This document provides a strategic analytical overview of PepsiCo's Southern African beverage division. It analyzes PepsiCo's performance in both the informal and formal sectors. In the informal sector, it identifies disadvantages like a lack of branding consistency and limited product range. It recommends partnering with importers to expand the product portfolio and using mini-depots for distribution. In the formal sector, it notes the limited product range excludes popular international brands. It recommends negotiating with bottlers to produce more brands and aggressively marketing the expanded range nationally. The best strategic option is seen as launching an overall brand extension marketing campaign to rejuvenate interest in PepsiCo products across sectors.

1. Summarized Strategic Analytical Overview of PepsiCo Southern
African Beverage Division.
By Faraaz Gani BAccSc (Wits) Cima Dip MA

2. Title and Content Layout
• Informal Sector Basic Analysis
> Pro’s and Con’s
> Recommendations
> Conclusion
• Formal Sector basic Analysis
> Pro’s and Con’s
> Recommendations
> Conclusion

3. Informal Sector Basic
Analysis.
Micro analytical Overview of the Zinniaville Business Area in the
city of Rustenburg in the North West Province, South Africa.

4. PepsiCo SA Beverage Division Informal Sector
Disadvantages:
• Imported Pepsico Beverage Brands are more widely distributed and available
than its locally made counterparts (Pioneer Foods vs Dubai Refreshments Co.
and Saudi Industrial Projects Co.)
• The new branding of Pepsi logo and colour scheme is not extended to existing
brand display units. See images below.
• Pepsico SA Beverage Division does not have a clear distribution channel
servicing the informal sector.
• No Pepsico SA Beverage Mini-Depo’s or service centers available for
independent shop owners to obtain pepsico fridges and other marketing
media.
• Pepsico SA Beverage has a limited range which does not include prominent
international Pepsico brands such as Aquafina, Amp Energy, Brisk Iced Tea
and Gatorade.
• Pepsico SA does not provide an experiential link to consumers in the informal
sector. Example includes its Rival Coca Cola providing disadvantaged
communities with clean drinking water.
Cannibalization of
locally made Pepsico
Products
Brand consistency
issues.
Weak distribution of
locally made
products.
Lack of operational
and marketing
support .
Lack of international
Pepsico product
portfolio presence.
Lack of local
community
involvement.

5. Cannibalization of locally made PepsiCo Beverages
by its own Imported counterpart:
Locally Manufactured PepsiCo product by
Pioneer Foods
Imported PepsiCo Beverage Product
manufactured by Dubai Refreshment Co.
And Saudi Industrial Projects Co.

6. Brand consistency issues
Pepsi Display fridge at independent retailer
in Rustenburg.
Beverage Display fridge according to new
Pepsi Image.

7. Lack of international PepsiCo Beverage product
range.
PepsiCo beverage ranges available through
PepsiCo SA Beverage Division:
PepsiCo beverage ranges available in the
informal sector through indirect channels:

8. PepsiCo SA Beverage Division Informal Sector
Indirect Advantages:
• Independent Entrepreneurs present keen interest and
willingness to stock PepsiCo Beverages which benefits PepsiCo
SA’s brand equity indirectly to a limited extent.
• Shop keepers initiate their own PepsiCo Beverage Branding
which indirectly adds some brand equity to PepsiCo SA.
• Imported PepsiCo Beverages can be easily found at wholesalers
and retailers which adds Market penetration and market
development indirectly to PepsiCo SA.
• Retailers use their own fridges to store the PepsiCo Beverages in,
eliminating the cost to PepsiCo SA
• Many for the International PepsiCo Beverage Brands not
available through PepsiCo SA are available such as Aquafina, Amp
Energy, Gatorade, Shani etc
• Local Entrepreneurs actively lobby for the benefits of PepsiCo
Beverage products through local Schools, charity events and
weddings.
Great Sentiment from
Shop Vendors who want
to Stock Pepsico
Products.
Internal Branding carried
out by Shop keepers.
Efficient indirect
distribution channels
from independent
entrepreneurs of Pepsico
Products
Operational marketing
support carried out by
independent
Entrepreneurs.
International Pepsico
product portfolio
imported by independent
Entrepreneurs.
Local community
involvement through
Independent
Entrepreneurs.

9. Great Sentiment from Shop Vendors who want to
Stock PepsiCo Products.
Large Consignment of PepsiCo
imported Beverage Products:
Internal Branding carried out by Shop
keepers.

10. Recommendations
Strategic Plans to address disadvantages and build on
existing advantages in the informal Sector.

11. Macro and Micro Strategic Plans for the informal
sector:
Macro Strategy for the informal
Sector:
 Legitimize or limit the effect of the Indirect Distribution
Channels by absorbing additional international PepsiCo
Products into PepsiCo SA’s Beverage Division Product
Portfolio.
 Working closely with Dubai Refreshment Co. (DRC) or
SIPCO in a new joint venture specially for the informal
sector. This new venture could also be expanded later on
as the strategy for the formal sector.
 Eliminating Pioneer Foods as the current bottler and
operating a finished goods distribution facility consisting
only of imported PepsiCo beverage products.
 This will address the inter product cannibalization of
products and price differential as Transfer policy pricing
policy can be worked out with DRC/SIPCO and forex
fluctuations hedged to stabilize operational costs.
Micro Strategy for the informal
Sector
 Address the financial and managerial constraints of the formal
distribution problem by using distribution partners (as ABI does
for Coca Cola Products) to get PepsiCo SA products to retailers.
 Make use of Mini-Depo’s by launching independent or franchise
short-term contracts with local entrepreneurs and wholesalers
before committing large capital to a formal brick and mortar
centre.
 Allow the mini-depo’s to handle product distribution, fridge
maintenance and inspection of retail outlets as well as facilitate
marketing of products under liberal conditions.

12. Macro Strategy illustration: Micro Strategy illustration:
(videos removed due to size constraints)

13. Strategic Option 1
Strategic Option 2
Strategic Option 3
Distribution Centre consisting
solely of Imported PepsiCo
Beverage Products.
 New Joint Venture with
Dubai Refreshments Co./Saudi
Industrial Projects Co. Jeddah.
OR
 New Joint Venture with DIS
VB Contract packagers Sittard
Holland.
Restructure current Joint-
venture agreement with
Pioneer Foods.
 Negotiate for price to reflect
the import price equivalent.
AND
Commission the production
of more PepsiCo International
Beverage brands e.g. Aquafina
etc
Manage Beverage Production
in-house.
 Commission a self owned
PepsiCo SA beverage
production facility and High-
Bay Warehouse with Krones
AG.
OR
 Negotiate Joint Venture
with Department of Trade and
Industry for production facility.
Macro Strategic Options to facilitate
recommended actions.

14. Conclusion:
Most favourable Option:
Subject to individual discretion, further feasibility analysis
and financial modelling etc,
Option 1 would seem the most favourable given the
issues identified earlier on.
Currently PepsiCo SA beverage division does not reap
any of the financial rewards of the PepsiCo products that
are currently in circulation in the informal sector.
The brand equity and exposure it indirectly enjoys may
mitigate against actively launching the proposed strategic
plan.
 PepsiCo International in a global sense benefits from
such indirect brand exposure.
 Any perceived taste variations can be assessed with
blind tastes with sample groups and may form part of pre-
feasibility tests.
High-bay Warehouse
National Distribution
Centre
Taking the Pepsi
Brand to the
masses.

15. Formal Sector Basic
Analytical Overview.
Micro analytical Observations.

16. PepsiCo SA Beverage Division Formal Sector
Disadvantages and Advantages:
Disadvantages:
 The most notable disadvantage is that, the formal
sector has a limited range
 This range Excludes prominent international Pepsico
brands such as Aquafina, Amp Energy, Brisk Iced Tea
and Gatorade. The above products are in sectors
which have and which still show exceptional growth
in the South African market.
 PepsiCo SA does not aggressively market its products
at national level even though in the formal sector, it
enjoys national distribution.
Advantages:
 PepsiCo SA Beverage Division is well established in
the formal sector. Most notably with many national
retail chain stores and fuel station forecourt
distributors.
 Has a long established relationships with Current
Contract packagers.

17. Recommendations:
 Negotiate new agreements with current contract bottlers to produce additional
PepsiCo International Brands.
Aggressively market these ‘NEW’ brands at National Level or Regional Level.
Restructure contracts with national chain store companies to provide more incentive to
actively market the PepsiCo beverage range in stores, either through revised Retail
Rebate structure or other means.

18. Strategic Options to facilitate recommendations:
Overall PepsiCo brand Extension
Marketing campaign.
 The entire range of ‘NEW’ international PepsiCo
brands can be launched simultaneously on one
platform which would also act as a proxy to
rejuvenate interest in the current PepsiCo SA
range.
 An illustration of the all-in-one platform could be
to use a theatrical promotion campaign similar to
Nestle North America’s recent launch of its
Resource Electrolyte Enhanced Bottled Water.
 Urban Shopping Malls could be the ideal places to
showcase such a theatrical display which would
possibly do wonders for PepsiCo SA. The Aquafina
brand can be seamlessly adapted to an exact
campaign just like resource water.
Nestle Resource Electrolyte Campaign
Case Study:

19. Conclusion:
 There is ample potential for PepsiCo SA to
further enhance its position in the formal
sector and possibly even dominate this
sector behind its main rival (Coca Cola) in the
formal retail sector.
 By simply launching/re-launching a wider
product portfolio, PepsiCo SA does not
necessarily need to ‘Innovate’ to dominate.
 Thus PepsiCo SA should be able to implement
such a strategy without much apprehension.

20. End of Presentation/report.
Thank you for viewing.
Author’s Disclaimer:
The intention of this presentation/report was to project my ideas, thoughts and experiences as an Academic and
Entrepreneur within the Non-Alcoholic Fast Moving Beverage sector. I have intentionally negated to include any
excessive use of Business Jargon, Business Technical Theory, including Strategic management and development
models/frameworks etc. I have tried to keep this presentation very jovial and practical for the end user.
By Faraaz Gani BAccSc (Wits) Cima Adv Dip MA