Did you know that back in the 1980s, PepsiCo had signed a bizarre deal with the Soviet Union to sell its Pepsi soft drink in exchange for their submarines and warships?
Yes, you heard that right!
In 1972, PepsiCo successfully negotiated a cola monopoly with the USSR and Pepsi became the very first American consumer product to be produced, marketed, and sold in the Soviet Union.
But back in those days, the Soviet currency was worthless internationally and was not even allowed to carry abroad as per Soviet law. As a result, in exchange for its soft drink, the company received a special alcoholic beverage called Stolichnaya vodka, which became an instant hit in the USA.
But, in the 1980s, due to political concerns and the American boycott of Soviet products, PepsiCo had to look for something else to exchange. This led to a remarkable deal in 1989 with the Soviet Union where, in exchange for its fizzy drink, the company received 17 old submarines and 3 Soviet warships, which the company eventually sold for scrap to earn its money.
PepsiCo Inc. is an American multinational food and beverage company headquartered in New York, USA. This parent brand currently owns over 500 brands, out of which at least 23 brands make over US $1 billion in sales annually.
In this article, we’ll dive deep into the interesting business strategies, vibrant brand identity designs, and popular marketing tactics that PepsiCo has managed to implement across all of its subsidiary brands, especially its flagship brand Pepsi, which is the second most valuable soft drink brand across the world and the biggest rival of Coca-Cola. Let’s dive straight away into PepsiCo’s Branding Case Study.
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A Brief History of PepsiCo
Let’s get a glimpse of the interesting journey through the history of PepsiCo, before getting into its branding specifics:
1893
In 1893, Caleb Bradham, an American pharmacist created a cola-flavored drink in his drugstore and called it "Brad's Drink". This humble formula would later evolve into Pepsi.
1898
In 1898, Brad's Drink was officially renamed Pepsi-Cola and Bradham started marketing it as a drink that helps in digestion.
1902
In 1902, Bradham officially incorporated the Pepsi-Cola Company. And, in the following year, he patents his Pepsi-Cola recipe, further solidifying his ownership and vision for the brand.
1965
In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc., a leading snack food company, to form PepsiCo. This marks the company’s journey to becoming a leader in the food and beverage industry.
1971
In 1971, PepsiCo reported its first-ever $1 Billion dollars in annual revenue.
1980s
In the 1980s, PepsiCo deepens its influence in the fast food segment by acquiring brands like KFC, Taco Bell, and Pizza Hut. However, later in 1997, these brands spin-off from PepsiCo as the now famous corporate group called Yum! Brands Inc.
Over the next years, PepsiCo made a lot of successful acquisitions and introduced a variety of new product line-ups and brands to offer more options for each and every customer, taste, lifestyle, and occasion.
PepsiCo's Brand Strategy
When we look into the business strategies that make PepsiCo what it is today, there are 3 particular ones that stand out to me:
Product Diversification: PepsiCo strategically launches new products and acquires new brands to consistently appeal to a very wide range of target customers and maintain its market leadership position.
Localized Globalization: PepsiCo looks for expansions into international markets especially, into emerging economies with great potential. It successfully does this while also tailoring products to local tastes and preferences.
Research and Innovation: PepsiCo invests heavily in the research and development of new products and innovative sustainability initiatives to ensure that it stays competitive while also meeting the ever-growing consumer expectations.
PepsiCo’s revenue model is primarily dependent on the retail sales of its diverse portfolio of food products and drinks. The company also supplies its products to food service establishments such as restaurants, hotels, and catering businesses, which also contributes to the overall revenue. Additionally, PepsiCo engages in brand partnerships where it receives licensing and royalty income from the use of its trademarks and intellectual property.
Related article: 12 Different Types of Businesses
Now, let’s get into PepsiCo's brand strategy and try to get an essence of how strong its foundation is.
PepsiCo’s vision is “To Be the Global Leader in Convenient Foods and Beverages”. In addition to this long-term vision, the company ensures its employees are regularly motivated through its mission which is to “Create More Smiles with Every Sip and Every Bite”.
As a way of ensuring a consistent culture throughout the company, PepsiCo ensures that everybody involved with the company abides by its brand values which are:
Diversity: Raise the bar on talent and diversity
Integrity: Act with integrity
Courage: Voice opinions fearlessly
Sustainability: Act as owners and ensure sustained growth
Responsibility: Focus and get things done faster
Trust: Be consumer-centric
Brand Architecture of PepsiCo
Owning over 500 brands across the different sectors of the food and beverage industry, PepsiCo adopts a Hybrid Brand Architecture to provide a robust structure to its widespread portfolio. Let’s have a closer look at some of its popular product brands:
1. Core Brand
Pepsi is the world-famous carbonated soft drink that is considered to be PepsiCo’s flagship product. Within the Pepsi brand, there are sub-brands like Diet Pepsi, Nitro Pepsi, and Pepsi Zero Sugar. All of these product brands have multiple flavor variants like Pepsi Mango, Diet Pepsi Caffeine Free, Nitro Pepsi Vanilla, and Pepsi Zero Sugar Wild Cherry.
2. Carbonated Beverage Brands
Apart from Pepsi, the company owns a sparkling water brand called Bubly Sparkling Water and other soft drinks like Mountain Dew, Mirinda, Starry, and 7 Up. It’s important to mention that although 7 Up is internationally distributed by PepsiCo, the brand and formula are currently owned by Keurig Dr. Pepper.
3. Other Beverage Brands
PepsiCo owns many other beverages like a sports drink brand called Gatorade, a fruit-juice brand called Tropicana, and a bottled water brand called Aquafina.
4. Snacks
PepsiCo’s wholly-owned subsidiary brand Frito-Lay produces the majority of its popular snack brands like the Fritos corn chips, Lay’s potato chips, Cheetos corn puffs, and Doritos and Tostitos brands of tortilla chips.
5. Cereals and Healthy Snacks
PepsiCo’s subsidiary brand Quaker Oats Company produces its breakfast cereal brands like Quaker Oats and Cap’n Crunch.
6. Partnership brands
PepsiCo also owns a number of product brands through collaborations with other famous companies. For example, Lipton’s ready-to-drink tea beverages are sold by "Pepsi Lipton International", a company jointly owned by Unilever and PepsiCo. Similarly, Starbucks partners with PepsiCo to distribute Starbucks ready-to-drink coffee beverages around the world.
7. Local Brands
PepsiCo also owns a few product brands especially snack brands that are only restricted to specific countries. Examples of such are India’s Kurkure, South Africa’s Simba, and Egypt’s Chipsy.
When it comes to competition, the majority of it comes from the beverage brands owned by The Coca-Cola Company. Another significant beverage rival of PepsiCo is Keurig Dr Pepper. Nestlé is also a major competitor, especially in the area of bottled water and snacks. In addition to this, Mondelez International also competes in the snacks market through its Oreo and Cadbury brands.
Did you know that back in the 90s, PepsiCo launched a completely clear cola soft drink called Crystal Pepsi which tasted exactly like the traditional Pepsi drink?
During the 1980s and 1990s, there was a popular marketing fad called the ‘Clear Craze’, where companies believed that the consumers equated clarity and transparency with the feeling of purity. This was the time when brands started launching clear gels and electronics with transparent or translucent outer casings.
As part of the trend, Pepsi launched its own clear product called Crystal Pepsi in 1992, which was essentially a caffeine-free version of Pepsi without its caramel color. Unfortunately, as with any fad, there was a surprisingly high initial interest among consumers followed by a steady decline in sales in the years that followed.
Though discontinued currently, this nostalgic product offering has gained a lot of cult following among soda lovers. As a means of banking on this love, PepsiCo occasionally releases limited editions of Crystal Pepsi, ultimately turning its failed product into a sought-after collector's item among soda enthusiasts.
PepsiCo's Brand Identity
Since PepsiCo is a corporate brand, it doesn’t communicate with the end consumers directly. As we already know, brand identity is truly powerful, particularly in the case of brands interacting with consumers.
Therefore, instead of PepsiCo’s identity, let’s observe and analyze the brand identity of a few of its famous consumer product brands.
By the way, Did you know that the drink Pepsi was named after a digestive enzyme?
PepsiCo’s and Pepsi’s name originates back to the late 1890s. Back when the cola-flavored drink was invented, it was named ‘Brad’s Drink’ after the founder himself.
In 1898, the drink was renamed Pepsi-Cola, believing it had a better ring to it. The latter part of the name was because of Kola nuts, which were the then-source of caffeine for the drink. The ‘Pepsi’ part was inspired by Pepsin, a digestive enzyme. Even though pepsin was not an ingredient, the name resonated well with the drink because it was being marketed as a drink that helps in relieving indigestion. This name eventually led to the naming of Pepsi drink and the PepsiCo company.
Over the years, the Pepsi logo has undergone several redesigns and updates. However, the core elements have remained the same throughout the logo evolution.
The iconic Pepsi Globe is a circular shape that represents unity and global reach. In addition, the wavy white line adds a sense of energy and symbolizes the excitement associated with carbonated beverages.
The use of red, white, and blue colors as its brand colors not only represents American patriotism but also signifies vibrancy, purity, and trust, respectively.
Keeping the core elements of the logo intact, in early 2023, Pepsi redesigned its logo and developed a cool, vibrant, and dynamic identity from it. The new classy identity introduced Electric blue and black color palettes using interesting styles of vibrant 2D patterns along with the ‘Pepsi Pulse’ motion design.
Another PepsiCo brand 7 Up also underwent a recent rebrand which included a friendly and modern logo along with a dynamic and refreshing identity system consisting of iconic citrus green colors and subtle geometric illustrations.
Similarly, Mirinda also redesigned its logo and identity design in an attempt to appeal to the Gen Z audience. This latest identity features bold and minimal packaging designs along with funky flavor-relevant illustrations combined with abstract globe shapes.
Coming to the packaging design of Pepsi branded products, the cans usually feature a minimalistic design on a premium reflective surface to ensure high visibility on the retail shelf, sometimes in combination with illustrations relevant to the drink’s flavor profile.
Even though the brands owned by PepsiCo have their own independent identity designs and target customers, the core foundation of the corporate parent brand is what makes each of these brands a success in their own market segments.
Related article: What Are The 9 Types of Logo Designs?
Pepsi's Marketing
PepsiCo’s true marketing genius lies in the way it creatively positions its Pepsi brand. The company's flagship product Pepsi has been engaged in a rivalry for generations with Coca-Cola. This rivalry through ad campaigns and TV commercials is like the Marvel vs. DC rivalry of the beverage world and is popularly known as ‘The Cola Wars’.
Popular Examples of Cola Wars
Of the many examples of the brand wars between Pepsi and Coke, here are 2 particular ones that we could look into:
1. Blind Taste Challenge Ads
As previously mentioned in Coca-Cola’s branding case study, there were blind taste tests conducted between Coke and Pepsi where it was proved that people actually preferred Pepsi since it tastes better. Pepsi took advantage of these test results and the ‘New Coke’ Debacle in 1985 with ad headlines like, “Coke is history. Pepsi is the future.” and “If you want the real thing, ask for Pepsi.”
2. Interactive Ad Campaigns by Pepsi and Coke
Pepsi's "Refresh Project" campaign funded community projects voted on by the public proving to be a great example of Cause Branding, while Coke's "Happiness Machine" dispensed random acts of kindness and provided some happy and memorable moments to the consumer. Each campaign took subtle jabs at the other, with Pepsi highlighting its focus on practicality and Coke emphasizing its feel-good message.
Apart from the Cola Wars, Pepsi has always been keen on partnering with celebrities and pop culture stars to have a strong brand positioning, especially among the youth. Over the multiple decades, Pepsi has partnered with popular celebrities like Michael Jackson and Beyonce back in the days to Kendall Jenner and Lionel Messi in the recent past.
Pepsi Points & Pepsi Stuff
PepsiCo ensured strong brand loyalty through its marketing campaigns like the Pepsi Points program and Pepsi Stuff catalog. These annual campaigns that were launched and relaunched in the years 1996, 2008, and 2018 featured a merch catalog called Pepsi Stuff consisting of T-shirts, hats, denim jackets, and bags that could be purchased with Pepsi Points acquired from specially marked Pepsi packages and bottles. The program was a huge success and helped in boosting Pepsi's sales significantly.
Did you know that in partnership with NASA, Pepsi took the Cola Wars even beyond the planet Earth?
In 1984, researchers for Coca-Cola had an idea about dispensing carbonated beverages in space to give astronauts more choices to drink and also to create a stellar advertising opportunity. NASA agreed to let the astronauts try Coke on a Shuttle flight. As soon as Pepsi got to know about this project, it also wanted to participate in it.
In 1985, PepsiCo made history by developing a unique dispensing system in the form of a handy can-like packaging. In the same year, NASA flew both Coke and Pepsi products on the STS 51-F mission so that crew members could evaluate the dispensers and do a taste test.
Though the results of the taste test were not released to the public, Pepsi’s decision to participate in this venture made history by taking the ‘Cola Wars to Space’.
Conclusion
The combination of strong brand strategy, refreshing design decisions, and innovative marketing ventures have resulted in not just Pepsi becoming one of the largest soft drink brands but also, PepsiCo becoming one of the largest food and beverage companies in the world.
PepsiCo Foundation
Throughout the many decades of its existence, PepsiCo has maintained a philanthropic program since 1962 called the PepsiCo Foundation, which ensures the creation of sustainable and innovative solutions to tackle socioeconomic issues like nutritious food, safe water, and economic opportunity.
PepsiCo Positive (pep+ program)
Recently, the company also introduced its Pep+ program, short for PepsiCo Positive, which is essentially a set of sustainable goals aimed at driving a positive impact on both the people and the planet, along with elaborate strategic steps to help guide the company, it employees, and its partners in this journey. This program has been running quite successfully since its inception in 2021.
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