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Investment Analysis of Coca Cola and Pepsi - Essay Example

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Investment Analysis of Coca Cola and Pepsi

Later he formed Pepsi-Cola Company in 1902. In 1965, Pepsi-Cola Company was merged with Frito-Lay, Inc. which created PepsiCo, Inc. PepsiCo. has expanded to include various range of foods like snack foods, health drinks, etc. Their current head is Indra Nooyi who is the Chairman and CEO (Penzkofer, 2007). The major customers of the company are the young generation of people and also include the sportsman. They use mainly Sustainable Sourcing program which leads to improved performance. Coco-Cola is a carbonated soft drink company headquartered in United States. It was introduced in the year 1886. It was intended to be a patent machine; this company was bought out by Asa Griggs Candler. Through his marketing tactics, Coke became a giant Soft-drink company. The company products are sold through license Coca-Cola bottlers. The bottlers basically hold contracts to produce the cold drink and package them in cans and bottles using sweeteners and filtered water (Pendergrast, 2000). They are then sold through merchandise Coco-Cola stores and also through the vending machines. The Company also sells soda fountains to the major restaurants and food service distributors across the world. Currently Muhtar Kent is the Chairman and Chief Executive officer of the company. Answer 2 Seeing the trend we conclude that the price of Coca Cola since its incorporation in 1962 has fallen to Rs. 57.16 and then has risen to Rs. 70.71 in 2012. It shows that that the price level is slowly increasing with each passing day. This shows that the company is performing well. Seeing the trend we can tell that since the initial date of Incorporation in the year 1977, there has been a downward trend in the price level of the stock due to major economic downturn faced by US. From the year 2010 to 2012 the price level has risen. It also shows that the price level is rising and the company is earning profit. Answer 3 Two Major events of PepsiCo In February 2011, PepsiCo acquired two-third stake in Wimm-Bill-Dann Foods. It is a Russian juice producer and Dairy company. Through this PepsiCo increased its stake in the company by 1.37% by buying 601.948 WBD shares. Thus they acquired overall 98.63% stake in the company. PepsiCo had to pay 3.884 roubles per share and also $32.7 per depository receipt. With this acquisition, PepsiCo has expanded their market positioning and hence it has given them a competitive leading position in the market. The share price increased as a result of the acquisition. In February 2012, Indra Nooyi took the decision of restructuring the company by cutting down 8,700 jobs. It equalled to roughly 3% of PepsiCo’s global workforce. This enabled them to increase the amount they allocated to the branding activities. PepsiCo was facing increased costs in their operation. The company first wanted to increase the prices of their products at first. But then they recognized the fact that consumer may not accept the price rise. Hence they started to do the restructuring plan. Pepsi made the tough decisions because they expected that the companies will face higher input cost of the raw materials as compared to other previous years. Indra Nooyi the CEO of PepsiCo said that the reduction will affect over 30 countries. There major reason was that they wanted to increase the allocation towards the branding activities like advertising, marketing etc. They wanted to increase the expenditure from $ 500 million to $ 600 million in the year 2012. Their major focus was on North America, where they wanted to invest about $100 million in displays, storing racks etc.Indra Nooyi pointed out that by doing this restructuring PepsiCo wanted to save about $1.5 billion by 2013. They took this step because of economic uncertainty which ...Show more

Summary

PepsiCo Inc. is an American multinational company which makes food and beverages. It is headquartered in Purchase, New York, United States. It was first developed as Pepsi in 1880s by a pharmacist and industrialist based in New Bern, North Carolina named Caleb Brandham…
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