PepsiCo, Inc. manufactures, markets, distributes, and sells various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region. It provides dips, cheese-flavored snacks, and spreads, as well as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups, granola bars, grits, oatmeal, rice cakes, simply granola, and side dishes; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee, and juices; dairy products; and sparkling water makers and related products. It serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, and others through a network of direct-store-delivery, customer warehouse, and distributor networks, as well as directly to consumers through e-commerce platforms and retailers. The company was founded in 1898 and is headquartered in Purchase, New York. The company is publicly listed on NASDAQ under the ticker “PEP”.
PepsiCo is one of the largest global beverage and convenient food company. It boasts a large diversified portfolio of several brands, such as Lays, Doritos, Cheetos, Gatorade, PepsiCola, Mountain Dew, Quaker and SodaStream.
These brands are known worldwide, and they benefit from a large solid base of loyal customers, giving the company an important competitive advantage. On the other hand, the markets in which the company operates are experiencing slow growth, making PepsiCo an investment opportunity for value-oriented investors who are looking at high dividend income rather than capital appreciation.
The business model of the company is fairly easy to understand and for reporting purposes it is divided in two macro-segments: food and beverage. In 2021, the company’s food segment accounted for 55% of the total revenue, while beverages segment accounted for 45%, totaling a huge overall revenue of $79,474 million. The company is the market leader in the global convenient foods market and enjoys a strong global position in the beverage market, where it is second only to The Coca-Cola Company. However, these markets have already reached their saturation point: as far as the estimates go, these markets should grow at an average CAGR of 4% to 5% for the next five years, which compared to other companies isn’t much. While the company has plenty of market share to take both under the beverage and food segment, we think the company will grow roughly at the same rate of the general markets it operates in.
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