PepsiCo, Inc. (PEP) owns about two dozen billion-dollar brands. Most of those brands are in the beverage category and are easily associated with the company. However, unlike its rival, Coca-Cola, PepsiCo has expanded outside of the beverage market with close to a dozen total billion-dollar food and snack brands.
PepsiCo as it currently exists was founded in 1965 as the result of a merger between the Pepsi-Cola Company and Frito-Lay, Inc. However, the Pepsi-Cola Company has origins dating back to the 1880s, when Caleb Bradham first developed the recipe for the iconic soda beverage. Today, PepsiCo is led by Chairman and CEO Ramon Laguarta (since October of 2018), as well as Marie Gallagher (Senior Vice President and Controller), Hugh F. Johnston (Vice Chairman and Chief Financial Officer) and René Lammers (Executive Vice President and Chief Science Officer).
PepsiCo's Revenue Growth
According to PepsiCo's most recent annual report, the company generated net revenues of $63.5 billion for the year 2017. This figure is up slightly from revenues of $62.8 billion for the year 2016.
Over half of PepsiCo's global revenue comes from snack and food products. No matter where you travel in the developed world, you are probably only a short distance from a PepsiCo food or beverage item. These are the main companies that have helped contribute to PepsiCo's success during the last 20 years.
PepsiCo was formed by the merger of Frito-Lay, Inc. and the Pepsi-Cola Company in 1965. Frito-Lay brought several iconic and profitable snack brands to PepsiCo, including six of today's billion-dollar brands: Cheetos, Doritos, Tostitos, Lay's, Walkers and Fritos. The Frito-Lay line has several other recognizable brands, such as SunChips, Ruffles, Stacy's Pita Chips, Rold Gold pretzels, and baseball stadium favorite Cracker Jack. In fiscal year 2017, Frito-Lay contributed to roughly a quarter of the company’s revenues, bringing in about $15.8 billion in revenue. Frito-Lay's share of the total operating profit for that year was 42 percent.
2. Quaker Oats
PepsiCo spent $13.4 billion in 2001 for Quaker Oats, acquiring Gatorade in the process. At the time, Quaker Oats owned Gatorade and was being sought after by three different companies, including both Coca-Cola and PepsiCo. Ultimately, PepsiCo won the bidding war after Coca-Cola's board of directors voted down the deal.
Quaker ended up being a great investment for PepsiCo. Gatorade has grown into a very profitable sports drink brand, and it currently commands about half of the global sports drink market share. In acquiring Quaker, PepsiCo aimed to cater to a shift in consumer habits which had moved away from sugary soft drinks in favor of sports and energy drinks. The healthier shift in consumer tastes also led PepsiCo to decide not to sell Quaker Oats after acquiring it for Gatorade.
Quaker is best known for its oat products. However, the brand also produces granola bars, rice cakes and grits. In addition, it produces non-Quaker brands, such as Aunt Jemima, Rice-A-Roni side dishes, and Cap'n Crunch and Life cereals. Not including Gatorade, the Quaker family produces only 4 percent of PepsiCo's annual revenue, or about $2.5 billion in 2017.
Before the Quaker Oats acquisition in 2001, PepsiCo made another strategic acquisition to capitalize on healthier consumer options. It acquired Tropicana in 1998 for $3.3 billion. Tropicana was founded by Anthony T. Rossi in 1947. The company manufactures fruit and vegetable juice products. After acquiring Tropicana, PepsiCo grew the brand to number one in market share for U.S. juices. Tropicana remains one of PepsiCo's billion-dollar brands despite relatively weak sales in recent years.
4. Sabra Dipping Company
Founded in 1986, Sabra Dipping Company is one of the largest producers of Mediterranean-style hummus dips and similar products in the U.S. The company was acquired by Strauss, and Israeli food company, in 2005. Subsequently, Strauss and Frito-Lay entered into a joint venture partnership in 2008. Under the terms of this agreement, Strauss and PepsiCo each own 50% of Sabra. With continually growing sales, Sabra likely exceeded $1 billion in total sales for fiscal year 2017.
5. Naked Juice
Santa Monica-based Naked Juice was founded in 1983. The company evolved and grew over the course of the next two decades. By the time PepsiCo expressed an interest in acquiring the company, it was a subsidiary of North Castle Partners. PepsiCo acquired Naked Juice for an undisclosed sum in the later part of 2006, with the acquisition finalized early in 2007. Like Gatorade, Naked Juice has helped PepsiCo to diversify its product offerings to cater toward an increasingly health-conscious pool of consumers. Recent sales figures for Naked Juice are not readily available.
Recent Acquisitions and Lesser-Known Companies
While the above subsidiaries and acquisitions are some of PepsiCo's largest and most important brands, there are a variety of other, smaller companies included under the Pepsi umbrella as well. In September of 2006, for example, PepsiCo bought sparkling juice manufacturer Izze. The company continues to acquire subsidiaries: on August 20, 2018, for instance, PepsiCo announced the acquisition of sparkling water brand SodaStream.
Unlike rival Coca-Cola (KO), which has largely remained focus on the beverage industry, PepsiCo has expanded its offerings well outside of sodas and juice drinks. This expansion has been thanks in large part to PepsiCo's aggressive acquisition strategy, which allows the company to subsume potential rivals while diversifying its product offerings.