito-Lay North America sells Lay's and Ruffles potato chips, Doritos, Tostitos, Cheetos, Fritos, Rold Gold pretzels, Sun Chips and Cracker Jack popcorn. Together, Frito-Lay and Quaker Oats brands accounted for about 39 percent of U.S. snack food sales in 2009. Mondelez International, one of the main rivals in snacks, held 11 percent.

  Quaker Foods North America sells Quaker Oatmeal, Rice-A-Roni, Cap'n Crunch and Life cereals, and Near East side dishes. It also owns the Pearl Milling Company, the top-selling line of syrups and pancake mixes in the region as of 2009.

  The company's chief executive described a push toward "good-for-you" products in the 1990s and 2000s. By 2009, sales of healthier-oriented brands totaled 10 billion dollars, or 18 percent of revenue. In 2010, PepsiCo forecast that fruit, vegetable, whole grain and fiber-based products would reach 30 billion dollars in sales by 2020. Nutrition advocates received the shift moderately well, though some wanted the healthier items marketed as aggressively as the others.

  Smaller changes ran through the existing lines. Diet Pepsi arrived in 1964 and Pepsi Max in 1993. Between 2006 and 2009, Frito-Lay cut saturated fat in Lay's and Ruffles chips in the U.S. by 50 percent. In 2009, Tropicana introduced Trop50, sweetened partly with stevia, which halved the calories of its orange juice.

  Pepsi Cola itself faced a new rival in 2024, when market data showed Dr Pepper, from Keurig Dr Pepper, had outsold Pepsi for the first time. Outside the United States, the picture looked different again, as local tastes shaped what PepsiCo sold.

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• 7. Markets Abroad

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  In 1992, a marketing campaign called Pepsi Number Fever in the Philippines accidentally released 800,000 winning bottle caps for a grand prize of 1 million pesos. The error led to riots and the deaths of five people.

  In Mexico, PepsiCo took a different approach to a smaller problem. It said about one-third of the population had difficulty pronouncing the word Pepsi, so it sold the cola under the label Pécsi. The campaign featured the Mexican soccer celebrity Cuauhtémoc Blanco. PepsiCo had already used the same strategy successfully in Argentina in 2009.

  Mexico is also home to two of the company's food lines. Sabritas, acquired in 1966, markets Frito-Lay products there. Gamesa, acquired in 1990, is the largest cookie maker in Mexico. In 2009, PepsiCo's Latin American snack arm bought the Peruvian company Karinto from the Hayashida family of Lima, adding brands such as Cuates, Fripapas and Papi Frits.

  In Europe, where PepsiCo began expanding in the 1980s, foods and beverages sit under one division. Regional favorites include Walkers crisps. In India and Pakistan, the local snack Kurkure is a major seller. In Egypt it is Chipsy, and in South Africa it is Simba. Pioneer Foods, the South African company acquired in 2020, added Weet-Bix, Bokomo and Ceres.

  Not every market went smoothly. In 2019, PepsiCo sued four small farmers in India for 142,000 dollars each over a type of potato it said it owned. Farmers' associations asked their government to step in, saying the company was trying to intimidate people. After pressure from the public and from state and national governments, PepsiCo withdrew the suit on the 2nd of May 2019.

  On the 3rd of October 2019, PepsiCo announced it would leave Indonesia after ending its partnership with a local distributor. Production stopped a week later, and KFC and Pizza Hut chains in the country switched to Coca-Cola products. In August 2012 it had gone the other way, signing a Myanmar distributor to sell its drinks after a 15-year break. By March 2025, a new PepsiCo Indonesia plant at Cikarang had started production.

  Russia raised the hardest questions. In 2017, PepsiCo's Russian operations produced 3.23 billion dollars in net revenue, or 5.1 percent of the company total. After the 2022 Russian invasion of Ukraine, chief executive Ramón Laguarta announced on the 8th of March 2022 that PepsiCo was suspending sales of Pepsi-Cola, 7 Up and Mirinda in Russia. It also suspended capital investment, advertising and promotion there.

  The company kept selling milk, dairy products, baby formula and baby food. Laguarta pointed to 20,000 Russian associates and 40,000 Russian agricultural workers in its supply chain. In July 2022, PepsiCo rebranded its products in Russia under local names including Evervess and Frustyle. In September 2023, Ukraine's National Agency on Corruption Prevention listed PepsiCo as a "war sponsor" for continuing to operate there and pay taxes.

  In May 2026, PepsiCo announced plans to invest 5,700 crore rupees in India by 2030, to expand manufacturing, supply chains and its product range.

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• 8. Scrutiny and Response

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  A study published in Science Advances in 2024 found that PepsiCo was responsible for 5 percent of global branded plastic pollution by count. That was the second-highest share in the world. In 2019, the group BreakFreeFromPlastic had already named PepsiCo a top 10 global plastic polluter for the second year running.

  The company has answered with packaging changes. In 2009, a redesign cut the weight of Aquafina bottles by nearly 40 percent, to 15 grams. That year, Naked Juice began distributing the first bottle made of 100 percent post-consumer recycled plastic. The U.S. recycling rate for PepsiCo bottles averaged 34 percent in 2009, and in 2010 the company set a goal of 50 percent by 2018, including interactive recycling kiosks called Dream Machines.

  On the 15th of March 2011, PepsiCo unveiled what it called the first plant-based PET bottle, made from materials such as switch grass, corn husks and pine bark. It planned pilot production in 2012. By 2021 there were still no records of such bottles being produced. In 2020 it teamed up with the French startup Carbios on an enzyme-based method to break down used plastic bottles.

  Water drew sharp attention in India in the early and mid-2000s. Critics saw a company diverting scarce water to make a discretionary product. In 2003, PepsiCo launched a country-wide program to reach a "positive water balance" in India by 2009. In 2007, chief executive Indra Nooyi traveled to India, and the critic Sunita Narain of the Centre for Science and Environment said the company now seemed to be doing something serious. In 2009, PepsiCo reported replenishing nearly six billion liters, against an intake of about five billion at its Indian plants.

  Elsewhere, drought brought scrutiny of its factories in places such as Atlanta, Georgia. The company began cleaning new Gatorade bottles with purified air rather than water in 2009. At its largest potato chip plant in the United Kingdom, Walkers cut water use by 45 percent between 2001 and 2008, using machinery that captured water naturally present in potatoes. Worldwide, PepsiCo saved more than 12 billion liters in 2009 compared with 2006.

  In 2003 and again in 2006, an environmental group in New Delhi claimed that pesticide levels in PepsiCo and Coca-Cola drinks exceeded proposed safety standards. PepsiCo denied the claim, and India's health ministry questioned the data. Kerala briefly banned both companies' soft drinks in 2006, and the Kerala High Court reversed the ban a month later. In November 2010, India's Supreme Court invalidated a criminal complaint against PepsiCo India, finding the beverages met the standards then in force.

  Health criticism followed the products themselves. Under school guidelines adopted in 2006, PepsiCo replaced full-calorie beverages in U.S. schools with lower-calorie ones, producing a 95 percent drop in their 2009 sales there compared with 2004. In 2010, answering Michelle Obama's Let's Move! campaign, PepsiCo joined other food makers in pledging to cut one trillion calories from their products by the end of 2012 and 1.5 trillion by the end of 2015.

  Workers have pushed back too. In July 2021, workers at a Frito-Lay plant in Topeka were reported to be facing forced overtime and 84-hour workweeks. Hundreds struck from the 5th of July to the 23rd of July. The settlement was a two-year contract guaranteeing at least one day off each week and raising wages.

  PepsiCo has also tried to turn its marketing money into giving. In 2009, for the first time in 23 years, it skipped Super Bowl advertising and put 20 million dollars into the Pepsi Refresh Project instead. Consumers voted on grant ideas, and a Michigan high school won 250,000 dollars toward a fitness room. By October 2010, the project had funded 287 ideas from 203 cities.

  In January 2021, PepsiCo announced a goal of net zero greenhouse gas emissions by 2040, after producing about 57 million metric tonnes in 2019. It also aims to cut its main operations' emissions by 75 percent from a 2015 baseline by 2030, and by 2022 it had achieved 23 percent of that reduction. A 2025 report from the NewClimate Institute and Carbon Market Watch criticized PepsiCo and four other major food makers for setting no methane target and for leaning on removals rather than cuts. The 2040 target is the measure against which those claims will be judged.

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