PepsiCo’s Carbonated Soft Drinks Business
During the mid-1990s it looked as if Coca-Cola would dominate the soft drink industry, with every Pepsi-Cola brand except Mountain Dew losing market share to Coca-Cola's brands Coca-Cola's CEO at the time.Roberto Goizueta. Had stated that the company's strategic intent was to control 50 percent of the U.S. cola market by 2000 and seemed convinced PepsiCo could be little to stop the industry leader Goizueta summed up his lack of concern about Pepsi as a key rival in an October 28,1996.
PepsiCo's management engineered a come-back in the late 1990s and early 2000s by launching new brands like Sierra Mist and focusing on strategies to improve local distribution. Among Pepsi's most successful strategies to build volume and share in soft drinks was its "Power of One" strategy, which attempted to achieve the synergistic benefits of a combined Pepsi-Cola and Frito-Lay envisioned by shareholders of the two companies in 1965. The Power of One strategy called for supermarkets to place Pepsi and Frito-Lay products side by side on shelves. In 2006, PepsiCo added "Innovation Summits" to its Power of One program whereby retailers could share their views on consumer shopping and eating habits. PepsiCo used the information gleaned from the summits in developing new products like SoBe Life Water and Lay's potato chips cooked in sunflower oil. The summits, which continued into 2007, also helped identify PepsiCo supply chain inefficiencies that affected retailers PepsiCo managers and retailers collaborated during one Innovation Summit to develop new shipping procedures that reduced stock-outs in retailers' stores
PepsiCo's primary focus in soft drink innovation was directed toward improving the nutritional properties of soft drinks. The company was attempting to develop new type of sweeteners that would lower the calorie content of nondiet drinks. The company also hoped its 2006 acquisition of lzze lightly carbonated sparkling fruit drinks would prove popular with health-conscious consumers. Tava was an additional calorie-free, caffeine-free better-for-you carbonated beverage that PBNA launched in the United States in 2007. Even though PepsiCo strengthened its position in the U.S. Carbonated soft drink industry, its 31.1 percent market share during 2007 was considerably less than Coca-Cola's 2007 market share of 41.6 percent.