Dividend stock: PepsiCo, Inc.
And here is the left hand of Coca-Cola. The ugly friend in restaurants which doesn’t seem to get much attention whatsoever.
We like Pepsi’s stock often times even more than we do Coca-Cola’s. There is not much rocket science to learn to understand this internationally powerful company.
It’s a beverage company with very innovative marketing, public relations and advertising, using the most expensive strategies there are to compete with Coke.
At first we just keep in mind that Pepsico, as a company is something that has a very stable and beautiful growth and pays significant sums of dividends to it’s shareholders every year.
But it’s not only beverage that Pepsico manufactures. Having a large chunk of brands underneath, Pepsico is generating more than 40 billion each year worldwide in revenue.
The net revenue makes it the largest food and beverage company in North America and second largest in the entire world.
It started way back in 1898, almost exactly the same way as Coca-Cola company did. A young and full-of-hope pharmacist and a businessman discovered a recipe for a great sugary drink.
However, during the time of the First World War, prices of sugar were fluctuating like never before and that resulted in large damages for the Pepsi-Cola Company. so the founder, Caleb Bradham had to accept bankruptcy.
Soon enough, the company was purchased by a wealthy executive’s holding company and then, by another wealthy executive. And the company thrived during the 20s and 30s.
Later, there had been some fights and suits between the stakeholders in Pepsi-Cola Company so in the end, the corporation was in Loft‘s hands
Now, Pepsi-Cola started seeking new places for enterprise, and their seek was worthwhile. Soviet Russia had just lost it’s dictator Joseph Stalin and was just warming up for the first steps of capitalism with a new leader, future friend of Nixon and Kennedy‘s, Nikita Chruszczhow.
With President Nixon under it’s wing, the head of Pepsi-Cola had asked him to get the leader of Soviet Russia to try Pepsi. And for sure Chruszczhow tried it and liked it very much. This brilliant trick of public relations actually had gotten PepsiCola in business with the Soviets.
But almost 10 years had passed with no progress with the Soviets, because the Russian ruble was worthless compared to the American dollar. Then, Pepsi’s CEO at that time decided to look for ways to trade with Soviets anyway.
So, PepsiCo ended up with one of the largest Navy in the world, tons on Russian vodka to sell and 10 oil tankers that were supposed to be built for them by the Soviets. And then the Soviet Union collapsed. After so much work regaining it’s assets, PepsiCo is still selling Pepsi in Russia till this day. We too have tried the Russian version of it.
Not to mention, the Pepsi-Cola Company had become PepsiCo, Inc after a merger with Frito – Lay in 1965. During the 60s, PepsiCo had also purchased Mountain Dew, which is so widely recognizable these days.
During the 80s and 90s there had been loads of competition with Coca-Cola. 90s was the time when PepsiCo decided to change the branding and cans to fully blue to differentiate a bit more from Coca-Cola. To make their new branding known, PepsiCo even rented a Concorde plane to repaint it and release it for a trip around the planet.
Right at the same time, PepsiCo also became the first company on the planet to shoot a commercial in space. Unfortunately, it never got on the national television or anywhere else because by the time this ad was to be shown, Pepsi had already changed the design of their can.
There have been lots of Pepsi’s advertising stunts, they sometimes even remind us of the endeavors of Red Bull. Latest commercials for Pepsi have not been well-received by the public. Companies like PepsiCo or Gillette should not be using social issues in their commercials.
However, we should also address the PepsiCo’s inner structure, business model and it’s stock, because that’s what we are here for.
PepsiCo’s stock, going under a ticker PEP is:
1) Very old;
2) Likes to grow a lot;
3) Is stable;
4) Pays hefty pefty dividends.
PepsiCo very rarely seems overvalued and is a pretty likable for a specter of investors.
Like Coca-Cola, PepsiCo had acquired many strong and respectable companies over the years. That’s also one of the reasons why it’s revenue comes from 200 or more countries.
Main products owned and sold by PepsiCo:
- Pepsi (Regular, Diet and Zero)
- Mountain Dew
- Frapuccino by Starbucks
- Quaker Oats
- Brisk iced tea
- SevenUp (7up)
- Sierra Mist
As you can see, PepsiCo is deeply involved in manufacturing different salty snacks as well. This is known to bring the company large portion of it’s revenue. Company calculations claim that 1 billion of their products are consumed worldwide every day.
More than $1 billion yearly comes from each one of 23 products. Annual sales of PepsiCo are usually around $68 billion with the help of 267,000 employees worldwide.
Getting back to the mergers and acquisitions it is worth to address most notable ones in the company history. Frito-Lay is what comes to mind immediately when on mentions PepsiCo’s mergers.
This merger had given Pepsi-Cola (name at that time) access to such brands as Doritos, Lay’s and Fritos. It was followed by the purchase of some of the largest restaurant chains in the US: Pizza Hut, Taco Bell, KFC. Then, SevenUp as well. While everyone was panicking during the dotcom crash, PepsiCo was rushing in on some health products like Quaker Oats.
It’s funny that most acquisitions and mergers done by PepsiCo were made during harsh times economically. As mentioned earlier, mergers with companies like Quaker Oats, Seagram Company (Tropicana) were made from 1998 to 2001. During the internet bubble.
In 2008, during the global economic crisis, PepsiCo was trying to rub into the Russian market again, after it’s adventures in the Soviet Union. So Russia finally became the second largest market for PepsiCo. The holding company purchased the largest juice manufacturer in Russia, JSC Lebedyansky.
PepsiCo’s stock is, again, a very stable one and generous with dividends. It has an average daily trading volume of 4.17 million, close to one that Amazon has. And how did we not mention the annual dividend yield which is 3.12% currently?
After buying the stock one gets a largely growing stock itself and plus 3% of compounding interest on it. That is quite impressive when you think about how, say, AT&T pays high dividends but it does not really grow as a stock.
As far as we know, stocks like AT&T are widely used for trading because of it’s quite decent liquidity.
And there have been and are still out there, the Coke Wars. How can we not address that. Regarding the stocks of these 2 giants, Coca-Cola’s all time stock gains are twice as large as PepsiCo’s. There is difference in their popularity, of course.
But, when we actually look at their charts separately, one think that comes to mind is that even though Coke is up about 16,000%, it had actually reached this level back in 1998. People who were buying Coca-Cola’s stock at the beginning of the 21st century and held it, haven’t made any profit for more than 10 years.
Shareholders of Coca-Cola were thriving every year until 1998, and then after the 2008 recession. So it hadn’t been all sunshine and rainbows for Coca-Cola. However, PepsiCo’s shareholders have been making money almost all the time.
Although not that much as those who held Coke.
Only what affected PepsiCo’s investors was the 2008 crash, but it the stock quickly got back on track where it was before and only grew thereafter.
It is difficult to compare both of these stocks and pick one. But Coca-Cola will probably always take the cake.
Let’s now run away from stocks and discuss some interesting growth strategies these soft-drink giants use. Advertisements are one of the things that they are famous for. They are famous for them because they had tried the craziest plots and lines on television, city banners, radio and the internet.
Also, hiring people like Michael Jackson, Britney Spears, building and remaking places and locations like the Coliseum, giving hard time to each other on the city banners and much more out of the box stuff.
The large stunts and advertisement campaigns of PepsiCo had started way back in the 90s when the blue color was introduced in the Pepsi brand. Then the first ever commercial in space followed and the bar was set very high for both of these massive companies.
They were trying to outperform each other in every McDonald’s fast food restaurant and every movie theater. Problems for PepsiCo arose when the black lives matter advert with Kylie Jenner was introduced. Audiences were outraged, so were the broadcasters.
These ads can still be found on Youtube.
To conclude, it has to be said that PepsiCo had, without a doubt, made the world a better place and it doesn’t matter where they are in terms of the war with Coca-Cola.
With so many great products and restaurant chains it holds one of the most respectable positions on in the food and drink industry. Who doesn’t like a can of Mountain Dew, Lay’s chips during a party or most importantly and ironically, Pepsi cola, when Coca-Cola is not around.
Throughout the years, Pepsi has become one of those brands that we can call a cultural phenomenon. It represents friends, our lifestyles, trips and love. Rarely does someone think of Coca-Cola when they see an ad for Pepsi.