Pepsi Corporation History and Major Problems Essay Example

Pepsi Corporation History and Major Problems Essay I. PEPSI CORPORATION HISTORY The Pepsi-Cola story began in a drugstore in New Bern, North Carolina, USA in 1896. Caleb Davis Bradham, a pharmacist, owned a drugstore named Bradham Drug Company in downtown New Bern. Like many of the drug stores at the time, Bradham’s store also housed a soda fountain. Here, Bradham offered his own soda concoctions which attracted most of the small-town folks. On August 28, 1898, Bradham invented a new recipe, blending kola nut extract, vanilla and â€Å"rare oils. This soda drink, initially known as Brad’s Drink, gathered so much popularity not only for its delicious and refreshing taste but people believed it helped them by aiding digestion and boosting their energy. Bradham likened the effect to digestion to the enzyme pepsin, even though it was not used as an ingredient. By combining the terms pepsin and cola, Bradham renamed his recipe Pepsi-Cola. Pepsi’s early growth was less significant than that of Cokes, and its real stre ngth as a competitor to Coke began after became CEO in 1950, a time when Pepsi was nearly bankrupt. Bradham was expected to liquidate the Pepsi-Cola Co. Instead, he made it his goal to beat Coke (, 2003). Pepsi spread to Canada in 1906, and the year after that, it was registered in Mexico. By 1908, Pepsi had upgraded their transportation delivery services from horse-drawn carts to automobiles. Pepsi seemed to be becoming successful in such a short time. But there is still a problem. By the time Pepsi Cola came out, Coke had already made its mark among the public and the newcomer Pepsi found it hard to find a consumer base. In the 1920’s, the company released the ad Drink Pepsi. It will satisfy you. However, despite industrious efforts, the Pepsi Company still fell into bankruptcy due to the fall of the sugar market. After seventeen years of success, Caleb Bradham lost Pepsi Cola. He had gambled on the fluctuations of sugar prices during W. W. I, believing that sugar prices would continue to rise but they fell instead leaving Caleb Bradham with an overpriced sugar inventory. Pepsi Cola went bankrupt in 1923. We will write a custom essay sample on Pepsi Corporation History and Major Problems specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Pepsi Corporation History and Major Problems specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Pepsi Corporation History and Major Problems specifically for you FOR ONLY $16.38 $13.9/page Hire Writer It suffered several years of losses before it was sold to Loft Inc. , a giant candy company. Loft was what Pepsi was waiting for. The company began to regain its former success. 1936 saw the formation of Pepsi Limited of London, and in 1938, the Pepsi logo was trademarked in the Soviet Union. The company sold the drink in 12 oz. bottles and launched the advertising campaign of Twice as Much for a Nickel. In 1993, Pepsi-Cola found itself in a crisis situation when a man in Tacoma, Washington claimed he had found a syringe inside a can of Diet Pepsi. Soon after the story hit the news, claims surfaced all over the country. People claimed to find objects from bullets to crack cocaine vials. Pepsi-Cola knew that the foreign objects had been inserted by people outside the company who had tampered with the product. Pepsi-Cola decided to use a defensive strategy, claiming its innocence in the matter. Proving the company’s innocence would be pivotal in protecting further damage to Pepsi-Cola’s brand name. Pepsi employed a variety of strategies to deal with the problem. PepsiCos India operations were met with substantial resistance in 2003 and again in 2006, when an environmental organization in New Delhi made the claim that, based on its research, it believed that the levels of pesticides in PepsiCo (along with those from rival Coca-Cola Company), exceeded a set of proposed safety standards on soft drink ingredients that had been developed by the Bureau of Indian Standards. PepsiCos usage of water was the subject of controversy in India in the early and mid 2000s in part because of the companys alleged impact on water usage in a country where water shortages are a perennial issue. In this setting, PepsiCo was perceived by India-based environmental organizations as a company that diverted water to manufacture a discretionary product, making it a target for critics at the time. Pepsi-Cola came to the Philippines through John Clarkin, a native of Minnesota, USA, who came with the American forces at the close of World War II. On October 16, 1946, Clarkin acquired a franchise to bottle Pepsi in the Philippines. He consequently founded the Pepsi-Cola Bottling Company of the Philippine Islands Ltd. and became its president and general manager. As of January 2012, 22 of PepsiCos product lines generated retail sales of more than $1 billion each,and the companys products were distributed across more than 200 countries, resulting in annual net revenues of $43. 3 billion. Based on net revenue, PepsiCo is the second largest food beverage business in the world. Within North America, PepsiCo is ranked (by net revenue) as the largest food and beverage business. II. MAJOR PROBLEMS 1. COMPETITORS â€Å"Pepsi’s early growth was less significant than that of Cokes, and its real strength as a competitor to Coke began after someone became CEO in 1950, a time when Pepsi was nearly bankrupt. Bradham was expected to liquidate the Pepsi-Cola Co. Instead, he made it his goal to beat Coke (, 2003). Pepsi spread to Canada in 1906, and the year after that, it was registered in Mexico. By 1908, Pepsi had upgraded their transportation delivery services from horse-drawn carts to automobiles. Pepsi seemed to be becoming successful in such a short time. But there is still a problem. By the time Pepsi Cola came out, Coke had already made its mark among the public and the newcomer Pepsi found it hard to find a consumer base. 2. FINANCIAL PROBLEM/BANKRUPTCY â€Å"In the 1920’s, the company released the ad Drink Pepsi. It will satisfy you. However, despite industrious efforts, the Pepsi Company still fell into bankruptcy due to the fall of the sugar market. After seventeen years of success, Caleb Bradham lost Pepsi Cola. He had gambled on the fluctuations of sugar prices during W. W. I, believing that sugar prices would continue to rise but they fell instead leaving Caleb Bradh am with an overpriced sugar inventory. Pepsi Cola went bankrupt in 1923. 3. PUBLIC RELATIONS CRISIS â€Å"In 1993, Pepsi-Cola found itself in a crisis situation when a man in Tacoma, Washington claimed he had found a syringe inside a can of Diet Pepsi. Soon after the story hit the news, claims surfaced all over the country. People claimed to find objects from bullets to crack cocaine vials. Pepsi-Cola knew that the foreign objects had been inserted by people outside the company who had tampered with the product. Pepsi-Cola decided to use a defensive strategy, claiming its innocence in the matter. Proving the company’s innocence would be pivotal in protecting further damage to Pepsi-Cola’s brand name. Pepsi employed a variety of strategies to deal with the problem. † 4. SAFETY STANDARDS â€Å"PepsiCos India operations were met with substantial resistance in 2003 and again in 2006, when an environmental organization in New Delhi made the claim that, based on its research, it believed that the levels of pesticides in PepsiCo (along with those from rival Coca-Cola Company), exceeded a set of proposed safety standards on soft drink ingredients that had been developed by the Bureau of Indian Standards. 5. WATER USAGE â€Å"PepsiCos usage of water was the subject of controversy in India in the early and mid 2000s in part because of the companys alleged impact on water usage in a country where water shortages are a perennial issue. In this setting, PepsiCo was perceived by India-based environmental organizations as a company that diverted water to manufacture a discretionary product, making it a target for critics at the time. †