Supplier insights: how PepsiCo plans to drive growth, lower costs and build purpose

Date : 15 February 2021

Stewart Samuel

Program Director - Canada

We look at the plans that PepsiCo has put in place this year to build on the pandemic-driven growth of 2020 through its ‘Faster, Stronger, Better framework.

Faster: strengthening its focus on winning in the market and improving market share

PepsiCo will prioritise the growth opportunities in its top 20 snack markets and selected beverage markets. Building on the almost doubling of ecommerce sales in 2020, it will expand its presence and accelerate its efforts in the channel. Supporting its ‘Beyond the Bottle’ strategy, it will offer more choice and innovative products through its SodaStream platform and drive more meaningful innovation in higher growth sub-categories.

Energy will be a major focus for the company, led by its Rockstar brand. PepsiCo has identified several other sub-segments in this area to target. The strategy is to continue investing in its larger, core brands while building the big brands of the future, many of which offer solutions in different day-parts.

Source: PepsiCo

Stronger: transform its cost structure, capabilities and culture

The company plans to sharpen its holistic cost management initiatives through adopting a zero-based budgeting approach. It has identified several cost opportunities in its end-to-end supply chain. This will be supported by the expansion of its Global Businesses Services platform into new capabilities, which will deliver better insight and support at lower cost. PepsiCo will also accelerate its digital transformation capabilities with a focus on consumer-centric analytics. This will support efforts to optimise its advertising and marketing spend and simplify it product portfolio.

Better: further integrating purpose into business strategy and its brands

PepsiCo’s efforts will be focused on building a more sustainable food system, strengthening its communities, and advancing social equity. Initiatives include those centred on regenerative farming, building a more resilient value chain, including targeting net-zero emissions by 2040 and reducing the amount of virgin plastic in its packaging, and optimising the power of purpose-led brands.

Positive sales outlook for 2021

The company expects organic revenue growth to be in the mid-single digits in 2021, with vaccination efforts accelerating population mobility trends. While consumers are expected to return to pre-pandemic behaviours by the second half, its also assumes that some of the newer consumer behaviours will remain. These include greater online adoption and penetration, more remote working and higher household penetration for large, trusted brands.

Retail Analysis subscribers: outlined in our report, North America retail outlook 2021, we highlight five key trends set to shape the North American retail marklet this year, including resetting the product offer.

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