PepsiCo Inc. (PEP), a global giant in the snack and beverage business, reported its first quarterly earnings report in 2017, and growth was largely due to demand of its healthier snack options. How does the global behemoth operate, and which are its key products and markets across the globe in terms of sales? Let's takes a look. (See also: PepsiCo Profit Beats on Demand for Healthier Snacks, Drinks)

Global Divisions

With its beverages, snacks and food products sold around the globe, PepsiCo operates through its six global divisions. Depending on the product portfolio and regional market, these various divisions work independently. Many also offer licensed products from other brands and operate with third parties as required in different regional markets.

North American Beverages (NAB): NAB is the largest revenue earner of the PepsiCo empire and it constitutes all beverages business across the U.S. and Canada. As per Q1 2017 results, it contributed $4.46 billion to total revenues of $12 billion of PepsiCo. According to the company: “NAB offers 11 billion-dollar brands that span carbonated soft drinks, juices and juice drinks, ready-to-drink teas and coffees, sports drinks, and bottled waters.” This division includes world famous proprietary brands like Pepsi-Cola, Gatorade, Mountain Dew, Naked and Tropicana. It also includes partnership brands like tea variants from Pepsi-Lipton, and coffee variants from Pepsi Starbucks partnerships. Additionally, NAB also markets licensed products from Dr. Pepper Snapple Group, Inc. (DPS), like Dr. Pepper, Crush and Schweppes, Dole Food Company, Inc. and from Ocean Spray Cranberries, Inc.

Frito-Lay North America (FLNA): FLNA makes up the second largest revenue generating business. It accounts for $3.5 billion of total revenues. Focused on the North American markets of the U.S. and Canada, this division includes potato chips brands like Lay’s and Ruffles, tortilla chips brand like Doritos, Santitas and Tostitos, and snacks brands like Stacy’s, Cheetos, Sun Chips and Fritos. FLNA also operates a joint venture with Strauss Group for manufacturing, marketing, sales and distribution of Sabra brand refrigerated dips and spreads.

Quaker Foods North America: The leading brand in oatmeal breakfast and cereals, it also includes products spanning across hot and cold cereals, healthy snack bars, rice based snacks, Real Medleys cereals and popped crisps. Though Quaker constitutes only about 5% of total revenues, it complements the NAB and FLNA divisions in keeping a good market share for PepsiCo in the North American markets. 

Europe Sub-Saharan Africa (ESSA): ESSA operates a full range of beverages, food and snack products in Europe and in the Sub-Saharan regions of Africa. Established brands in this market include Lay’s, QuakerDoritos, Cheetos, Ruffles, Wimm-Bill-Dann, Walkers and Marbo. This market contributed $1.4 billion of total revenues in Q1 2017.

Asia, Middle East & North Africa (AMENA): Spread across two large continents, this market contains snack brands like  Lay’s, Kurkure, Chipsy, Doritos, Cheetos and Smith’s, and beverages brands like Pepsi, Mirinda, 7UP, Mountain Dew, Aquafina and Tropicana. It also has partnership brands like Lipton iced tea products with Unilever (UL). This market contributed $970 million of revenues in Q1 2016.

Latin America (LA): The LA division operates an entire product range in the Latin American markets and includes beverages, food and snack products. It constituted around 8.9% of total revenues in Q1 of 2017. Leading brands include Toddynho in Brazil, Sabritas and Gamesa in Mexico, Natuchips in Venezuela, Colombia and Ecuador, Tortrix in Guatemala and Toddy Cookies in Argentina.

The Bottom Line

The PepsiCo portfolio contains 22 brands spread across beverages, food and snacks, diversification offers sufficient room for offsetting declines in one product line with growth in others. This product and regional diversification combined with dynamic business strategies enables it to be a regular dividend payer and a leader in the cola market. 

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