PepsiCo

PepsiCo, Inc.
Type	Public
Traded as	Nasdaq: PEP; S&P 500 component
Industry	Food processing; Beverages
Founded	1965, by the merger of Pepsi-Cola Company (1898) and Frito-Lay, Inc. (1961)
Founder	Caleb Bradham (Pepsi-Cola); Herman Lay and Charles Elmer Doolin (Frito-Lay)
Headquarters	Purchase, Harrison, New York, United States
Key people	Ramon Laguarta (Chairman and chief executive officer)
Products	Soft drinks, snack foods, juices, bottled water, sports drinks, breakfast cereals
Employees	Approximately 319,000
Website	pepsico.com

PepsiCo, Inc. is an American multinational food and beverage company headquartered in Purchase, New York. It is the second largest food and beverage business in the world by revenue, after Nestlé, and it holds a position in salty snacks that is considerably more dominant than its position in soft drinks.

The company was formed in 1965 by the merger of the Pepsi-Cola Company, whose drink was created in 1893 by the pharmacist Caleb Bradham in New Bern, North Carolina, and Frito-Lay, Inc., itself the 1961 combination of the Frito Company and the H. W. Lay Company.

PepsiCo owns 23 brands that each generate more than US$1 billion in annual retail sales, among them Pepsi, Lay's, Doritos, Gatorade, Mountain Dew, Quaker, Tropicana, Cheetos, Ruffles, Mirinda, 7 Up outside the United States, Aquafina and Walkers. Its distribution network reaches more than 200 countries.

The company's relationship with The Coca-Cola Company is the most studied rivalry in consumer business and has run for more than a century, encompassing the comparative taste tests of the 1970s, the marketing campaigns of the 1980s, and the ultimately decisive discovery that PepsiCo's snack business was worth more than either company's cola.

PepsiCo has been criticised over working conditions in its supply chain, deforestation associated with palm oil, water extraction in India and elsewhere, pesticide residues found in Indian products, plastic pollution, for which it has repeatedly been named among the largest branded contributors, greenhouse gas emissions and the nutritional profile of much of its portfolio. Its decision to continue trading in Russia after the 2022 invasion of Ukraine has also drawn sustained objection.

History

Pepsi-Cola, 1893 to 1965

Caleb Bradham, a pharmacist in New Bern, North Carolina, formulated a drink he called Brad's Drink in 1893 and renamed it Pepsi-Cola in 1898, the name deriving from pepsin and from the kola nut, and marketed on a claim that it aided digestion. He incorporated the Pepsi-Cola Company in 1902 and registered the trademark in 1903.

The company failed twice. Bradham speculated on sugar after the First World War, buying heavily when the wartime price controls were lifted and prices collapsed, and Pepsi-Cola went bankrupt in 1923. It was bought by Roy Megargel, failed again in 1931, and was bought by Charles Guth, the president of the Loft candy company, who wanted a cola for Loft's soda fountains after Coca-Cola refused him a wholesale discount. Guth reformulated the drink and sold it through the Loft stores, and litigation between Guth and Loft over who owned Pepsi produced Guth v. Loft, a 1939 Delaware decision that remains a foundational authority on corporate opportunity doctrine.

The move that saved the company was price. In 1933, during the Depression, Pepsi began selling twelve-ounce bottles for five cents, the price at which Coca-Cola sold six and a half ounces, and advertised the fact with a radio jingle, "Nickel, Nickel", that became the first advertising jingle broadcast nationally in the United States. Twice as much for the same money was a proposition that required no explanation, and Pepsi's sales rose sharply.

The consequence, which shaped the company for fifty years, was that Pepsi became the cheaper cola and was therefore associated with people who had less money. The brand's subsequent strategy, which succeeded, was to convert that association into one of youth.

Alfred Steele, who became president in 1950 having come from Coca-Cola, drove international expansion and marketed to a newly affluent suburban market. His wife, the actress Joan Crawford, promoted the brand and served on the board after his death in 1959.

At the 1959 American National Exhibition in Moscow, vice president Richard Nixon handed Nikita Khrushchev a cup of Pepsi in a staged moment arranged by Steele's successor Donald Kendall, which produced a photograph that ran worldwide and that began PepsiCo's unusually long Soviet involvement.

Frito-Lay

The snack half of the company has a separate and equally American origin.

Charles Elmer Doolin bought a corn chip recipe from a Mexican vendor in San Antonio in 1932 for US$100, along with the equipment and the customer list, and founded the Frito Company, producing the chips initially in his mother's kitchen. Herman W. Lay, a travelling salesman in Nashville, bought the potato crisp business he had been distributing in 1938 and built the H. W. Lay Company across the American South.

The two companies distributed each other's products from 1945 and merged in 1961 as Frito-Lay, Inc., creating the largest snack food company in the United States.

PepsiCo, 1965 to 1996

Donald Kendall of Pepsi-Cola and Herman Lay agreed the merger that created PepsiCo in 1965, on the reasoning that salty snacks and soft drinks are complementary, are sold through the same channels and are consumed together.

The judgement was correct and is the single most important decision in the company's history. Coca-Cola remained a beverage company and has periodically attempted and abandoned diversification; PepsiCo built a snack business that now produces the larger share of its profit and that faces no competitor of comparable scale.

Kendall's other preoccupation was the Soviet Union. Following the 1959 Moscow encounter, he negotiated through the 1970s an arrangement under which Pepsi would be produced and sold in the USSR in exchange for Stolichnaya vodka, since the rouble was not convertible. Pepsi became the first American consumer product manufactured and sold in the Soviet Union, from 1974, and the barter arrangements grew to the point that a 1989 deal involved a quantity of Soviet vessels including submarines and a frigate, to be sold for scrap, which briefly and accurately made PepsiCo the notional operator of a substantial navy. The company had a near-monopoly on cola in the Soviet Union until Coca-Cola entered in 1985.

The 1970s and 1980s brought the Pepsi Challenge, a blind taste test conducted in public from 1975 in which participants consistently preferred Pepsi. The result was genuine and was subsequently explained: in a single sip, the sweeter drink usually wins, which does not predict what people prefer to drink in quantity. Coca-Cola's response was New Coke in April 1985, a reformulation which its own testing supported and which produced one of the most severe consumer backlashes ever recorded, the original being restored within 79 days as Coca-Cola Classic. Pepsi declared victory and gave its employees a day off. Coca-Cola's sales subsequently rose.

PepsiCo also diversified into restaurants, buying Pizza Hut in 1977, Taco Bell in 1978 and Kentucky Fried Chicken in 1986, and into transport and sporting goods, both of which it exited.

Refocusing, 1997 to 2006

Roger Enrico, chief executive from 1996, reversed the diversification. The restaurant businesses were spun off in October 1997 as Tricon Global Restaurants, later renamed Yum! Brands, on the reasoning that restaurants are a property and labour business with nothing in common with packaged goods and that PepsiCo's ownership of them made it a competitor to its own fountain customers.

The bottling operations were separated in 1999 as the Pepsi Bottling Group and PepsiAmericas, a structure the industry favoured at the time because bottling is capital-intensive and low-margin while concentrate is the opposite. Both were bought back in 2010 when the logic reversed.

The transformative purchase was Quaker Oats, agreed in December 2000 for approximately US$13.4 billion in stock and completed in August 2001 after a Federal Trade Commission review. The cereals and the Quaker brand were useful; the object was Gatorade.

Gatorade had been developed at the University of Florida in 1965 by a team under Robert Cade to replace the fluid and electrolytes lost by the university's football players, and by 2000 it held a commanding share of a sports drink category that was growing far faster than carbonated soft drinks. Coca-Cola had bid and lost. The acquisition gave PepsiCo the dominant position in a category that has remained dominant, and Gatorade is now among its largest brands.

Steve Reinemund, chief executive from 2001, and then Indra Nooyi, who became chief executive in 2006, continued the shift.

Nooyi and Performance with Purpose, 2006 to 2018

Indra Nooyi, born in Madras and educated in India and at Yale, had joined PepsiCo in 1994 and had been the architect of both the restaurant spin-off and the Quaker acquisition as chief strategist and then chief financial officer. She became chief executive in 2006, one of a small number of women to lead a company of that size and among the first of Indian origin.

Her programme, Performance with Purpose, divided the portfolio into what the company called fun for you, better for you and good for you, and committed to growing the latter categories faster. In practice this meant investing in Quaker, Tropicana, Gatorade and water, reducing sugar, sodium and saturated fat across products, and moving research toward reformulation. She hired Mehmood Khan, an endocrinologist from the Mayo Clinic, to lead research and development, which was an unusual appointment for a snack company.

The strategy attracted considerable admiration and considerable criticism. Investors, and notably the activist Nelson Peltz of Trian, argued that the company was under-investing in its core beverages while the health portfolio grew too slowly to matter, and pressed from 2013 for a separation of snacks from drinks. Peltz eventually accepted a compromise and the split did not occur.

The financial record during Nooyi's tenure was solid but not exceptional: revenue rose substantially, the share price roughly doubled, and PepsiCo performed broadly in line with Coca-Cola. The strategic judgement, that regulators and consumers would turn against sugar and that the company needed a portfolio for that world, has been largely vindicated by events even where the pace of change disappointed at the time.

Other developments included the 2010 repurchase of the two large bottlers for approximately US$7.8 billion, restoring direct control of distribution; a joint venture with Tingyi in China in 2011; and the 2015 purchase of a majority of Sabra, the hummus business.

Laguarta and the portfolio squeeze, 2018 to 2026

Ramon Laguarta, a Spanish executive who had run the European business, became chief executive in October 2018 and chairman in 2019.

His strategy has emphasised growth in snacks, digital and direct-to-consumer capability, and international expansion, under the slogan Faster, Stronger, Better. Acquisitions have included SodaStream in 2018 for approximately US$3.2 billion, Rockstar Energy in 2020 for US$3.85 billion, and the 2020 purchase of Be and Cheery in China for US$705 million. Tropicana and other juice brands were sold to PAI Partners in 2021 for approximately US$3.3 billion, PepsiCo retaining a minority stake, on the judgement that chilled juice is a low-growth, capital-intensive business whose nutritional positioning had weakened as attitudes to sugar in fruit juice changed.

Siete Foods, a Mexican-American brand making grain-free tortillas and chips, was acquired for US$1.2 billion in a deal announced on 1 October 2024 and completed on 17 January 2025. Poppi, a prebiotic soda brand, was bought in March 2025 for approximately US$1.95 billion before tax benefits, reflecting the rapid growth of functional soft drinks among younger consumers.

The company's difficulties became apparent from 2024. Volumes in North American snacks and beverages declined as consumers reacted to several years of price increases, private label took share, and the growth of GLP-1 weight loss medicines introduced a structural question the industry had not previously faced.

In late 2025 the activist investor Elliott Investment Management took a position reported at approximately US$4 billion and published a critique arguing that PepsiCo had underperformed, that its North American beverage business was badly run, and that its portfolio was too complex. On 8 December 2025 PepsiCo announced an agreement with Elliott under which it would cut nearly 20 per cent of its American product range by early 2026, close three manufacturing plants, simplify the portfolio and reduce prices to restore volume.

In May 2026 the company announced plans to invest ₹57 billion in India by 2030, expanding manufacturing, supply chain and product range, and its Indonesian plant at Cikarang began production in March 2025.

Business divisions

PepsiCo reports through seven divisions.

PepsiCo Beverages North America covers Pepsi, Mountain Dew, Gatorade, Aquafina, Starbucks ready-to-drink products under licence, Lipton in partnership with Unilever, Bubly, Rockstar and Poppi. It is the division that has most persistently underperformed and was the principal subject of Elliott's criticism.

Frito-Lay North America is the company's profit engine and holds a share of the American salty snack market above 60 per cent, with Lay's, Doritos, Cheetos, Ruffles, Tostitos, Fritos, SunChips, Smartfood and Siete. Its direct store delivery system, in which PepsiCo employees stock the shelves in more than a million outlets rather than delivering to a retailer's warehouse, is the operational asset competitors have found hardest to match and the reason the division's margins are among the highest in packaged food.

Quaker Foods North America covers oats, cereals, rice and pasta side dishes, Aunt Jemima having been renamed Pearl Milling Company in 2021 after criticism of its origins in a minstrel caricature. The division suffered a substantial setback in December 2023 when a Salmonella contamination at its Danville, Illinois plant produced a very large recall and the plant's eventual closure.

Latin America, with Sabritas and Gamesa in Mexico among the strongest positions the company holds anywhere, Europe, where Walkers in Britain is effectively the national crisp brand, Africa, Middle East and South Asia, where the 2020 acquisition of Pioneer Foods in South Africa was significant and where India is a major growth market, and Asia Pacific, Australia, New Zealand and China complete the structure.

Brands

PepsiCo owns 23 brands generating more than US$1 billion each in annual retail sales, a portfolio larger than that of any food company except Nestlé.

Carbonated soft drinks: Pepsi, Pepsi Max and Pepsi Zero Sugar, Diet Pepsi, Mountain Dew, Mirinda, 7 Up outside the United States where the rights are held by Keurig Dr Pepper, Sierra Mist and its successor Starry, Schweppes in some markets, Poppi.

Sports and energy: Gatorade, Propel, Rockstar, Celsius through a distribution arrangement and equity stake taken in 2022.

Water: Aquafina, Bubly, LIFEWTR, SodaStream.

Juice and dairy: Tropicana and Naked retained as minority interests after the 2021 sale, Gamesa dairy products in Mexico, Muller and other partnerships.

Tea and coffee: the Lipton joint venture with Unilever, the ready-to-drink Starbucks partnership, Pure Leaf.

Salty snacks: Lay's, sold as Walkers in Britain, Sabritas in Mexico and Smith's in Australia; Doritos; Cheetos; Ruffles; Tostitos; Fritos; SunChips; Funyuns; Smartfood; Miss Vickie's; Stacy's; PopCorners; Siete.

Cereals and grains: Quaker Oats, Cap'n Crunch, Life, Rice-A-Roni, Pasta Roni, Near East, Chewy granola bars, Pearl Milling Company.

Dips and other: Sabra hummus, Tostitos dips, Grandma's cookies, Munchies.

The Pepsi trademark itself was redesigned in 2023 for the brand's 125th anniversary, reintroducing the black outline and the bolder wordmark of the 1990s packaging and rolling out globally from 2024, a deliberate return to a period the brand's target consumers associate with a confident identity.

Corporate affairs

Governance and ownership

PepsiCo is listed on Nasdaq, having moved from the New York Stock Exchange in December 2017, and is a component of the S&P 500. It has no controlling shareholder; the largest holders are the institutional index managers, principally Vanguard, BlackRock and State Street.

The chairmanship and chief executive roles have generally been combined, which governance specialists criticise and which shareholders have not voted to change.

The company has paid a dividend every year since 1965 and has increased it annually for more than fifty consecutive years, placing it among the small group of companies known as dividend kings, a record the board treats as a constraint on capital allocation.

Headquarters

PepsiCo's headquarters occupies a campus at Purchase, in the town of Harrison, Westchester County, New York, which it has held since 1970. The buildings, by Edward Durell Stone, sit in the Donald M. Kendall Sculpture Gardens, a 168-acre landscape designed by Russell Page and later Françoise Bellanger containing works by Auguste Rodin, Alexander Calder, Henry Moore, Alberto Giacometti, Claes Oldenburg and others. The gardens are open to the public and are among the more significant corporate art collections in the United States.

The Frito-Lay division is headquartered at Plano, Texas, and Quaker at Chicago.

Finances

Revenue passed US$60 billion in 2015 and approximately US$92 billion in 2024, with operating margin in the mid-teens as a percentage of revenue. Frito-Lay North America contributes a disproportionate share of profit relative to its revenue, and international operations have grown faster than domestic ones for more than a decade.

The company's principal financial challenge since 2024 has been volume. Price increases through the inflationary period of 2021 to 2023 raised revenue while unit sales fell, a pattern that is sustainable briefly and not indefinitely, and the December 2025 agreement with Elliott is an acknowledgement that the limit had been reached.

Charitable activities

The PepsiCo Foundation funds nutrition, water access and agricultural programmes, with a stated commitment to providing safe water access to a large number of people in water-stressed regions, partly as a response to criticism of the company's own water use. Food for Good distributes meals to children in the United States outside school terms, using the company's distribution network. The Pepsi Refresh Project, run from 2010, allocated grant funding by public vote and was an early and much-studied experiment in crowdsourced philanthropy.

Competition

The Coca-Cola Company remains the principal beverage competitor and holds a larger share of carbonated soft drinks worldwide, particularly outside the United States, where Coca-Cola's international position is far stronger than Pepsi's. In December 2005 PepsiCo surpassed Coca-Cola in market value for the first time in twelve years, a moment that was treated as symbolically significant and that reflected the value of the snack business rather than any change in the cola contest.

The two companies' strategies have diverged substantially. Coca-Cola is a beverage company that has concentrated on brand and on an asset-light model in which independent bottlers hold the capital. PepsiCo is a food company with a large beverage business, holds its own distribution, and earns most of its profit from snacks. The comparison is now less between two cola makers than between two different businesses.

In snacks the competition is fragmented and much weaker. Mondelez International, Kellanova, Campbell's and a large number of regional producers compete in parts of the category, and private label has grown, but no competitor approaches Frito-Lay's scale or its direct store delivery network in the United States.

In sports drinks, BodyArmor, bought by Coca-Cola in 2021, is the principal challenger to Gatorade. In energy, Red Bull and Monster, the latter distributed by Coca-Cola, lead a market where PepsiCo's position through Rockstar and Celsius is smaller.

The structural challenge across the portfolio is the shift in consumer preference away from sugar and from heavily processed food, and, since 2023, the growth of GLP-1 receptor agonist medicines for weight loss, whose users report substantially reduced appetite for exactly the categories in which PepsiCo is strongest. Estimates of the effect vary widely and the companies have generally described it as manageable, while reformulating toward smaller portions, higher protein and functional claims.

Principal brands in detail

Pepsi

Pepsi itself is now a modest part of the company and remains its identity. Formulated in 1893 and named in 1898, it has been reformulated repeatedly, most substantially in the reductions of sugar since 2010 and in the 2020 change replacing part of the sugar with sweeteners in several markets.

The product line includes Pepsi, Diet Pepsi, Pepsi Zero Sugar, which replaced Pepsi Max in the United States in 2016 and was itself reformulated in 2023 and again in 2024, and a considerable number of limited editions. Pepsi Max remains the name outside North America and has been the growth product in Europe.

The brand's visual identity has changed roughly once a decade. The 2023 redesign, introduced for the 125th anniversary and rolled out globally from 2024, restored the black outline and bold wordmark of the 1990s, a period the brand associates with confidence, and reversed the flatter 2008 identity which had been widely criticised, not least for a design agency document explaining the new logo through references to gravitational fields and the golden ratio that circulated as an object of ridicule.

Mountain Dew

Mountain Dew was created in Tennessee in the 1940s as a mixer for whiskey, acquired by Pepsi-Cola in 1964, and repositioned from the 1990s toward action sports and video games, an association the company built through sponsorship of skateboarding, BMX and later competitive gaming.

It has a very high sugar content, a strong regional concentration in the American South and Appalachia, and a devoted customer base that has repeatedly forced the company to restore discontinued variants. The company has used it for flavour experimentation to a degree it does not attempt with Pepsi, including the Baja Blast line developed with Taco Bell, which became a substantial product in its own right.

Gatorade

Gatorade was developed in 1965 by a team under the nephrologist Robert Cade at the University of Florida, at the request of a coach who wanted to know why his players were being affected by heat. The formulation replaced water, sodium, potassium and carbohydrate in proportions matched to what is lost in sweat.

The university received royalties under an arrangement settled after litigation, and the product passed through Stokely-Van Camp to Quaker Oats in 1983 and to PepsiCo in 2001.

Gatorade holds the large majority of the American sports drink market and has extended into powders, protein, energy chews, water and, through the Gatorade Sports Science Institute, into a research programme on hydration and performance that has produced a substantial published literature and that also functions as a marketing asset. BodyArmor, acquired by Coca-Cola in 2021, is the principal challenger.

Lay's and Doritos

Lay's is the largest crisp brand in the world and is sold under local names, including Walkers in Britain and Ireland, Sabritas in Mexico, Smith's in Australia and Margarita in Colombia. Its flavour range is adapted market by market to a degree unusual in packaged food, with British prawn cocktail, Chinese cucumber and Indian magic masala among many hundreds of variants.

Doritos, introduced in 1966 and developed from surplus tortillas at Disneyland's Casa de Fritos restaurant, is the largest tortilla chip brand and the company's principal youth-facing snack. Its marketing has been built on consumer participation, including the Crash the Super Bowl programme under which the public produced advertisements, and on flavour extremity, including the Flamin' Hot line which has been among the fastest-growing platforms in the portfolio.

The Flamin' Hot origin story became a public dispute in 2021 when Los Angeles Times reporting cast doubt on the account given by Richard Montañez, a Frito-Lay janitor who had described inventing Flamin' Hot Cheetos, and whose story had been the subject of a book and a film. Frito-Lay said its records did not support the claim; Montañez maintained it.

Quaker

The Quaker Oats Company, founded in 1877 and among the oldest food brands in the United States, brought oats, Cap'n Crunch, Life, Rice-A-Roni and Aunt Jemima, the last renamed Pearl Milling Company in 2021 after long criticism of a brand built on a minstrel character.

The division has been the company's weakest in recent years. Oats benefited from the pandemic shift to home breakfast and then declined, and the December 2023 Salmonella contamination at the Danville, Illinois plant produced a recall covering a very large number of granola and cereal products, a second expansion of the recall in January 2024, and the closure of the plant in June 2024.

Supply chain and agriculture

PepsiCo buys agricultural products at a scale that makes it a significant actor in several commodity markets: potatoes, corn, oats, oranges, palm oil, sugar and dairy.

Potatoes are the clearest illustration of how the company operates. Crisp production requires potatoes with specific characteristics, low sugar content so they do not darken when fried, high solids so they absorb less oil, and consistent size. PepsiCo therefore breeds its own varieties, contracts with growers to plant them, specifies agronomic practice, and in several countries provides seed, finance and technical advice. This gives it reliable supply and gives the grower a guaranteed buyer, and it also creates the dependency that made the 2019 Gujarat litigation against farmers growing the FC5 variety so damaging to the company's standing.

The company's regenerative agriculture programme, announced in 2021, commits to practices including cover cropping, reduced tillage and improved nutrient management across a large proportion of its agricultural footprint by 2030, measured in acres rather than in tonnes. The objective is emissions reduction, since agriculture is the dominant source, together with soil health and water retention. Independent assessments have been cautiously positive about the design and have noted that verification at that scale is unresolved across the industry.

Palm oil, used in some snack production, is sourced through the supply chain that has produced the deforestation and labour criticism described above.

Workforce and culture

PepsiCo employs approximately 319,000 people, of whom a large majority are in manufacturing, distribution and route sales rather than in offices, which distinguishes it from most companies of comparable market value.

The company has long-standing diversity programmes and was among the earlier large American companies to market deliberately to Black consumers, employing a dedicated sales team from 1940 under Edward Boyd, whose work is documented in Stephanie Capparell's The Real Pepsi Challenge. Indra Nooyi's appointment in 2006 and Ramon Laguarta's in 2018 have both been noted as unusual for an American company of the period, being an Indian woman and a Spaniard respectively.

Union representation is substantial in American manufacturing and distribution, principally through the Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers union, and disputes have concerned overtime, scheduling and, in 2021 at Topeka, the practice of suspend days in which a worker finishing a shift could be required to begin another after a short break.

The route sales role is physically demanding, begins very early, and has a high turnover, and the company's ability to staff it is a recurring operational constraint that becomes visible whenever the labour market tightens.

Marketing

PepsiCo's advertising has been among the most expensive and most studied in consumer goods, and its method has been consistent since the 1960s: associate the brand with youth, music and the present moment, against a competitor associated with tradition.

The Pepsi Generation and the cola wars

The Pepsi Generation campaign, launched in 1963, was the first large consumer campaign to define its audience by attitude rather than by demographics, addressing people who thought of themselves as young rather than people who were. It established the brand's position and has been the foundation of everything since.

The Pepsi Challenge, from 1975, took blind taste tests into shopping centres and filmed the results, and it worked because the finding was true. The sip test favours sweetness; Pepsi is sweeter; participants chose it. Coca-Cola's internal testing reached the same conclusion, which is why New Coke was reformulated to be sweeter in 1985 and why its failure was so instructive: people were not choosing a flavour, they were choosing a thing they had a relationship with.

The cola wars of the 1980s were fought largely through celebrity. PepsiCo signed Michael Jackson in 1984 for a reported US$5 million, then the largest endorsement in history, and a pyrotechnic accident during the filming of a commercial at the Shrine Auditorium set his hair alight and caused burns whose treatment contributed to his later dependence on painkillers. Other campaigns used Madonna, whose 1989 advertisement was withdrawn after the accompanying "Like a Prayer" video provoked religious objection, Michael J. Fox, Ray Charles, Tina Turner, Cindy Crawford, whose 1992 advertisement for the redesigned can is among the most replayed of the period, Britney Spears, Beyoncé, David Beckham and Lionel Messi.

The company has bought the Super Bowl halftime show sponsorship, held from 2013 to 2022, and has run Super Bowl advertising for decades, including the 1996 Coca-Cola delivery driver commercial and a long series of Doritos advertisements produced by consumers under the Crash the Super Bowl programme, an early and effective use of user-generated content.

Missteps

Pepsi Number Fever, a 1992 promotion in the Philippines, printed a winning bottle cap number, 349, on approximately 800,000 caps rather than the intended two, creating a prize liability of roughly US$32 billion against an intended US$40,000. PepsiCo offered goodwill payments of 500 pesos, riots followed, delivery trucks were attacked and several people died in the resulting violence. Litigation continued for more than a decade.

The Harrier jet advertisement of 1996 offered merchandise for points, ending with a joke that seven million points would buy an AV-8B Harrier. A student, John Leonard, assembled the points using the cash purchase option at ten cents each, presented a cheque for approximately US$700,000 and sued when refused. The court held in Leonard v. Pepsico, Inc. (1999) that no reasonable person would have understood the advertisement as an offer, and the case is taught in American contract law courses.

The 2017 Kendall Jenner advertisement, in which the model resolves a protest by handing a police officer a can of Pepsi, was withdrawn within 24 hours after widespread criticism that it trivialised civil rights demonstrations. PepsiCo apologised to Jenner as well as to the public, and the episode is cited as the standard example of a brand misreading a political moment.

Sponsorship

PepsiCo sponsors the UEFA Champions League, the National Football League through Frito-Lay and Gatorade, Major League Baseball and the National Basketball Association through Gatorade, the Indian Premier League at various points, and a large number of individual athletes. Gatorade's association with American sport is deep enough that the Gatorade shower, in which players douse a winning coach, is a recognised ritual, and the brand's sideline presence is contractually protected.

Music sponsorship has included festivals, the Super Bowl halftime show and long-running arrangements with individual performers.

Frito-Lay and direct store delivery

Frito-Lay's competitive position rests on a distribution system that is expensive, difficult to copy, and largely invisible to consumers.

Most packaged food is delivered to a retailer's distribution centre, from which the retailer moves it to stores and stocks the shelves. Frito-Lay instead employs its own route sales representatives, roughly 17,000 in the United States, who drive to individual stores, decide what to stock based on what has sold, arrange the display themselves, and remove stale product.

The advantages are substantial. Snacks are an impulse purchase in which shelf position and freshness determine sales, and a supplier that controls both captures a disproportionate share. The company sees sales data daily at the level of the individual store. New products can be placed nationally within weeks. And because the representative owns the shelf, competitors' products are stocked by people with no interest in them.

The costs are equally substantial: a very large employed workforce, a fleet, and fixed costs that must be spread across enough volume to justify the visit. This is why the system works for the market leader and not for a challenger, and why Frito-Lay's position has proved durable across sixty years in a category with no technical barriers to entry.

The system has also been a source of labour friction, since the work is physically demanding and the hours are early, and it was the setting of the 2021 Topeka strike.

International operations

PepsiCo's international business now produces more than 40 per cent of revenue and is growing faster than North America.

Mexico is among its strongest markets anywhere. Sabritas holds a share of Mexican salty snacks comparable to Frito-Lay's in the United States, and Gamesa is a leading biscuit brand. The company's distribution reaches several hundred thousand small retailers.

India has been a long and difficult investment that is now paying. PepsiCo entered in 1989 under an arrangement requiring it to export agricultural products, developed a contract potato farming programme covering tens of thousands of farmers, and built Kurkure, a locally developed snack, into a very large brand. Lay's, Kurkure and Mirinda are national brands; the beverage bottling was franchised to Varun Beverages in 2019 in a restructuring that improved the economics substantially. The May 2026 commitment of ₹57 billion by 2030 reflects the market's importance.

China has been harder. PepsiCo's beverage bottling was transferred to Tingyi in a 2011 joint venture after years of losses, with PepsiCo retaining a minority interest and the brand, while the snack business has grown strongly, assisted by the 2020 purchase of Be and Cheery.

Europe is led by Walkers in Britain, which holds a dominant share of the crisp market and whose flavour range is closely adapted to local taste, by Doritos and Lay's across the continent, and by Pepsi Max, which has been notably more successful in Europe than Pepsi Zero Sugar was in the United States. Regulatory pressure on sugar and on advertising has been greater in Europe than elsewhere, and PepsiCo has generally reformulated ahead of legislation, including reducing sugar in response to the British soft drinks industry levy of 2018.

Africa and the Middle East were transformed by the 2020 acquisition of Pioneer Foods in South Africa for approximately US$1.7 billion, which brought a broad food business and a distribution platform. Egypt, Saudi Arabia and Nigeria are significant markets.

Latin America beyond Mexico includes large positions in Brazil, Argentina and Colombia, where PepsiCo's snack brands are generally stronger than its beverages.

Research and product development

PepsiCo employs several thousand people in research and development, at sites including Valhalla, New York, Plano, Texas, Barrington, Illinois, Leicester in England, Shanghai and Hyderabad.

The work divides into flavour and product development, which is the visible part and which produces the very large number of regional variants the company sells, and reformulation, which is the substantive part. Reducing sodium in a crisp without changing the taste requires changing the crystal size and distribution so that the salt reaches the tongue more efficiently; reducing sugar in a drink requires managing the mouthfeel that sugar provides as well as the sweetness. Both have consumed large programmes over many years.

Agricultural research covers potato varieties, which are bred for specific frying characteristics and for yield, oat and corn genetics, and, increasingly, regenerative farming practice, to which the company has committed across a large proportion of its agricultural footprint by 2030.

Packaging research addresses the recyclability commitments and has produced compostable formats, reduced plastic weight, and pilot refill and dispensing systems, particularly through SodaStream, whose acquisition in 2018 was justified partly on the argument that home carbonation eliminates the bottle entirely.

PepsiCo and the Soviet Union

PepsiCo's Soviet history is unique among Western consumer companies and deserves separate treatment.

The relationship began with a photograph. At the American National Exhibition in Moscow's Sokolniki Park in July 1959, vice president Richard Nixon and Nikita Khrushchev conducted the exchange later called the kitchen debate. Donald Kendall, then running Pepsi-Cola's international division, had persuaded Nixon to bring Khrushchev to the Pepsi stand, and the resulting image of the Soviet leader drinking Pepsi ran worldwide. Kendall's career was made by it and he became chief executive in 1963.

Fifteen years of negotiation followed. The obstacle was the rouble, which was not convertible, so that Pepsi could sell in the Soviet Union but could not take the money out. The solution was barter: Pepsi would supply concentrate and receive Stolichnaya vodka, which it would distribute in the United States through a subsidiary.

The arrangement was signed in 1972 and production began at Novorossiysk in 1974, making Pepsi-Cola the first American consumer product manufactured and sold in the Soviet Union. Bottling plants multiplied across the country and Pepsi held an effective monopoly on cola until Coca-Cola was permitted entry in 1985.

By the late 1980s the volumes had outgrown the vodka market. The 1989 renegotiation, reported at approximately US$3 billion, included a quantity of Soviet naval vessels to be sold for scrap: by various accounts seventeen submarines, a cruiser, a frigate and a destroyer, together with new merchant tankers to be built and leased. PepsiCo sold the warships to a Norwegian breaker. Kendall's remark to the national security adviser Brent Scowcroft, that PepsiCo was disarming the Soviet Union faster than the government was, is the version most often repeated.

The Soviet collapse ended the arrangement. Pepsi's plants were distributed across fifteen new countries, its distribution agreements became unenforceable, and Coca-Cola entered the Russian market with new capital and overtook it within a decade. PepsiCo rebuilt through acquisitions, buying the juice company Lebedyansky in 2008 and the dairy and juice group Wimm-Bill-Dann in 2011 for approximately US$5.4 billion, the largest foreign acquisition in Russia at the time, which is why the company's Russian business today is principally dairy and baby food rather than cola, and why it has been able to argue that it supplies essential goods.

Timeline

1893 Caleb Bradham formulates Brad's Drink in New Bern, North Carolina.
1898 It is renamed Pepsi-Cola.
1923 The company goes bankrupt after speculating on sugar.
1931 It fails a second time and is bought by Charles Guth of Loft.
1932 Charles Elmer Doolin founds the Frito Company in San Antonio.
1933 Pepsi sells twelve ounces for five cents and sales rise sharply.
1938 Herman Lay founds the H. W. Lay Company.
1959 Khrushchev drinks Pepsi in Moscow.
1961 Frito and Lay merge as Frito-Lay, Inc.
1963 The Pepsi Generation campaign launches; Donald Kendall becomes chief executive.
1965 PepsiCo is formed by the merger of Pepsi-Cola and Frito-Lay; Gatorade is developed at the University of Florida.
1974 Pepsi becomes the first American consumer product made and sold in the Soviet Union.
1975 The Pepsi Challenge begins.
1977–1986 Pizza Hut, Taco Bell and KFC are acquired.
1984 Michael Jackson signs for a reported US$5 million.
1985 Coca-Cola releases and withdraws New Coke.
1989 The Soviet barter deal includes naval vessels.
1992 The Pepsi Number Fever promotion in the Philippines produces riots and deaths.
1997 The restaurants are spun off as Tricon, later Yum! Brands.
1999 Bottling operations are separated.
2001 Quaker Oats is acquired for about US$13.4 billion, bringing Gatorade.
2006 Indra Nooyi becomes chief executive and launches Performance with Purpose.
2010 The two large bottlers are repurchased for approximately US$7.8 billion.
2011 Wimm-Bill-Dann is acquired in Russia; Chinese bottling passes to Tingyi.
2017 The Kendall Jenner advertisement is withdrawn within a day.
2018 Ramon Laguarta becomes chief executive; SodaStream is acquired.
2020 Rockstar and Pioneer Foods are acquired.
2021 Tropicana and the juice brands are sold to PAI Partners.
2022 Sales of Pepsi are suspended in Russia while other production continues.
2024 Siete Foods is acquired for US$1.2 billion; volumes decline in North America.
2025 Poppi is acquired for about US$1.95 billion; Elliott Investment Management takes a position and an agreement is reached in December to cut a fifth of the American range.
2026 ₹57 billion of Indian investment is announced for the period to 2030.

Reception

PepsiCo occupies an unusual position in public perception: its products are extremely widely consumed, its corporate identity is weak, and most consumers of Doritos, Gatorade, Quaker and Walkers do not associate them with the same company.

This has been commercially useful, in that criticism attaching to one brand rarely transfers, and it has been a limitation in the periods when the company has wanted credit for something, as during the Performance with Purpose years.

Among investors the company is regarded as a defensive holding with a very long dividend record, and the argument about it concerns whether the snack business subsidises a beverage business that would be better separated, a proposition Nelson Peltz advanced in 2013 and Elliott revived in 2025 in modified form. Management's answer has been consistent: the distribution, procurement and retail relationships are shared, and the snacks and drinks are bought together.

Among public health and environmental organisations the assessment is uniformly critical and has been for two decades, on grounds of nutrition, plastic, water and agricultural emissions. The company's responses have generally been more substantial than its competitors' and have consistently been judged insufficient against the scale of what it sells.

The most durable judgement is probably the simplest. PepsiCo lost the cola contest and won the argument about what kind of company to be, and it has spent the sixty years since 1965 demonstrating that the second mattered more.

Controversies

Russia

PepsiCo's presence in Russia is among the longest of any Western consumer company, dating to the 1974 arrangement negotiated by Donald Kendall, and it has not ended.

Following the invasion of Ukraine in February 2022 the company suspended sales of Pepsi, 7 Up and Mirinda and stopped capital investment and advertising, while continuing to produce dairy, infant formula and baby food on the argument that these are essential goods. In practice the Russian business continued to grow: revenue rose in 2022, profits increased substantially, and locally developed cola brands including Evervess and Frustyle replaced the withdrawn products through the same plants and distribution.

The 2025 annual report disclosed that Russia accounted for approximately five per cent of global net revenue and about 20 per cent of consolidated cash and cash equivalents at the year end, the latter figure reflecting that profits cannot readily be repatriated. The company has been listed by Ukrainian authorities and by campaign groups including the Yale School of Management's tracker among those that have not withdrawn.

Working conditions

PepsiCo has faced criticism over conditions in its supply chain and its own operations. Investigations have examined conditions on palm oil plantations supplying its joint venture with Indofood in Indonesia, where Rainforest Action Network and others documented child labour, unpaid overtime and exposure to hazardous chemicals, leading PepsiCo to end aspects of the relationship in 2018.

Agricultural labour in its potato and corn supply chains has been examined in several countries, and the company has faced union disputes at American plants, including a 2021 strike at a Frito-Lay facility in Topeka, Kansas, over mandatory overtime that workers described as leaving them with insufficient rest between shifts, which produced national coverage and a revised agreement.

India

PepsiCo's operations in India have been the subject of several distinct controversies.

In 2003 and again in 2006 the Centre for Science and Environment reported pesticide residues in PepsiCo and Coca-Cola soft drinks at levels far above European standards, producing bans in several states, parliamentary inquiry and a long argument about the absence of Indian standards for the substances in question. The companies disputed the testing methodology; standards were subsequently introduced.

Water extraction by bottling plants in water-stressed districts, including at Kala Dera in Rajasthan and Palakkad in Kerala, produced local protest and litigation against both companies, and PepsiCo subsequently committed to replenishing more water than it uses in high-risk areas, a target it reports having met in a number of locations.

In 2019 PepsiCo India sued nine farmers in Gujarat for growing the FC5 potato variety used for Lay's, seeking very large damages, and withdrew the cases after a public outcry over a multinational suing smallholders. In December 2021 the Protection of Plant Varieties and Farmers' Rights Authority revoked the company's registration of the variety following a petition by the farmers' rights activist Kavitha Kuruganti, on the ground that the application had misstated the date of first sale. PepsiCo appealed to the Delhi High Court.

Environment

Plastic. PepsiCo has been named among the top three branded contributors to plastic pollution in every annual audit conducted by the Break Free From Plastic movement since 2018, alongside Coca-Cola and Nestlé. It has committed to making all packaging recyclable, compostable or biodegradable and to reducing virgin plastic use, and in 2024 it revised several of those targets to later dates and lower ambition, a change campaigners criticised and the company attributed to the absence of recycling infrastructure. The New York attorney general sued PepsiCo in November 2023 over plastic pollution in the Buffalo River, the first such action by a state against a consumer goods company; the case was dismissed in 2024 and appealed.

Palm oil and deforestation. The company's use of palm oil, principally through its Indonesian joint venture, has been linked to deforestation and peatland conversion. PepsiCo publishes a sourcing policy requiring no deforestation, no peat development and no exploitation, and reports on traceability, with campaigners disputing the completeness of the reporting.

Water. Beyond India, water use has been contested in the United States and the United Kingdom, and the company's replenishment commitments have been criticised as accounting exercises where the replenishment occurs in a different basin from the extraction.

Emissions. PepsiCo has committed to net zero by 2040 and to reducing absolute value chain emissions substantially against a 2015 baseline. In 2025 it was named, with four other large food manufacturers, in a report by the NewClimate Institute and Carbon Market Watch for failing to set a methane reduction target covering livestock and fertiliser in its supply chain and for overstating progress by relying on greenhouse gas removals rather than reductions at source. Agricultural emissions, principally from dairy, potatoes, corn and oats, dominate the footprint.

Nutrition

The nutritional profile of PepsiCo's portfolio is the criticism that applies most directly to what the company sells.

Sugar and salt. The company has reduced sugar in Pepsi in several markets, including a 2020 reformulation replacing some sugar with sweeteners, and has set targets for the proportion of its beverage portfolio below a sugar threshold and its snack portfolio below sodium and saturated fat thresholds. Public health bodies have generally regarded the targets as real and the pace as slow, and have noted that reformulation of individual products coexists with growth in total volumes sold.

Marketing to children. PepsiCo participates in industry pledges restricting advertising to children, which campaigners describe as narrow because they define the audience by the proportion of children watching rather than by whether children see the advertisement, and because they do not cover much of what children actually watch. Sponsorship of sporting events with large youth audiences, including the UEFA Champions League and, historically, the NFL and the Super Bowl halftime show, falls outside the pledges.

Aspartame and ingredients. The company removed aspartame from Diet Pepsi in the United States in 2015 in response to consumer concern, reinstated it as an option in 2016 after sales fell, and has periodically adjusted formulations in response to public reaction rather than to evidence, which nutrition researchers have identified as characteristic of the industry.

Assessment

PepsiCo's defining decision was made in 1965 and has determined everything since: that a soft drink company should also sell salty snacks.

The reasoning was about distribution, and it turned out to be about economics. Frito-Lay occupies a position in American snacks that has no equivalent anywhere in packaged food, protected by a direct delivery system that costs more than the alternative and that no competitor has been willing to replicate. It earns margins that the beverage business does not, it has faced no serious challenger in sixty years, and it is the reason PepsiCo has been able to lose the cola contest, which by most measures it has, without the outcome mattering very much.

The company's present difficulty is narrower and more immediate. Several years of price increases raised revenue while units fell, private label took share, the beverage business in North America has been poorly run by the assessment of its own board's new agreement with an activist investor, and the portfolio had accumulated products that did not earn their place on a shelf. The December 2025 commitment to remove a fifth of the American range is a correction of a specific failure rather than a strategic reversal.

The longer question is the one the whole industry faces. PepsiCo sells, principally, sugar, salt, fat and refined carbohydrate, in a period when medical opinion, regulation and now pharmacology are all moving against those things. Its answer has been reformulation, portfolio diversification and the acquisition of brands positioned on function rather than indulgence, which is the correct answer and which has so far changed the composition of its revenue far less than its communications imply.