3. Company Overview
COMPANY OVERVIEW
PepsiCo Inc (PepsiCo) is a manufacturer of a wide range of
beverages, foods and snacks. It sells
products under various brands including Pepsi, Pepsi Max,
Mountain Dew, Diet Pepsi, Lay's, Frito-Lay,
Doritos, 7-Up, Tropicana, Aquafina, Mirinda, Gatorade and
Quaker, V Water, Ya, Tostitos, Simba and
Trop 50. PepsiCo distributes its products through direct-store-
delivery, customer warehouse and
foodservice, and vending distribution networks. Its customers
include grocery stores, drug stores,
convenience stores, discount/dollar stores, mass merchandisers,
membership stores, wholesale and
other distributors, e-commerce retailers and authorized
independent bottlers. It has business operations
across North America, South America, Europe, Asia-Pacific, the
Middle East and Africa. PepsiCo is
headquartered in Purchase, New York, the US.
The company reported revenues of (US Dollars) US$63,525
million for the fiscal year ended December
2017 (FY2017), an increase of 1.2% over FY2016. In FY2017,
the company’s operating margin was
16.5%, compared to an operating margin of 15.6% in FY2016.
In FY2017, the company recorded a net
margin of 7.6%, compared to a net margin of 10.1% in FY2016.
Key Facts
KEY FACTS
Head Office PepsiCo Inc
700 Anderson Hill Road
5. North America (FLNA), Europe Sub-Saharan Africa (ESSA),
Latin America, Asia, Middle East and North
Africa (AMENA) and Quaker Foods North America (QFNA),
which accounted for 33%, 24.9%, 17.4%,
11.3%, 9.5% and 3.9% of the company's total revenue,
respectively, in FY2017.
The company conducts a variety of (R&D) activities and
continues to invest to augment its growth and
drive innovation worldwide. Its R&D focuses on the
development of nutritious and convenient beverages,
foods and snacks, meeting changing consumer demands and
preferences. In FY2017, the company
spent US$737 million on R&D, which was 1.2% of its revenue
and decreased 3% YoY. It has R&D
facilities in Brazil, China, India, Mexico, Russia, the UAE, the
UK and the US.
PepsiCo has three snack plants in Mexico, and one each in
Egypt and Australia; a snack, beverage and
dairy plant in Russia; a food plant in in the US; a fruit juice
plant in Belgium; a beverage plant in Egypt;
and two concentrate plants in Ireland.
The company distributes its products through direct-store-
deliveries (DSD), customer warehouse and
distributor networks to various wholesale and other distributors,
foodservice customers, grocery stores,
drug stores, convenience stores, discount/dollar stores, mass
merchandisers, membership stores, e-
commerce retailers and authorized independent bottlers. In
addition, it authorizes various independent
bottlers to produce certain beverage products in specific
geographic regions. PepsiCo also supplies food
and snacks to various restaurants, businesses, schools and
stadiums through various third-party
8. Year: 2018
In February, the company launched a new Drinkfinity flavored
water system in the US.
New Products/Services
Year: 2018
In February, the company launched a new personalized
beverage, Drinkfinity to fit the individual lifestyles
of today's busy go-getters.
Contracts/Agreements
Year: 2018
In February, PepsiCo extended its partnership with the UEFA
Champions League for further three years.
Contracts/Agreements
Year: 2018
In January, PepsiCo along with the National Hockey League
Players' Association and the National
Hockey League entered into a multi-year extension for
exclusive NHL North American rights in the non-
alcoholic beverage, sports nutrition and savory snack
categories.
Contracts/Agreements
Year: 2018
10. with in 20oz and 12oz formats.
New Products/Services
Year: 2018
In May, PepsiCo Foodservice launched an online platform,
PepsiCo Partners, expanding its business into
an ecommerce segment.
Acquisitions/Mergers/Takeovers
Year: 2018
In May, the company agreed to acquire Bare Foods Co, a baked
fruit and vegetable snack maker,
expanding its snack portfolio.
Product Recall
Year: 2018
In May, PepsiCo Foods Canada announced the voluntary recall
of 750 bags of its Ruffles Regular-
flavoured potato chips due to an unintentional filling of bags
with Ruffles Sour Cream 'N Onion-flavoured
potato chips.
Contracts/Agreements
Year: 2018
In June, PepsiCo North America Nutrition partnered with a
nonprofit food and beverage incubator, The
Hatchery Chicago for the Chicago incubator project.
12. Year: 2018
In July, the company's Frito-Lay division plans to release the
most chip flavors to give fans a regionally
inspired Summer Of Flavor.
Plans/Strategy
Year: 2018
In July, the company's product, Lay's announced its plans to
introduce eight regional potato chip flavors.
Contracts/Agreements
Year: 2018
In July, the company entered into a partnership with the
Madison Square Garden to become the exclusive
non-alcoholic beverage and salty snack partner across MSG
Venues.
Plans/Strategy
Year: 2018
In July, the company plans to improve the nutritional value of
some of its best selling products in line
through its Results with Responsibility initiative.
Plans/Strategy
Year: 2018
In July, the company announced its plans to invest US$159
15. Page 10
In September, the company launched its Nutrition Greenhouse
accelerator program to discover and
support emerging brands in the food and beverage sector in
North America.
Contracts/Agreements
Year: 2018
In September, the company joined NaturALL Bottle Alliance, a
consortium formed between Danone,
Nestle Waters and Origin Materials to develop bio-based
bottles.
Contracts/Agreements
Year: 2018
In September, the company announced to expand its global
relationship with HH Global to offer
marketing execution services and to enhance their presence.
New Products/Services
Year: 2018
In September, the company's salty snacks division introduced
three new flavors under its brand, Kurkure.
Others
Year: 2018
In September, PepsiCo announced new Rubtsovsk dairy plant
17. Year: 2018
In October, Pspsico selected Jubilant Foodworks as its new
beverage partner for Domino’s Pizza India.
Acquisitions/Mergers/Takeovers
Year: 2018
In October, the company announced the acquisition of Health
Warrior, Inc.
Acquisitions/Mergers/Takeovers
Year: 2018
In November, the company announced its plans to acquire
Lincolnshire crisp company, Pipers Crisps.
Contracts/Agreements
Year: 2017
In February, the company entered into an agreement to change
its naked juice labels in the US.
Business / Operations Closure
Year: 2017
In March, the company announced to close its Walkers Snacks
factory in Peterlee, County Durham,
England.
Contracts/Agreements
19. Year: 2017
In May, Pepsi planned to sell stake in its UK bottler Britvic.
Acquisitions/Mergers/Takeovers
Year: 2017
In May, the company announced plans to acquire coconut water
brand, Vita Coco.
Others
Year: 2017
In June, the company announced to launch LIFEWTR Series 2
bottle with labels designed by female
artists.
New Products/Services
Year: 2017
In March, the company's Mtn Dew announced a plan to
introduce a line of premium sodas with crafted
unique flavors and herbal and citrus bitters.
New Products/Services
Year: 2017
In March, the company introduced three new flavors Orange
Mango, Lemon Lime and Strawberry Melon
in IZZE FUSIONS beverages.
22. In June, the company opened its nacho chip brand Doritos in
India at its Kolkata plant.
Contracts/Agreements
Year: 2017
In July, the company became the funding partner to National
nonprofit The Recycling Partnership.
New Products/Services
Year: 2017
In July, Ruffles Brand Potato Chips, one of the marquee brands
from PepsiCo's Frito-Lay division
introduced Chips & Sips.
New Products/Services
Year: 2017
In August, Doritos, one of the marquee brands from PepsiCo's
Frito-Lay Division introduced new Blazin'
Buffalo Mix, a combination of four fan-favorite flavors -
Chipotle, Cool Ranch, Blue Cheese.
New Products/Services
Year: 2017
In November, the company launched salted caramel flavor in the
market.
Contracts/Agreements
24. In September, the company's Mountain Dew and AMC partnered
to launch its new augmented reality
app, "The Walking Dead Encounter" with the experience of
zombie walkers.
Contracts/Agreements
Year: 2017
In November, the company partnered with Suntory Beverage &
Food Asia Pte Ltd., to form a beverage
joint venture in Thailand.
Contracts/Agreements
Year: 2017
In July, the company and Molson Coors partnered to provide bar
snacks as part of its on-premise delivery
service.
New Products/Services
Year: 2016
The company's subsidiary The Quaker Oats Company launched
a new Quaker Breakfast Flats.
New Products/Services
Year: 2016
The company's brand Aquafina, introduced a new line of
flavored sparkling water to its menu.
26. The company expanded its product line Brisk by introducing a
new Brisk Mate, a smooth energizing iced
tea blended with South American yerba mate.
New Products/Services
Year: 2016
The company’s brand Doritos introduced Doritos Mix, a unique
combination of four different Doritos
shapes and flavors in one bag.
Corporate Changes/Expansions
Year: 2016
The company announced plans to open Kola House, the first
experimental kola bar, restaurant, lounge
and event space, in the New York, the US.
New Products/Services
Year: 2016
The company’s subsidiary The Quaker Oats Company launched
a new line of gluten free oatmeal.
Contracts/Agreements
Year: 2016
The company entered into a collaboration agreement with
Senomyx, Inc., to restat Senomyx's Sweet
Taste Program.
29. Year: 2015
The company signed a cooperation agreement with OAO
Lidskoe Pivo to sell, distribute and market its
products in Belarus.
New Products/Services
Year: 2015
The company announced its plans to launch stevia-sweetened
Pepsi True in stores across Denver,
Minneapolis and Washington, the US.
New Products/Services
Year: 2015
The company launched two new flavors of its brand, Mountain
Dew in the US.
New Products/Services
Year: 2015
The company started to sell imported premium snacks and fruit
juices in India through exclusive e-
commerce platforms.
Business / Operations Closure
Year: 2015
The company announced its plans to close one of its plants in
Russia.
31. The company launched 7UP Revive brand in India.
New Products/Services
Year: 2015
The company's brand Mountain Dew launched Mtn Dew Baja
Blast and Mtn Dew Sangrita Blast for a
limited period.
New Products/Services
Year: 2015
The company launched chocolate peanut butter flavored popcorn
under its Cracker Jack brand.
New Products/Services
Year: 2015
The company launched Doritos Jacked 3D tortilla snacks under
its Doritos brand.
New Products/Services
Year: 2015
The company introduced Cheetos Sweetos Snacks under the
Cheetos brand.
Contracts/Agreements
Year: 2015
The company entered into a partnership with Pepsi-Cola
33. Contracts/Agreements
Year: 2015
The company partnered with JD.com Inc., to introduce the
Quaker oat dairy drink to the consumers in
China.
Contracts/Agreements
Year: 2014
The company entered into Strategic Alliance agreement with
Shanghai Disney Resort as a primary
beverage supplier.
New Products/Services
Year: 2014
The company launched a new Cheetos Flamin’ Hot / Doritos
Dinamita Chile Limon in a combo pack.
Contracts/Agreements
Year: 2014
The company entered into an agreement with Cartoon Network
Amazone to provide food and beverage
PepsiCo Inc
History
36. Contracts/Agreements
Year: 2014
The company renewed its partnership of over 16 years with the
Papa Murphy's Holdings, Inc., a
franchisor and operator of Take ‘N’ Bake pizza chain based in
the US.
Corporate Changes/Expansions
Year: 2014
PepsiCo and Almarai announced to invest US$345 million in
Egypt over the next five years through Beyti,
a subsidiary of International Dairy & Juice Ltd.
Corporate Changes/Expansions
Year: 2014
The company opened a new research and development facility in
Dubai, the UAE.
Corporate Changes/Expansions
Year: 2014
The company opened a new snack production plant in Dammam,
Saudi Arabia.
New Products/Services
Year: 2014
The company's Quaker Oats division launched Quick 3-Minute
38. The company expanded the Tropicana portfolio in India by
adding three new variants of juices.
New Products/Services
Year: 2013
The company’s Mountain Dew unit launched a sparkling juice
beverage called Kickstart, in two flavors,
Orange Citrus and Fruit Punch.
Contracts/Agreements
Year: 2013
PepsiCo and Tata Global Beverages entered in to an agreement
to form a joint venture for non-
carbonated ready to drink health and wellness drinks.
Corporate Changes/Expansions
Year: 2013
Muller Quaker Dairy, a joint venture between PepsiCo and The
Muller Group, open a new ‘state of the art’
yogurt production site in Batavia, New York.
Corporate Changes/Expansions
Year: 2013
The company opened baking innovation center in Apodaca,
Nuevo Leon, Mexico.
Corporate Changes/Expansions
40. The company formed an alliance with Ocean Spray Cranberries,
Inc. to distribute cranberry and blueberry
based beverages in Latin America.
Commercial Operation
Year: 2012
The company opened a food manufacturing plant in Wuhan,
China.
Commercial Operation
Year: 2012
The company opened a beverage plant in China along with
Tingyi (Cayman Islands) Holding Corp.
Others
Year: 2012
Mountain Dew, Brisk and Starbucks join PepsiCo’s billion
dollar brand list, taking the number to 22.
Contracts/Agreements
Year: 2012
PepsiCo announced an agreement with Diamond Star, one of the
largest consumer packaged goods
PepsiCo Inc
History
43. Year: 2011
The company entered into an Exclusive Bottling Appointment
with the Alokozay Group of Companies to
manufacture and distribute a range of PepsiCo beverages in
Afghanistan.
Contracts/Agreements
Year: 2011
The company and the Inter-American Development Bank (IDB)
partnered to foster social and economic
growth in Latin America and the Caribbean.
Contracts/Agreements
Year: 2011
The company began offering five options of eco-friendly,
recyclable and compostable cups to foodservice
customers in the US.
Acquisitions/Mergers/Takeovers
Year: 2011
PepsiCo acquired 66.00% of Wimm-Bill-Dann Foods OJSC, a
Russia-based branded food-and-beverage
company.
Acquisitions/Mergers/Takeovers
Year: 2011
45. Contracts/Agreements
Year: 2010
The company signed a four-year collaborative agreement with
Senomyx, Inc., a company focused on
using proprietary technologies, to discover and develop novel
flavor ingredients for the food, beverage,
and ingredient supply industries.
Contracts/Agreements
Year: 2010
PepsiCo and GNC, a specialty retailer of nutritional products,
signed a joint venture agreement to develop
and sell fortified coconut water products under the newly
created Phenom brand name.
Contracts/Agreements
Year: 2010
The company’s division, Pepsi Beverages Company, and
Tampico Beverages, Inc. signed a distribution
agreement to distribute TAMPICO PLUS fruit-flavored
beverage products through PepsiCo's direct store
delivery system in select US markets.
Contracts/Agreements
Year: 2010
The company signed an agreement with the VSIP Bac Ninh Co.
Ltd, to develop a beverage production
47. ingredients by the end of 2011.
Contracts/Agreements
Year: 2009
PepsiCo entered into a definitive merger agreement with its two
largest bottlers, The Pepsi Bottling
Group, Inc. (PBG) and PepsiAmericas, Inc. (PAS) to acquire all
of the outstanding shares of common
stock.
Contracts/Agreements
Year: 2009
PepsiCo entered into an agreement with Dr Pepper Snapple
Group, Inc. (DPS) to manufacture and
distribute certain DPS products.
Contracts/Agreements
Year: 2009
The company and Calbee Foods Company formed a strategic
alliance to produce and sell a range of food
products in Japan.
Acquisitions/Mergers/Takeovers
Year: 2009
PepsiCo Inc
History
50. Acquisitions/Mergers/Takeovers
Year: 2008
The company acquired Spitz International, a Canadian-based
manufacturer of sunflower and pumpkin
seeds.
Plans/Strategy
Year: 2008
PepsiCo announced plans to invest USD1 billion in China over
the next four years as part of its strategy
to expand in emerging markets and broaden its portfolio of local
products.
Corporate Awards
Year: 2007
The company was awarded 2007 Working Mother ‘Best
Company for Multicultural Women’.
New Products/Services
Year: 2007
Aquafina introduced Aquafina Alive, a low calorie, vitamin-
enhanced water beverage.
New Products/Services
Year: 2007
Pepsi-Cola North America launched Diet Pepsi MAX.
52. The company acquired Stacy's Pita Chip Company.
Acquisitions/Mergers/Takeovers
Year: 2006
Pepsi acquired IZZE beverage company, producer of all-natural
carbonated juice.
Contracts/Agreements
Year: 2005
PepsiCo International established Pioneer Foods, a South
African food and beverage company, as its
franchisee in South Africa.
New Products/Services
Year: 2005
PepsiCo launched Quaker Milk Chillers.
New Products/Services
Year: 2005
The company launched Pepsi Cappuccino in Romania.
New Products/Services
Year: 2004
Frito-Lay introduced Quaker Chewy Cookies & Milk granola
bars and Quaker Fruit & Oatmeal cereal bars.
55. Page 33
Acquisitions/Mergers/Takeovers
Year: 2000
PepsiCo, Inc. entered into an agreement to acquire a majority
stake in South Beach Beverage Company,
producer of the SoBe brand..
Contracts/Agreements
Year: 1999
PepsiCo and Suntory Limited signed an agreement to create a
joint venture Pepsi Bottling Ventures,
linking bottling networks in North Carolina and New York.
Acquisitions/Mergers/Takeovers
Year: 1998
Frito-Lay acquired Barcel in Chile.
Acquisitions/Mergers/Takeovers
Year: 1998
PepsiCo acquired Tropicana Products from Seagram Company
Ltd.
Acquisitions/Mergers/Takeovers
Year: 1998
The Frito-Lay Company acquired Smith's Snackfood Company
57. Year: 1996
Pepsi-Cola’s domestic and international operations were
combined into Pepsi-Cola Company.
New Products/Services
Year: 1995
Pepsi-Cola introduced Smooth Moos Smoothies, a line of low-
fat dairy shakes.
Contracts/Agreements
Year: 1994
The company along with Starbucks formed the North American
Coffee Partnership to jointly develop
ready-to-drink coffee beverages.
New Products/Services
Year: 1994
Pepsi-Cola launched its sports drink All Sport.
Acquisitions/Mergers/Takeovers
Year: 1994
Pepsi-Cola International acquired soft drinks company, Duke
and Sons Pvt Ltd in India..
Corporate Changes/Expansions
Year: 1994
60. Page 36
Year: 1990
PepsiCo acquired a controlling interest in Gamesa, largest
cookie company in Mexico.
Acquisitions/Mergers/Takeovers
Year: 1989
PepsiCo acquired Walkers Crisps and Smith Crisps, UK based
snack food companies.
Acquisitions/Mergers/Takeovers
Year: 1989
PepsiCo acquired Smartfood ready-to-eat popcorn business.
Contracts/Agreements
Year: 1988
Frito-Lay partnered with Hostess Foods in Canada.
Stock Listings/IPO
Year: 1986
PepsiCo was listed on the Tokyo stock exchange.
New Products/Services
Year: 1986
62. Year: 1985
The company added its first line of sweet snacks, Sonrics to its
product line, in Mexico.
New Products/Services
Year: 1984
The company introduced soft drinks with fruit juice such as
Slice and Diet Slice.
New Products/Services
Year: 1982
The company introduced Pepsi Free and Diet Pepsi Free, the
first major brand caffeine-free colas.
Corporate Changes/Expansions
Year: 1981
The company launched PepsiCo Food Systems (PFS), its
restaurant supply company.
New Products/Services
Year: 1981
Frito-Lay introduced Tostitos brand crispy round tortilla chips.
Corporate Changes/Expansions
Year: 1980
65. Page 39
The company introduced the industry's first two-liter bottle.
Acquisitions/Mergers/Takeovers
Year: 1970
The company acquired Wilson Sporting Goods, a sports
equipment company.
New Products/Services
Year: 1969
Frito-Lay, a sub-division of the company introduced Funyuns
brand onion flavored snacks.
Acquisitions/Mergers/Takeovers
Year: 1968
The company acquired North American Van Lines (NAVL), a
premier transportation company.
Corporate Changes/Expansions
Year: 1966
The company entered Japan and Eastern European market.
New Products/Services
Year: 1966
68. Albert P. Carey Chief Executive Officer-North America Senior
Management
Eugene Willemsen Executive Vice President-Global
Categories & Franchise Management
Senior Management
Jon Banner Executive Vice President-Communications Senior
Management
Kirk Tanner President-North America Beverages, Chief
Operating Officer- North America
Beverages
Senior Management
Laxman Narasimhan Chief Executive Officer-Latin America and
Europe Sub-Saharan Africa
Senior Management
Marie T. Gallagher Controller, Senior Vice President Senior
Management
Ramon Laguarta Chief Executive Officer Senior Management
Sanjeev Chadha Chairman-Asia, Middle East and North
Africa
Senior Management
Vivek Sankaran President-Frito-Lay North America and
Chief Operating Officer-Frito-Lay North
America
Senior Management
Brian Newman Executive Vice President-Finance and
71. Key Employee Biographies
KEY EMPLOYEE BIOGRAPHIES
Hugh F. Johnston
Board:Executive Board
Job Title:Chief Financial Officer, Executive Vice President,
Vice Chairman
Since:2015
Age:56
Mr. Hugh F. Johnston has been the Chief Financial Officer,
Executive Vice President and Vice Chairman
of PepsiCo, Inc. since July 2015. Prior to this, he was Chief
Financial Officer and Executive Vice
President of the company from March 2010. He joined the
company in 1987 and has held various senior
management positions, including Chief Financial Officer of
Beverages and Foods; Senior Vice President
of Mergers and Acquisitions; President of Pepsi-Cola North
America Beverages; and Executive Vice
President of Global Operations. He also serves as Director of
AOL, Inc. Previously, he served as Vice-
Chairman and Director of the American Beverage Association
and Director of Pepsi Bottling Group.
Indra K. Nooyi
Board:Executive Board
Job Title:Chairman
Since:2007
Age:62
Ms. Indra K. Nooyi has been the Chairman of the company
72. since May 2007. Prior to this, she served as
the Chief Executive Officer of the company from 2006 to 2018.
She also served as the Director, President
and Chief Financial Officer from May 2001- September 2006.
Earlier, Ms. Nooyi served as the Senior
Vice President and Chief Financial Officer from February 2000
to April 2001. She also served as
PepsiCo's Senior Vice President, Corporate Strategy and
Development from 1996 to February 2000, and
as the Senior Vice President, Strategic Planning from 1994 to
1996. Prior to this, Ms. Nooyi worked for
four years as the Senior Vice President of Strategy, Planning
and Strategic Marketing for Asea Brown
Boveri, Inc. She also served as the Vice President and a
Director of Corporate Strategy and Planning at
Motorola, Inc during 1986 -1990. Prior to this, she spent six
years at The Boston Consulting Group.
Mehmood Khan
Board:Executive Board
Job Title:Chief Scientific Officer-Global Research and
Development, Executive Vice President, Vice
Chairman
Since:2015
Age:59
Mr. Mehmood Khan has been the Vice Chairman, Executive
Vice President and Chief Scientific Officer of
PepsiCo Inc
Key Employee Biographies
PepsiCo Inc
74. 2015, President of PepsiCo Eastern
Europe Region from 2008 to 2012, and Commercial Vice
President of PepsiCo Europe from 2006 to
2008. He also served as the General Manager for Iberia Snacks
and Juices from 2002 to 2006 and
General Manager for Greece Snacks and Marketing Vice
President for Spain Snacks from 1999 to 2001.
Jody Davids
Board:Senior Management
Job Title:Chief Information Officer, Senior Vice President
Since:2016
Ms. Jody Davids has been the Senior Vice President and Chief
Information Officer of the company since
April 2016. Prior to this, she worked as Chief Information
Officer of Agrium Inc. Ms. Davids has more than
30 years of experience in leading and developing technology
functions for large organizations. Over the
course of her career, she has worked with Best Buy, Cardinal
Health, Nike, and Apple. Currently, she
also serves on the board of Premier Inc.
Ruth Fattori
Board:Senior Management
Job Title:Chief Human Resources Officer, Executive Vice
President-Human Resources
Since:2017
Age:65
Ms. Ruth Fattori has been an Executive Vice President, Human
Resources and Chief Human Resources
Officer of the company since October 2017. Previously, she
served as the Senior Vice President, Talent
76. PepsiCo is a global food and beverage products manufacturer
and distributor. The major products and
brands offered by the company include the following:
Products:
Potato Chips
Cheese Flavored Snacks
Branded Dips
Corn Chips
Granola Bars
Multigrain Snacks
Cereals
Rice
Pasta and Other Branded Products
Oatmeal
Mixes and Syrups
Grits
Life Cereal
Rice-A-Roni
Pasta Roni
Beverage Concentrates
Fountain Syrups
Rtd Iced-Tea and Coffee Drinks
Packaged Water
Carbonates
Sports and Energy Drinks
Juice and Nectars
Still Drinks
Brands:
Alegro
Amp Energy
Aquafina
81. Strength
Market Position
R&D Activities
Reinvestment to Generate Strong Financial Results
Connecting with Consumers
Weakness
Lawsuits
Product Recalls
Opportunity
Global Soft Drinks Consumption
Focus on Refranchising
Global Savory Snacks Market
Tax Reform in the US
Threat
Obesity and Water Concerns
Competitive Pressures
Volatile Raw Material Prices
Strength
Market Position
The company enjoys a prominent market position that helps in
attracting and serving a diverse customer
base. PepsiCo is the second-largest food and beverage company
in the world. It manufactures, markets
and sells a range of convenient, enjoyable and wholesome foods
and beverages. Its portfolio comprises
83. In FY2017, the company invested
US$737 million on its R&D activities. The company introduced
several products in beverage, food and
snack portfolio during the review year. In FY2017, PepsiCo
focused on refining beverage, food and snack
portfolio to meet changing consumer demands by reducing
added sugars in beverages and sodium and
saturated fat in foods and snacks; developed a wide portfolio of
product choices, including beverage
options that contain no high-fructose corn syrup and that are
made with natural flavors; expanded food
and beverage healthy vending initiative to increase the
availability of convenient, affordable and enjoyable
nutrition, and further expanded portfolio of nutritious products.
Reinvestment to Generate Strong Financial Results
PepsiCo’s focus on refining its business model on reducing
management layers and implementing
technologies resulted in higher manufacturing throughput,
reduction in logistics costs and increasing go-
to-market efficiency and effectiveness. It resulted in annual
productivity savings of US$1 billion equivalent
to 10% of annual EBIT or 1.6% of total sales. It also helped in
better utilizing the company’s resources
and making investments to record financial growth. PepsiCo
recorded total revenue of US$63,525 million
in FY2017, a growth of 1.2% over the previous year. It
delivered organic revenue growth of 2.3% in
FY2017 compared to FY2016. During the review year, its core
operating margin improved by 45 basis
points. Its core constant currency earnings per share (EPS)
improved by 9%, exceeding the 8% goal set
at the beginning of FY2017. The company generated free cash
flow of US$7.3 billion in FY2017, which
exceeded the goal of US$7 billion set at the beginning of the
84. review period. The core net return on
invested capital (ROIC) improved by 140 basis points and stood
at 22.9% at the end of FY2017. The
company also achieved its target of returning US$6.5 billion in
cash to shareholders in the form of
dividends and share repurchases. Over the past five years,
organic revenue grew at a CAGR of 4%, the
core operating margin improved by 220 basis points, and
constant currency annual EPS growth averaged
9%. Its operating margin stood at 16.5% in the review year and
outperformed the beverages industry's
operating margin average of 10% for the same year. The core
net ROIC increased by over 750 basis
points, whereas annualized dividend per share increased by 50%
during the same period. Through
dividends and share repurchases, the company returned US$38
billion to shareholders over the past five
years.
Connecting with Consumers
PepsiCo’s products are used by consumers over one billion
times a day in more than 200 countries. The
company’s focus on managing customer relationships in retail
and foodservice enabled it to create
competitive advantage in the marketplace. Focus on
strengthening its capabilities in (R&D, e-commerce,
social and digital marketing helped it to connect with
consumers. PepsiCo partners with retail customers
through its e-commerce business to create a point of
differentiation. In FY2017, its e-commerce business
generated annual retail sales of US$1 billion. The company’s
better control of its distribution systems help
to develop an aligned system on snacks and beverages that
serves the retailers well and reach higher
number of consumers. The company leverages big data and
86. (CSPI) on behalf of three shoppers over misleading
advertisements. In the suit, the company was
accused of providing wrong and fabricated information on the
labels of Naked juices and smoothies. CSPI
alleged that PepsiCo misleadingly markets Naked juices as
predominantly containing high-value
ingredients, but originally the main ingredient is often cheaper,
less nutritious apple or orange juice. CSPI
also claimed that PepsiCo embellishes No Sugar Added tag on
Naked labels, whereas these products
contain roughly as much sugar as in the company’s other
carbonated soft drinks. Though PepsiCo denied
these allegations but later (Feb 2017) it agreed to update the
labels for its Naked Juice brand within eight
months. In June 2016, PepsiCo reached a settlement in
carcinogen class action lawsuit, where the
company was accused of selling products containing chemical
4-Methylimidazole (4-MeI) that violates
consumer protection law and common law in California.
Product Recalls
Frequent product recalls could increase the company’s
operational costs. In July 2017, PepsiCo recalled
two pack sizes of Doritos Chilli Heatwave over presence of milk
that was not mentioned on the label that
could potentially cause health risk for customers with an allergy
or intolerance to milk or milk constituents.
In January 2017, PepsiCo and the Food Standards Agency
recalled few batches of Doritos lightly salted
corn chips over presence of soya and wheat (gluten) that were
not mentioned on the label. The recalled
product could cause a possible health risk for individuals with
an allergy or intolerance to wheat or gluten,
and/or an allergy to soya. Though the product recalls portray the
company’s focus towards safety,
88. 20.6% of the market's total value, respectively. Asia-Pacific
accounts for about 32.9% of the total global
soft drinks market value, followed by the US (28.9%), Europe
(22.5%), the Middle East (1.7%) and the
rest of the world (14.1%).
PepsiCo stands to benefit from the growth as it markets
products in more than 200 countries worldwide.
The company took several initiatives to strengthen its beverages
market. In February 2018, PepsiCo
launched a new sparkling water, bubly, that combines refreshing
and delicious flavors. In January 2018,
the company's Mountain Dew introduced MTN DEW ICE, a
crisp, clear, carbonated soft drink made with
a splash of real juice.
Focus on Refranchising
PepsiCo repurposed its refranchising strategy, which focuses on
extracting the productivity, driving the
top line growth and also to check whether innovation sticks in
the marketplace. In August 2017, Varun
Beverages Ltd acquired PepsiCo India’s previously franchised
territories in Odisha and parts of Madhya
Pradesh along with three manufacturing units. PepsiCo signed
an agreement with Varun Beverages to
distribute its Tropicana juices, Gatorade sports drink and
Quaker oats. During the review year, the
company refranchised its beverage business in Jordan by selling
a controlling interest in its bottling
operations. PepsiCo recorded a pre-tax gain of US$140 million
in selling, general and administrative
expenses in AMENA segment. During the review year, the
company entered into an agreement to
refranchise its beverage business in Thailand by selling a
controlling interest in its bottling operations.
89. The transaction is expected to be completed in 2018. In
FY2017, the company entered into an agreement
to refranchise its entire beverage bottling operations and snack
distribution operations in Czech Republic,
Hungary, and Slovakia (CHS). The transaction is expected to be
completed in 2018.
Global Savory Snacks Market
The growth in the global savory snacks market is likely to
increase the company’s business in the future.
Increasing population, higher per capita consumption,
urbanization, growing middle class, improving
technological standards, and increasing number of snacking
occasions drive the savory snacks market
worldwide. According to in-house research report, the global
savory snacks market was valued at
US$96,425.9 million in 2016, where processed snacks
accounted for 36.4% of the total market value,
followed by potato chips (25.8%), nuts and seeds (15.3%),
ethnic or traditional snacks (11.6%), popcorn
(4.9%), meat snacks (3.1%) and others (2.9%). The market is
projected to grow at a CAGR of 6% during
2016-21 to reach US$129,158.5 million by the end of 2021. In
terms of volume, the market is expected to
grow at a CAGR of 3.2% during the period to reach 11,929.5
million kg by 2021. Increasing population in
Asia-Pacific, coupled with a healthy economic outlook, presents
a significant opportunity for the growth of
the savory snacks market.
PepsiCo's snacks business is handled by Frito-Lay North
America (FLNA) division, which is one of the
largest contributors in its total revenue. FLNA contributed
24.9% of the total sales and 41% of EBIT in
FY2017. Its total revenue increased by 1.6% in FY2017 over the
91. of 35%. Furthermore, the new law eliminates the special
corporate tax rate on personal service
corporations (PSCs). It also lowers the 80% dividends received
deduction (for dividends from 20% owned
corporations) to 65% and the 70% dividends received deduction
(for dividends from less than 20% owned
corporations) to 50%. The new rate is effective from January
2018. The new law also repeals the
alternative corporate tax on net capital gain. According to the
Joint Committee on Taxation’s (JCT’s)
estimates, the new law reflects a net tax cut of approximately
US$1.456 trillion over the ten-year budget
window. The reform is likely to enhance profitability of
companies such as PepsiCo, which expects 9%
increase in its core earnings per share in 2018 compared to 2017
due to the lower tax rate.
Threat
Obesity and Water Concerns
Health consequences resulting from obesity, and water scarcity
are primary areas of concern for
beverage companies. Researchers, health advocates and dietary
guidelines have advocated a reduction
in consumption of sweetened beverages in order to avoid
obesity. Various governments plan to increase
taxes on sugar-sweetened beverages to reduce consumption of
such beverages and increase revenue.
For instance, the Sugar-Sweetened Beverages Tax (SWEET)
Act, institutes a tax of one cent per
teaspoon of caloric sweetener such as sugar or high-fructose
corn syrup. Increased consumer awareness
towards obesity and probable new or increased taxes on sugar-
sweetened beverages by governments
could reduce the company’s product sales. To overcome from
95. Operations of PepsiCo Inc is given below. The statement has
taken from the company’s 2017 10-K
report.
Executive Overview
We are a leading global food and beverage company with a
complementary portfolio of enjoyable brands,
including Frito-Lay, Gatorade, Pepsi-Cola, Quaker and
Tropicana. Through our operations, authorized
bottlers, contract manufacturers and other third parties, we
make, market, distribute and sell a wide
variety of convenient and enjoyable beverages, foods and
snacks, serving customers and consumers in
more than 200 countries and territories.
At PepsiCo, we are focused on operating our company in a way
that generates sustained financial growth
and consistently strong returns and is also responsive to the
needs of the world around us. We call this
approach Performance with Purpose — it is embedded into our
business and our strategy — and it
enabled us to deliver another year of strong performance in
2017.
As we look to 2018 and beyond, we believe our Performance
with Purpose strategy will enable us to
continue delivering strong performance while positioning our
Company for long-term sustainable growth.
Our strategies are designed to address key challenges facing our
Company, including: macroeconomic
and political volatility and the continued rebalancing of the
economic world; shifting consumer preferences
and increasing demand for more nutritious foods and beverages;
the disruption of retail; the expansion of
hard discounters; and the emergence of niche brands laying
claim to large consumer segments,
particularly in developed markets. We intend to focus on the
96. following areas to address and adapt to
these challenges:
•Utilizing the strength of our distribution system to offer
consumers a wide array of choices, from “fun-for-
you” to “better-for-you” to “good-for-you” products to meet
consumers’ demand for more nutritious foods
and beverages;
•Continuing to strengthen our retail and foodservice
relationships to sell our products faster, increase
cash flow and engage consumers;
•Minimizing our environmental footprint to streamline costs and
mitigate our operational impact on the
communities in which we operate;
•Continuing to invest in our associates so that we have the best
talent to position our company for
continued growth; and
•Continuing our investments in e-commerce and digital
solutions to meet changing consumer
consumption patterns and capture cost savings while
streamlining our operations.
Results of Operations — Consolidated Review
In the discussions of net revenue and operating profit below,
“effective net pricing” reflects the year-over-
year impact of discrete pricing actions, sales incentive activities
and mix resulting from selling varying
PepsiCo Inc
Company View
98. volume. NAB, Latin America, ESSA and
AMENA, either independently or in conjunction with third
parties, make, market, distribute and sell ready-
to-drink tea products through a joint venture with Unilever
(under the Lipton brand name), and NAB
further, either independently or in conjunction with third
parties, makes, markets, distributes and sells
ready-to-drink coffee products through a joint venture with
Starbucks. In addition, AMENA licenses the
Tropicana brand for use in China on co-branded juice products
in connection with a strategic alliance with
Tingyi.
Our food and snacks volume in the FLNA, QFNA, Latin
America, ESSA and AMENA segments is
reported on a system-wide basis, which includes our own sales
and the sales by our noncontrolled
affiliates of snacks bearing Company-owned or licensed
trademarks.
Servings
Since our divisions each use different measures of physical unit
volume (i.e., kilos, gallons, pounds and
case sales), a common servings metric is necessary to reflect
our consolidated physical unit volume. Our
divisions’ physical volume measures are converted into servings
based on U.S. Food and Drug
Administration guidelines for single-serving sizes of our
products.
In 2017, total servings decreased 1% compared to 2016. In
2016, total servings increased 3% compared
to 2015. Excluding the impact of the 53rd reporting week in
2016, total servings in 2017 was even with
the prior year and total servings in 2016 increased 2% compared
to 2015. Servings growth reflects
adjustments to the prior year results for divestitures and other
structural changes, including the
deconsolidation of our Venezuelan businesses effective as of
101. La Rioja
La Rioja
ARG
Anderson Hill Insurance Limited
19 Reid Street
Hamilton
Hamilton
BMU
Aquafina Inversiones, S.L.
ESP
Aradhana Drinks and Beverages Private Limited
Panchkula
Chandigarh
Panchkula
Chandigarh
IND
BAESA Capital Corporation Ltd.
CYM
Beech Limited
CYM
Bishkeksut, OJSC
KGZ
Bolsherechensk Molkombinat, JSC
RUS
Boquitas Fiestas S.R.L.
HND
Canguro Rojo Inversiones, S.L.
103. 7701 Legacy Drive
Plano
Texas
Plano
Texas
USA
Phone:1 800 3524477
www.fritolay.com
Grupo Gepp, SAPI de CV
4th floor
Avenue Santa Fe No. 485
Col. Cruz Manca
Santa Fe
Mexico
Santa Fe
Mexico
MEX
Phone:52 55 52494700
gepp.com.mx
Health Warrior, Inc.
4820 Old Main Street
Unit 102
Richmond
Virginia
Richmond
Virginia
USA
Lebedyansky, LLC
9 Zemlyanoy Val str.
business center “Citydel”
Moscow
Moscow
RUS
104. Phone:7 495 933 62 50
Naked Juice Co. of Glendora, Inc.
935 W. 8Th St.
Azusa
California
Azusa
California
USA
Phone:1 626 812
Fax:1 626 334
www.nakedjuice.com
Pepsi Bottling Holdings, Inc.
Delaware
Delaware
USA
Pepsi Cola Trading Ireland
30 Herbert Street
Dublin
Dublin
IRL
Pepsi Croatia
1 Dimitrie Cantemir Blvd
Bucharest
Bucharest
ROM
Phone:40 21 3172800
Fax:40 21 3172802
Pepsi Hungary
Helsinki ut 121-123,
Budapest
Budapest
106. Chatswood
New South Wales
Chatswood
New South Wales
AUS
Phone:61 29 9511799
www.pepsico.com.au
PepsiCo BeLux BVBA
Da Vincilaan 3
Zaventem
Brabant Flamand
Zaventem
Brabant Flamand
BEL
Phone:32 27 140540
Fax:32 27 140541
www.pepsico.be
PepsiCo Beverages International Limited
C/o 7-Up Bottling Company
247 Moshood Abiola Way
Ijora
Lagos
Lagos
NGA
Phone:234 1 5871686
Fax:234 1 5877146
www.pepsico.com
Pepsico Beverages Italia S.R.L.
Via Tiziano, 32
Milano
Lombardia
Milano
Lombardia
107. ITA
Phone:39 2 434381
Fax:39 2 43438200
www.pepsi.it
PepsiCo Beverages Switzerland GmbH
Genfergasse 4,
Bern
Bern
CHE
Phone:41 33 47000
Fax:41 33 47001
www.pepsi.ch
PepsiCo Bosnia and Herzegovina
1 Dimitrie Cantemir Blvd, Bucharest 4,
Bucharest
Bucharest
ROM
Phone:40 213 172800
Fax:40 213 172802
PepsiCo Bulgaria
Pepsi-Cola GmbH
Linke Wienzeile
Vienna
Vienna
Vienna
Vienna
AUT
PepsiCo Chile
Avenida Kennedy 5454
Floor 4
Las Condes
Santiago
109. Buenos Aires
Buenos Aires
ARG
Phone:54 6778 2200
Fax:54 6778 2234
PepsiCo Deutschland GmbH
Hugenottenallee 173
Neu-Isenburg
Neu-Isenburg
DEU
Phone:49 61 027490
Fax:49 61 02749200
www.pepsico.de
PepsiCo do Brasil Ltda.
Street Renato Paes de Barros
1017 - 7th floor
Moema Sao Paulo - SP - CEP 04530-001
Sao Paulo
Sao Paulo
Sao Paulo
Sao Paulo
BRA
Phone:55 11 38485000
www.pepsico.com.br
PepsiCo Europe
63 Kew Road
Richmond
Surrey
Richmond
Surrey
GBR
Phone:44 208 3324000
Fax:44 208 3324042
110. www.pepsico.eu
PepsiCo Europe, Czech Republic
Kolbenova 50/510
Vysocany
Prague
Prague
CZE
Phone:420 2 66191200
Fax:420 2 66191258
PepsiCo France SNC
420, rue d'Estienne d'Orves
Colombes Cedex
Paris
Ile-de-France
Paris
Ile-de-France
FRA
Phone:33 1 55699000
Pepsico Holdings
Building 1, Territory of the Free Economic Zone,
Sherrizon
Solnechnogorsk
Moscow
Moscow
Moscow
Moscow
RUS
PepsiCo Inc
Locations And Subsidiaries
112. PepsiCo Inc
P.O. Box 660634
Dallas
Texas
Dallas
Texas
USA
Phone:1 800 3524477
www.fritolay.com
PepsiCo Inc
Rue du Rhône 50
Geneva
Geneva
CHE
Phone:41 914 2532000
www.pepsico.eu
Pepsico Inc Sucursal De Peru SA
Cal. Esquilache Nro. 371 int. 15
Esquil Empresarial Business Center
San Isidro
Lima
Lima
Lima
Lima
PER
Phone:51 1 7117111
www.pepsico.com
PepsiCo India Holdings Pvt Ltd
Level 3-6
Pioneer Square, Sector 62, Near Golf Course
Extension Road
Gurgaon
120. 17-19, Felix Street, Bucharest 1
Bucharest
Bucharest
ROM
Phone:40 21 3172800
Fax:40 21 3172802
Pepsi-Cola Panamericana SA-Colombia
Avenida de las Americas 53-09
Bogota
Bogota
COL
Phone:57 1405 3002
Fax:57 1405 6375
Pepsi-Cola Panamericana, S.A.
Av. 4, Edificio Ctro Empresarial Polar
Urbanización Los Cortijos de Lourdes
Caracas
Distrito Capital
Caracas
Distrito Capital
VEN
Phone:58 2 2036411
www.empresaspolar.com
Pepsi-Cola Portugal LDA
Lagoas Park
Edificio 5C, 5
Porto Salvo
Oeiras
Lisboa
Oeiras
Lisboa
PRT
Phone:351 21 4147100
121. Fax:351 21 4144754
www.pepsi.pt
Pepsi-Cola SR sro
Seldom Nadrazna 534
Malacky
Bratislava
Malacky
Bratislava
SVK
Phone:421 347 963110
www.pepsico.sk
Sakata Rice Snacks Australia Pty Ltd
Level 8
Tower A, 799 Pacific Highway
Chatswood
Sydney
New South Wales
Sydney
New South Wales
AUS
Phone:61 1800 025789
www.sakata.com.au
The Quaker Oats Company
P.O. Box 049003
Chicago
Illinois
Chicago
The Smith'S Snackfood Company Ltd
Level 8
799 Pacific Highway
Chatswood
New South Wales
123. Chicago
Illinois
Chicago
Illinois
USA
www.tropicana.com
Tropicana UK Ltd
450 South Oak Way, Green Park
Reading
Berkshire
Reading
Berkshire
GBR
www.tropicana.co.uk
Veurne Snack Foods BVBA
Imperiastraat 6
Zaventem
Brabant Flamand
Zaventem
Brabant Flamand
BEL
Phone:32 2 7140540
Fax:32 2 7140541
Walkers Snack Foods Ltd
Freepost Le4 918
Leicester
Leicestershire
Leicester
Leicestershire
GBR
www.walkers.co.uk
Wimm-Bill-Dann Foods OJSC
124. Dmitrovskoye Highway
Moscow
Moscow
RUS
Phone:7 495 9255805
Fax:7 495 9255800
www.wbd.ru
A Progressive Digital Media business
John Carpenter House, John Carpenter Street, London, United
Kingdom, EC4Y 0AN
T: +44 (0) 203 377 3042 | F: +44 (0) 870 134 4371 | E:
[email protected] | W: www.marketline.com
Company Overview Key Facts Business Description History
Key Employees Key Employee Biographies Major Products &
Services SWOT Analysis Top Competitors Company View
Locations And Subsidiaries
BR N S
BRE AK T HR U
2 17
64
fortune.com // jan.01.17
1 . I N S T E A D O F F I X AT I N G O N T H E O F T E N
N E B U L O U S
“ B R A N D ,” think of how you can “own a category” in the
minds of 1,000 die-hard fans who can then act as your
strongest marketing force. If you can’t be No. 1 or No. 2
125. in a category (“Uber for X,” imported light beer, low-cost
airline, whatever), find or create another category.
M Y S A C R E D R U L E S
O F B R A N D I N G
T I M F E R R I S S , EARLY-STAGE INVESTOR
(UBER, FACEBOOK, TWITTER, ALIBABA,
ETC.) AND AUTHOR OF THE NO. 1 NEW
YORK TIMES BESTSELLER TOOLS OF
TITANS: THE TACTICS, ROUTINES, AND
HABITS OF BILLIONAIRES, ICONS, AND
WORLD-CLASS PERFORMERS.
A I R B N B I N S T A G R A M S L A C K S N A P C H A T
S P O T I F Y
F
E
R
R
IS
S
:
A
N
D
R
126. E
W
K
E
L
L
Y
BRE AK T HR U H
65
fortune.com // jan.01.17
W H AT D O E S I T TA K E F O R A B R A N D to truly break
through in today’s crowded market? Just as it has
with everything else, digital transformation has
upended the traditional rules of marketing. In less
than a decade brands like Uber and Airbnb have
attained the kind of consumer mindshare that com-
panies used to have to work decades to create. Part
of this is the simple fact that most of these newer
brands are technology companies; they provide
products and services that themselves can be built
almost overnight, thanks to the proliferation of
smartphones, cloud computing, and fast, free, and
universally accessible digital tools. But many of
these brands are also resonating on a deeper level
with consumers. We wanted to get to the bottom
of which companies best exemplified this—those
brands that have attained the emotional reso-
nance with consumers typically reserved for big
127. blue-chip companies, but in a fraction of the time.
So we surveyed 4,000 consumers and asked them
to name the brands that meant the most to them,
both overall and across a variety of industries.
We then sorted the list by industry, category, and
age to come up with our list of 10 “Breakthrough
Brands”—companies that, when measured on the
basis of how they resonate with consumers, sit side
by side with Apple, Coca-Cola, Disney, and other
mature brands despite being relative babes. The
10 names here are new and white-hot; they are all
tech companies; and they have all “broken through”
to claim space among the giants. All but two of
them are less than a decade old.
We’ve also shared some other key findings from our
survey, like the brands that received the most men-
tions overall—those that may have broken through
decades ago but still register highly in consumers’
minds. On that list, Apple trounced everyone else.
But it’s the breakthrough brands of today that we
find most compelling. These are the ones that are
best positioned to become the Apples of tomorrow.
2 . D O N ’ T M A K E A P R O D U C T F O R “ E V E R
Y O N E .” If everyone is your market, no one
is your market. Particularly with the first versions of your
product or service, it’s
better to have 1,000 people who love you (and many who hate
you) than 100,000
who think you’re kinda, sorta cool. “Great” to 1,000 edge-case
nerds beats “good”
to 100,000 of anything else, every time. In a social-sharing-
driven world, cultivate
the intense few instead of the lukewarm many.
128. 3 . F O R G E T B R A N D I N G . Think about consis-
tently over-delivering one or two benefits to
your customers/users/fans. Branding is a side
effect of consistent association. Don’t put the
cart before the horse. Put good business first,
and good “brand” will follow.
S Q U A R E T E S L A U B E R V E N M O W A Z E
S U R V E Y S C O N D U C T E D B Y M O R N I N G C O N
S U LT A N D T I M E I N C .
A I R B N B
I N S T A G R A M S L A C K
66
fortune.com // jan.01.17
WORKPLACE CHAT SERVICE Slack
was an accidental success.
Originally developed as an
internal tool, the company—then
named Tiny Speck—took a big
bet on launching it to the outside
world in 2013 after its original
product, a videogame named
Glitch, wasn’t paying off. Slack
wasn’t the first app for chatting
with coworkers—HipChat, Yam-
mer, and others came before
it—but it had a quirky design and
slick user interface, and perhaps
129. most critically, it came at just
the right time: taking the tech
industry by storm as it spread
among the then-exploding
number of new Silicon Valley
startups. Today the service has
more than 4 million daily active
users—1.25 million of them
paying—and Slack’s colorful
plaid logo has become an icon in
Silicon Valley. —Kia Kokalitcheva
CANDID PHOTOS OF FRIENDS with
a vintage patina, vistas with
vivid hues, close-ups of fancy
cocktails—Instagram’s 2010 de-
but made everyone seem like a
shutterbug—and everyone could
be, thanks to the app that brought
professional-grade photo tools
to the iPhone-holding masses.
But Facebook’s billion-dollar
acquisition of the fast-growing
photo app in 2012 accelerated
everything. Then Instagram had
30 million users; today it has
more than 500 million. What
started as a faddish distrac-
tion developed into a full-blown
social network. Once a serious
threat to Facebook, Instagram
is now a critical pillar (alongside
WhatsApp, Oculus VR, and the
company’s namesake service)
of its $25 billion business. And
you can still use it to take a great
130. photo. —Andrew Nusca
A P AY M E N T S A P P or a messaging service is one thing.
Opening
up peoples’ homes to let strangers stay in them? Well, that’s
just crazy. That’s what lots of smart people thought back in
2008 when Airbnb’s founders were trying to get their startup
off the ground. Some 140 million “guest arrivals” later, it has
reimagined travel, building an online platform for home-based
accommodations with lush, inviting photography, an easy in-
terface, and appealing prices, all wrapped in the cozy image of
“belonging.” This company has its challenges, like discrimina-
tory behavior by its users and pushback from regulators—but
breaking through has not been one of them. —Leigh Gallagher
APPLE
1,229
GOOGLE
346
WALMART
396
AS PART OF OUR METHODOLOGY, we asked respondents
to name one company in any category that best
exemplified a breakthrough brand. Apple topped
the list—and got more than three times the mentions
131. of the runner-up, Walmart. Here are the top 15.
T H E A L L - S T A R
B R A N D S
FOUNDED: 2008 HEADQUARTERS: SAN FRANCISCO
FOUNDED: 2010
HQ: MENLO PARK, CALIF.
FOUNDED: 2009
HQ: SAN FRANCISCO
B R E A K T H R O U G H
B R A N D S
2 0 1 7
S P O T I F Y
S N A P C H A T S Q U A R E
67
fortune.com // jan.01.17
PLENTY OF PARENTS are still thor-
oughly confused by the mobile
ephemeral-messaging app, but
that doesn’t matter to Snap-
chat, which has achieved the
holiest of holy grails: capturing
the fickle hearts—and precious
time—of teenagers and young
adults the world over. It now has
150 million daily active users,
132. numbers that have prompted
attempts by Facebook and
Instagram to copy some of
Snapchat’s most popular fea-
tures. The ambitions of parent
company Snap have grown in
lockstep with Snapchat’s scale
as it moves beyond mobile
apps for sending photos
and reading bite-size news
from media giants like ESPN
and People: In the fall, Snap
unveiled its first pair of video-
recording sunglasses, called
Spectacles. —Kia Kokalitcheva
JACK DORSEY’S other company,
Twitter, gets all the attention—
good and bad. But Dorsey
also runs Square, the com-
pany whose little white dongles
changed small business forever.
The idea was simple enough:
Give away small credit card
readers that connect to mobile
phones and tablets and charge
the same rate for each transac-
tion, regardless of the type of
card. Square was the first to
make that easy, and along with
its user-friendly accounting
services, it fast became a tool
of economic empowerment
for tutors, dog walkers, and
shingle hangers of all stripes.
Dorsey may or may not remain