A Brief History Of Pepsi’s Corporate Strategies

Pepsi, along with Coca-Cola, is a soft drink giant that has a reach to pretty much every country around the world. From its humble beginnings in the late 20th century to becoming a multi-billion dollar corporation, Pepsi has seen a lot of different corporate strategies over the years. Let’s take a brief look at Pepsi’s history of corporate strategies.

The Start

When it was first introduced in 1893 by Caleb Bradham, Pepsi was called Brad’s Drink and became a local favorite in New Bern, North Carolina where Bradham dispensed the beverage from his drugstore. The pharmacist claimed that there were health benefits for the drink and started marketing it as such, saying that it could cure dyspepsia at a time when it was a common ailment in the United States.

Thus, the first strategy was born and the name changed to Pepsi-Cola as a result of the marketing. Unfortunately for Bradham, he had to sell the company after sugar prices during World War I put him out of business. The company changed hands twice and ended up in the hands of Charles Guth, a candymaker who had become disgruntled with the Coca-Cola company.

Price Points

Pepsi entered the cola wars with Coca-Cola and got a huge leg up during the Great Depression. Both companies were selling the same sized (6.5 ounces) bottle for years until Pepsi decided to nearly double the size to 12 ounces without increasing the price. This helped Pepsi become a more common drink in middle America during a time when Coca-Cola had a stranglehold. With Pepsi now a familiar name across the nation, it was time to change course.

Drink of the Youth

Throughout much of the company’s history, Pepsi has made sure that they’re marketing toward the younger generation at the time. This dates back to the 1930s when Pepsi would use up-and-coming actors in their advertisements and continued over the decades with superstars entering their prime including Michael Jackson, Britney Spears, and many more. As a result, Pepsi has laid claim to being the “official” soft drink of each generation, including campaigns titled “The Pepsi Generation” and “Generation Next.”

The Food Side

During the 1950s, Pepsi saw a massive expansion and decided to go further than simply selling just a couple of soft drinks. In 1965, Pepsi and Frito-Lay merged, making sure that a massive chunk of the snacks and soft drinks in the United States were under one roof. This is why in most commercials for Frito-Lay brand chips, there’s a Pepsi product somewhere on the screen, and vice-versa.

In the following decade, under its new name PepsiCo, decided to start acquiring restaurants where Pepsi products would be dispensed from the soda fountains instead of Coca-Cola. Some of these restaurants included Pizza Hut, Taco Bell, KFC, and the nearly-defunct Hot ‘n Now (which still has one location in Sturgis, Michigan).

The Health Movement

Of course, when a company is founded on creating high-calorie snacks and soft drinks that are often packed with sugar and carbohydrates, there are going to be a lot of critics. After obesity and diabetes rates increased dramatically over the 20th century, many people pointed the finger at companies like PepsiCo. Because of this, Pepsi has changed much of its corporate strategy in the 21st century to promote healthier foods.

The 2010s especially saw a big movement for Pepsi as the company acquired several businesses that focused on healthier snacks. This includes Wimm-Bill-Dann Foods (yogurt, juice, milk), Bare Foods, SodaStream, and more. Zero-calorie energy drinks have also been a key focus for Pepsi, acquiring brands like Rockstar and Celsius.

After Michelle Obama started a campaign against childhood obesity during her time as the First Lady of the United States, Pepsi pledged to cut 1.5 trillion calories from their products across the nation. The company also removed advertising toward anyone under the age of 12 while increasing the promotion of its low and zero-calorie drinks.

Merging and Emerging

We already mentioned that Pepsi has had a big focus on acquiring companies who can help to expand the catalog of products, and that remains a major key to Pepsi’s corporate strategy. Pepsi will focus on the companies that are coming up into the market, making sure to acquire them before they can become competitors or cost the company too much. In the company’s official corporate strategy report, it says there are five C’s that they want to promote heavily: Commercial, Capabilities, Costs, Collaboration, and Capital. Because of Pepsi’s history, there’s no doubt that it’s capable of achieving success.