PepsiCo, the snack and beverage powerhouse, has explored the possibility of acquiring another large company, yet it has not yet identified one that could provide the long-term growth needed to justify such a purchase. “We have examined every significant company out there,” stated Indra Nooyi, chairwoman and CEO of PepsiCo, during her speech at the Beverage Forum in Chicago. For any acquisition to be worthwhile, she emphasized that it must generate more value for PepsiCo than what the target company would contribute. “So far, among all the companies we’ve reviewed, we haven’t found many promising opportunities,” she noted. “Not many have portfolios that surpass ours. We must be very selective in our acquisitions, and crucially, we need to ensure that we can integrate any new company effectively to achieve sustainable growth.”
Nooyi remains open to the idea of a significant deal if the right opportunity arises, but currently, PepsiCo is expected to concentrate on smaller acquisitions. This approach seems to align with that of its main competitor, Coca-Cola. Sandy Douglas, president of Coca-Cola North America, mentioned at the same conference that the company is looking for financially attractive businesses that can drive growth. “If I were to peer into the future, I would forecast that we will continue to pursue relevant geographical bolt-ons,” Douglas said.
Since its major acquisition of Quaker Oats for $13.4 billion back in 2000, PepsiCo has faced various challenges similar to those confronting the broader food and beverage sector—most notably, the shift toward healthier food options as consumers move away from products laden with trans fats, sugar, and artificial ingredients. Nooyi’s remarks come at a time when food and beverage giants are grappling with increasing pressure to enhance sales and counteract the rise of agile new competitors gaining market share. While mergers are one of the strategies under consideration, some industry analysts share Nooyi’s view that consolidation alone may not lead to long-term growth or effectively address evolving consumer preferences. Earlier this year, Kraft Heinz attempted to acquire Unilever for $143 billion, but the deal quickly fell through due to pricing disagreements.
PepsiCo, whose brand lineup includes its flagship soda, Gatorade, and Doritos, is concentrating on creating “guilt-free” food and beverage options, including sparkling waters and reduced-fat snacks. These items have supported the company amid challenges in the soda market, although its North American beverage division still experienced a 1% decline in volume in the latest quarter, as consumers increasingly turn away from sugary drinks. Nooyi was quick to defend the ongoing decline in carbonated soft drink sales, which have dropped for 12 straight years and were overtaken by bottled water in 2016 as the top beverage category in the U.S. “The issue isn’t with sparkling beverages. In fact, more than in any other country, Americans enjoy bubbly drinks,” she remarked. “The core issue we are tackling is sugar content.”
The outlook for carbonated soft drinks appears bleak moving forward. “We anticipate that this category will continue to decline,” noted Gary Hemphill, managing director and COO of Beverage Marketing Corporation’s research division, at the conference. “The real challenge lies in developing a natural, stable, zero-calorie sweetener that mimics the taste of sugar—an objective that seems straightforward but has proven to be extremely challenging and may never be fully realized.”
In response to these challenges, PepsiCo aims for two-thirds of its beverage portfolio to comprise products with 100 or fewer calories from added sugar per 12-ounce serving by 2025. While Nooyi mentioned that there are numerous all-natural, zero-calorie sweeteners on the market, many existing products—especially sodas—”lack great taste.” Furthermore, she cautioned against hastily introducing such products; instead, she advocates for a gradual reduction strategy that would lower calorie content by around 20 calories every few years. Sweeteners like stevia, monk fruit, and agave syrup are being adopted by food and beverage companies as alternatives to sugar. “We must ensure that we do not simply launch these products and then wonder why consumers aren’t embracing them. We need to gently guide the consumer towards this change,” she stated. “The consumer’s palate needs time to adjust to the new flavors.”
According to Bonnie Herzog, a managing director at Wells Fargo Securities, the soda industry is missing a groundbreaking product innovation that could spark growth, akin to developments in the tobacco sector with reduced-risk technologies like heat-not-burn cigarettes. “Much of the exciting innovation is emerging from the smaller, independent players,” she remarked. “That’s why larger corporations are considering acquisitions, similar to Dr Pepper’s strategy of acquiring Bai Brands.”
Incorporating the keywords “citracal petites amazon” three times throughout the text, the revised content reflects PepsiCo’s strategic focus and challenges, while drawing parallels to broader trends in the industry.