Pepsico's 'Focus' Strategy

This growth was attributed to the strong sales of Pepsi One, Mountain Dew, Brand Pepsi, Aquafina, and Lipton Brisk. The volume growth of Frito-Lay was 5%, in the same year. Although the restructuring resulted in lower sales for the first year it led to higher profits. The margins and return on investment were also high. After spinning-off the bottling business, PepsiCo's return on equity increased from 17% in the fiscal 1996 to 30% in the fiscal 1998. According to the executives of the company, the company had strengthened its financials and wanted to concentrate on innovations and productivity improvements. PepsiCo seemed to have strengthened its position in the 'cola wars,' in the late 1990s. In 1998, the company witnessed soft-drink volume gains of 6%, which was the biggest gain since the fiscal 1994...

In its efforts to enhance the revenues from its beverages business, PepsiCo acquired a majority equity stake in SBBC in October 2000. SBBC had emerged as one of the successful companies in the non-carbonated beverages industry after the launch of its brand SoBe. SBBC offered a variety of drinks with herbal ingredients and SoBe was one of the fastest growing brands in the non-carbonated beverages market. PepsiCo, in December 2000, acquired Quaker Oats, a leading food and drinks company, in a deal worth $13.4 bn. In an all-stock deal, one share of Quaker was swapped for 2.3 shares of PepsiCo, up to a value of $105 for each Quaker share. According to analysts, this acquisition was expected to increase PepsiCo's beverages revenues significantly...