PepsiCo - Wikipedia, The Free Encyclopedia
PepsiCo - Wikipedia, The Free Encyclopedia
PepsiCo - Wikipedia, The Free Encyclopedia
org/wiki/PepsiCo
PepsiCo
From Wikipedia, the free encyclopedia
Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since Founder(s) Donald Kendall, Herman Lay
2006, and the company employed approximately 285,000 people
Headquarters Purchase, New York, U.S.
worldwide as of 2010.[6] The company’s beverage distribution and bottling
is conducted by PepsiCo as well as by licensed bottlers in certain Area served Worldwide
regions.[7] PepsiCo is a SIC 2080 (beverage) company. Key people Indra Nooyi
[1]
(Chairman & CEO)
Separately, the Frito Company and H.W. Lay & Company – two American potato and corn chip snack manufacturers – began
working together in 1945 with a licensing agreement allowing H.W. Lay to distribute Fritos in the Southeastern United States. The
companies merged to become Frito-Lay, Inc. in 1961.[11]
In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc., the company it is known as at present. At
the time of its foundation, PepsiCo was incorporated in the state of Delaware and headquartered in Manhattan, New York. The
company's headquarters were relocated to its still-current location of Purchase, New York in 1970,[12] and in 1986 PepsiCo was
reincorporated in the state of North Carolina.[9]
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Between the late-1970s and the mid-1990s, PepsiCo expanded via acquisition of businesses outside of its core focus of packaged
food and beverage brands; however it exited these non-core business lines largely in 1997, selling some, and spinning off others
into a new company named Tricon Global Restaurants, which later became known as Yum! Brands, Inc..[13] PepsiCo also
previously owned several other brands that it later sold, in order to allow it to return focus to its primary snack food and beverage
lines, according to investment analysts reporting on the divestments in 1997.[14] Brands formerly owned by PepsiCo include:
Pizza Hut,[15] Taco Bell,[15] KFC,[15] Hot 'n Now,[16] East Side Mario's,[17] D'Angelo Sandwich Shops,[18] Chevys Fresh Mex,
California Pizza Kitchen,[19] Stolichnaya[20] (via licensed agreement), Wilson Sporting Goods[21] and North American Van
Lines.[22]
The divestments concluding in 2007 were followed by multiple large-scale acquisitions, as PepsiCo began to extend its operations
beyond soft drinks and snack foods into other lines of foods and beverages. PepsiCo purchased the orange juice company
Tropicana Products in 1998,[23] and merged with Quaker Oats Company in 2001,[24] adding with it the Gatorade sports drink line
and other Quaker Oats brands such as Chewy Granola Bars and Aunt Jemima, among others.[25]
In August 2009, PepsiCo made a $7 billion offer to acquire the two largest bottlers of its products in North America: Pepsi
Bottling Group and PepsiAmericas. In 2010 this acquisition was completed, resulting in the formation of a new wholly owned
subsidiary of PepsiCo, Pepsi Beverages Company.[7] Also in late 2010, the company made its largest international acquisition
when it purchased a majority stake in Wimm-Bill-Dann Foods – a Russian food company which produces milk, yogurt, fruit
juices and dairy products.[26]
Competition
The Coca-Cola Company has historically been considered PepsiCo’s primary competitor in the beverage market,[27] and in
December 2005, PepsiCo surpassed The Coca-Cola Company in market value for the first time in 112 years since both companies
began to compete. In 2009, the Coca-Cola Company held a higher market share in carbonated soft drink sales within the U.S.[3] In
the same year, PepsiCo maintained a higher share of the U.S. refreshment beverage market, however, reflecting the differences in
product lines between the two companies.[3] As a result of mergers, acquisitions and partnerships pursued by PepsiCo in the 1990s
and 2000s, its business has shifted to include a broader product base, including foods, snacks and beverages. The majority of
PepsiCo's revenues no longer come from the production and sale of carbonated soft drinks.[28] Beverages accounted for less than
50 percent of its total revenue in 2009. In the same year, slightly more than 60 percent of PepsiCo's beverage sales came from its
primary non-carbonated brands, namely Gatorade and Tropicana.[3]
PepsiCo's Frito-Lay and Quaker Oats brands hold a significant share of the U.S. snack food market, accounting for approximately
39 percent of U.S. snack food sales in 2009.[3] One of PepsiCo's primary competitors in the snack food market overall is Kraft
Foods, which in the same year held 11 percent of the U.S. snack market share.[3]
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PepsiCo Americas Foods consists of the company’s food and snack operations in North and South America. This operating
division is further segmented into Frito-Lay North America, Quaker Foods & Snacks, Sabritas, Gamesa and Latin America Foods.
Food and snack sales in North and South America combined contributed 48 percent of PepsiCo’s net revenue in 2009.[5][29][32]
Frito-Lay North America, the result of a merger in 1961 between the Frito Company and the H.W. Lay Company, produces the top
selling line of snack foods in the U.S. Its main brands in the U.S., Canada and Mexico and include Lay's and Ruffles potato chips,
Doritos tortilla chips, Tostitos tortilla chips and dips, Cheetos cheese flavored snacks, Fritos corn chips, Rold Gold pretzels, Sun
Chips and Cracker Jack popcorn. Products made by this division are sold to independent distributors and retailers, and are
transported from Frito-Lay's manufacturing plants to distribution centers, principally in vehicles owned and operated by the
company.[33]
Quaker Foods North America, created following PepsiCo’s acquisition of the Quaker Oats Company in 2001, manufactures,
markets and sells Quaker Oatmeal, Rice-A-Roni, Cap'n Crunch and Life cereals, as well as Near East side dishes within North
America. This division also owns and produces the Aunt Jemima brand, which as of 2009 was the top selling line of syrups and
pancake mixes within this region.[3][34]
Sabritas and Gamesa are two of PepsiCo’s food and snack business lines headquartered in Mexico, and they were acquired by
PepsiCo in 1966 and 1990, respectively. Sabritas markets Frito-Lay products in Mexico, including local brands such as Poffets,
Rancheritos, Crujitos and Sabritones. Gamesa is the largest manufacturer of cookies in Mexico, distributing brands such as
Emperador, Arcoiris and Marías Gamesa.[35]
PepsiCo’s Latin America Foods (Spanish: Snacks América Latina) operations market and sell primarily Quaker- and Frito-
Lay-branded snack foods within Central and South America, including Argentina, Brazil, Peru and other countries in this
region.[36] Snacks América Latina purchased Peruvian company Karinto S.A.C. including its production company Bocaditas
Nacionales (with three production facilities in Peru) from the Hayashida family of Lima in 2009, adding the Karito brand to its
product line, including Cuates, Fripapas, and Papi Frits.[37]
This division contributed 23 percent of PepsiCo’s net revenue as of 2009,[29] and involves the manufacture (and in some cases
licensing), marketing and sales of both carbonated and non-carbonated beverages in North, Central and South America.[38] The
main brands distributed under this division include Pepsi, Mountain Dew, Gatorade, 7 Up (outside the U.S.), Tropicana Pure
Premium orange juice, Sierra Mist, SoBe Lifewater, Tropicana juice drinks, AMP Energy, Naked Juice and Izze. Aquafina, the
company’s bottled water brand, is also marketed and licensed through PepsiCo Americas Beverages.[1]
PepsiCo also has formed partnerships with several beverage brands it does not own, in order to distribute these or market them
with its own brands.[1] As of 2010, its partnerships include: Starbucks (Frappuccino, DoubleShot and Iced Coffee), Unilever’s
Lipton brand (Lipton Brisk and Lipton Iced Tea), and Dole (licensed juices and drinks).
The company started a new market strategy to sell their Pepsi Cola product in Mexico, stating that about about one third of the
population has difficulty pronouncing "Pepsi". They started manufacturing and selling their product under the label 'Pecsi', the
advertisement campaign features the Mexican soccer celebrity Cuauhtemoc Blanco. This is not the first time it has happened, back
in 2009, PepsiCo used the same strategy successfully in Argentina.[39]
PepsiCo Europe
PepsiCo began to expand its distribution in Europe in the 1980s, and in 2009 it made up 16 percent of the company's global net
revenue.[29] Unlike PepsiCo’s Americas business segments, both foods and beverages are manufactured and marketed under one
umbrella division in this region, known as PepsiCo Europe. The primary brands sold by PepsiCo in Europe include Pepsi-Cola
beverages, Frito-Lay snacks, Tropicana juices and Quaker food products, as well as regional brands unique to Europe such as
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Walkers crisps, Copella, Paw Ridge, Snack-a-Jack, Duyvis and others. PepsiCo also distributes the soft drink 7UP in Europe via
license agreement.[1] PepsiCo's European presence expanded with its acquisition of Russian juice and dairy product brand
Wimm-Bill-Dann Foods in December 2010.[40]
The most recently created operating division of PepsiCo covers Asia, the Middle East and Africa.[28] In addition to the production
and sales of several worldwide Pepsi-Cola, Quaker Foods and Frito-Lay beverage and food product lines (including Pepsi and
Doritos), this segment of PepsiCo’s business markets regional brands such as Mirinda, Kurkure and Red Rock Deli, among
others.[1] While PepsiCo owns its own manufacturing and distribution facilities in certain parts of these regions, more of this
production is conducted via alternate means such as licensing (which it does with Aquafina), contract manufacturing, joint
ventures and affiliate operations. PepsiCo’s businesses in these regions, as of 2009, contributed 13 percent to the company’s net
revenue worldwide.[29]
Corporate governance
Headquartered in Purchase, New York, with research and development headquarters in Valhalla, New York, PepsiCo’s Chairman
and CEO is Indra Nooyi.[41] The board of directors is composed of eleven outside directors as of 2010, including Ray Lee Hunt,
Shona L. Brown, Victor Dzau, Arthur C. Martinez, Sharon Percy Rockefeller, Daniel Vasella, Dina Dublon, Ian M. Cook, Alberto
Ibargüen, James J. Schiro and Lloyd G. Trotter. Former top executives at PepsiCo include Steven Reinemund, Roger Enrico, D.
Wayne Calloway, John Sculley, Michael H. Jordan, Donald M. Kendall, Christopher A. Sinclair and Alfred Steele.
On 1 October 2006, former Chief Financial Officer and President Indra Nooyi replaced Steve Reinemund as Chief Executive
Officer. Nooyi remained as the corporation's president, and became Chairman of the Board in May 2007, later (in 2010) being
named No.1 on Fortune's list of the "50 Most Powerful Women"[42] and No.6 on Forbes' list of the "World's 100 Most Powerful
Women".[43] PepsiCo received a 100 percent rating on the Corporate Equality Indexreleased by the LGBT-advocate group Human
Rights Campaign starting in 2004, the third year of the report.[44]
Headquarters
The PepsiCo headquarters are located in Purchase, Harrison, New York. It was one of the
last architectural works by Edward Durell Stone. It consists of seven three story buildings.
Each building is connected to its neighbor through a corner. The property includes a
sculpture garden with 45 sculptures. Works include those of Alexander Calder, Henry
Moore, and Auguste Rodin. Westchester Magazine stated "The buildings’ square blocks
rise from the ground into low, inverted ziggurats, with each of the three floors having strips
of dark windows; patterned pre-cast concrete panels add texture to the exterior surfaces."
In 2010 the magazine ranked the building as one of the ten most beautiful buildings in
Westchester County.[45] PepsiCo headquarters
At one time PepsiCo had its headquarters in 500 Park Avenue in Midtown Manhattan, New
York City.[46] In 1956 Pepsico paid $2 million for the original building.[47] PepsiCo built the new 500 Park Avenue in 1960.[48] In
1966 Mayor of New York City John Lindsay started a private campaign to convince PepsiCo to remain in New York City.[49] In
1967 PepsiCo announced that it was moving to 112 acres (45 ha) of the Blind Brook Polo Club in Westchester County.[50] After
PepsiCo left the Manhattan building, it became known as the Olivetti Building.[48]
Charitable activities
PepsiCo has maintained a philanthropic program since 1962 called the PepsiCo
Foundation,[51] in which it primarily funds “nutrition and activity, safe water and water
usage efficiencies,[52] and education,” according to the foundation’s website.[53] In 2009,
$27.9 million was contributed through this foundation, including grants to the United
Way[54] and YMCA,[55] among others.
In 2009, PepsiCo launched an initiative which the company calls the Pepsi Refresh
Project,[56] in which individuals submit and vote on charitable and nonprofit
Headquarters of Pepsi-Cola collaborations.[57] The main recipients of grants as part of the refresh project are
Venezuela (ES) community organizations with a local focus and nonprofit organizations, such as a high
school in Michigan which – as a result of being selected – received $250,000 in 2010
towards construction of a fitness room for high school students.[58] Following the Gulf of Mexico oil spill which occurred in the
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spring of 2010, PepsiCo donated $1.3 million to grant winners in determined by popular vote.[59] As of October, 2010, the
company had provided a cumulative total of $11.7 million in funding, spread across 287 ideas of participant projects from 203
cities in North America.[60] In late 2010, the refresh project was reported to be expanding to include countries outside of North
America in 2011.[61]
Sustainability practices
According to its 2009 annual report, PepsiCo states that it is “committed to delivering sustainable growth by investing in a
healthier future for people and our planet”,[29][62] which it has defined in its mission statement since 2006 as “Performance with
Purpose”.[63][64] According to news and magazine coverage on the subject in 2010, the objective of this initiative is to increase the
number and variety of healthier food and beverage products made available to its customers,[65] employ a reduction in the
company’s environmental impact,[66] and to facilitate diversity and healthy lifestyles within its employee base.[63] Its activities in
regards to the pursuit of its goals – namely environmental impacts of production and the nutritional composition of its products –
have been the subject of recognition from health and environmental advocates and organizations, and at times have raised
concerns among its critics. As the result of a more recent focus on such efforts, “critics consider (PepsiCo) to be perhaps the most
proactive and progressive of the food companies", according to former New York Times food industry writer Melanie Warner in
2010.[67]
Environmental record
PepsiCo’s usage of water was the subject of controversy in India in the early and mid 2000s in part because of the company’s
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.[68]
As a result, in 2003 PepsiCo launched a country-wide program to achieve a “positive water balance” in India by 2009.[69] In 2007,
PepsiCo’s CEO Indra Nooyi made a trip to India to address water usage practices in the country, prompting prior critic Sunita
Narain, director of the Centre for Science & Environment (CSE), to note that PepsiCo "seem(s) to be doing something serious
about water now."[68] According to the company’s 2009 corporate citizenship report,[62] as well as media reports at the time,[67]
the company (in 2009) replenished nearly six billion liters of water within India, exceeding the aggregate water intake of
approximately five billion liters by PepsiCo’s India manufacturing facilities.[62]
Water usage concerns have arisen at times in other countries in which PepsiCo operates. In the U.S., water shortages in certain
regions resulted in increased scrutiny on the company’s production facilities, which were cited in media reports as being among
the largest water users in cities facing drought – such as Atlanta, Georgia.[70][71] In response, the company formed partnerships
with non-profit organizations such as the Earth Institute and Water.org, and in 2009 began cleaning new Gatorade bottles with
purified air instead of rinsing with water, among other water conservation practices.[72] In the United Kingdom, also in response
to regional drought conditions, PepsiCo snacks brand Walkers' reduced water usage at its largest potato chip facility by 45 percent
between the years 2001 and 2008. In doing so, the factory employed machinery which captured the water naturally contained in
potatoes, and used that water to largely offset the need to bring in outside water to the factory.[73][74]
As a result of water reduction practices and efficiency improvements, PepsiCo in 2009 saved more than 12 billion liters of water
worldwide,[75] compared to its 2006 water usage. Environmental advocacy organizations including the Natural Resources Defense
Council and individual critics such as Rocky Anderson (mayor of Salt Lake City, Utah) voiced concerns in 2009, noting that the
company could conserve additional water by refraining from the production of discretionary products such as Aquafina.[76] The
company maintained its positioning of bottled water as “healthy and convenient”, while also beginning to partially offset
environmental impacts of such products through alternate means, including packaging weight reduction.[76]
PepsiCo’s 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.[77] PepsiCo denied the allegations, and India's health ministry has also dismissed the allegations –
both questioning the accuracy of the data compiled by the CSE, as it was tested by its own internal laboratories without being
verified by outside peer review.[78][79] The ensuing dispute prompted a short-lived ban on the sale of PepsiCo and Coca-Cola
Company soft drinks within India's southwestern state of Kerala in 2006;[80] however this ban was reversed by the Kerala High
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In November, 2010, the Supreme Court of India invalidated a criminal complaint filed against PepsiCo India by the Kerala
government, on the basis that the beverages did meet local standards at the time of the allegations. The court ruling stated that the
“percentage of pesticides” found in the tested beverages was “within the tolerance limits subsequently prescribed in respect of
such product,” since at the time of testing “there was no provision governing pesticide adulteration in cold drinks.”[82][83] In 2010,
PepsiCo was among the 12 multinational companies that displayed “the most impressive corporate social responsibility
credentials in emerging markets”, as determined by the U.S. Department of State.[84] PepsiCo's India unit received recognition on
the basis of its water conservation and safety practices and corresponding results.[85]
Environmental advocates have raised concern over the environmental impacts surrounding the disposal of PepsiCo’s bottled
beverage products in particular, as bottle recycling rates for the company’s products in 2009 averaged 34 percent within the
U.S.[86] The company has employed efforts to minimize these environmental impacts via packaging developments combined with
recycling initiatives. In 2010, PepsiCo announced a goal to create partnerships that prompt an increase the beverage container
recycling rate in the U.S. to 50 percent by 2018.[87]
One strategy enacted to reach this goal has been the placement of interactive recycling kiosks called “Dream Machines” in
supermarkets, convenience stores and gas stations, with the intent of increasing access to recycling receptacles.[88][89] The use of
resin to manufacture its plastic bottles has resulted in reduced packaging weight, which in turn reduces the volume of fossil fuels
required to transport certain PepsiCo products. The weight of Aquafina bottles was reduced nearly 40 percent, to 15 grams, with a
packaging redesign in 2009. Also in that year, PepsiCo brand Naked Juice began production and distribution of the first 100
percent post-consumer recycled plastic bottle.[90]
PepsiCo, along with other manufacturers in its industry, has drawn criticism from environmental advocacy groups for the
production and distribution of plastic product packaging, which consumed an additional 1.5 billion gallons of petrochemicals in
2008. These critics have also expressed apprehension over the production volume of plastic packaging, which results in the
emission of carbon dioxide.[91] Beginning largely in 2006, PepsiCo began development of more efficient means of producing and
distributing its products using less energy,[92] while also placing a focus on emissions reduction.[91] In a comparison of 2009
energy usage with recorded usage in 2006, the company’s per-unit use of energy was reduced by 16 percent in its beverage plants
and 7 percent in snack plants.[62]
In 2009, Tropicana (owned by PepsiCo) was the first brand in the U.S. to determine the carbon footprint of its orange juice
product, as certified by the Carbon Trust, an outside auditor of carbon emissions.[93] Also in 2009, PepsiCo began the test
deployment of so-called “green vending machines,” which reduce energy usage by 15 percent in comparison to average models in
use. It developed these machines in coordination with Greenpeace, which described the initiative as “transforming the industry in
a way that is going to be more climate-friendly to a great degree.”[93]
Product nutrition
Product diversity
From its founding in 1965 until the early 1990s, the majority of PepsiCo’s product line consisted of carbonated soft drinks and
convenience snacks. PepsiCo broadened its product line substantially throughout the 1990s and 2000s with the acquisition and
development of what its CEO deemed as “good-for-you” products, including Quaker Oats, Naked Juice and Tropicana orange
juice.[94] Sales of such healthier-oriented PepsiCo brands totaled $10 billion in 2009, representing 18 percent of the company’s
total revenue in that year. This movement into a broader, healthier product range has been moderately well received by nutrition
advocates; though commentators in this field have also suggested that PepsiCo market its healthier items as aggressively as
less-healthy core products.[95]
In response to shifting consumer preferences and in part due to increasing governmental regulation, PepsiCo in 2010 indicated its
intention to grow this segment of its business, forecasting that sales of fruit, vegetable, whole grain and fiber-based products will
amount to $30 billion by 2020.[96][97] To meet this intended target, the company has said that it plans to acquire additional health-
oriented brands while also making changes to the composition of existing products that it sells.[97]
Ingredient changes
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Public health advocates have suggested that there may be a link between the ingredient makeup of PepsiCo’s core snack and
carbonated soft drink products and rising rates of health conditions such as obesity and diabetes. The company aligns with
personal responsibility advocates, who assert that food and beverages with higher proportions of sugar or salt content are fit for
consumption in moderation by individuals who also exercise on a regular basis.[98]
Changes to the composition of its products with nutrition in mind have involved reducing fat content, moving away from
trans-fats, and producing products in calorie-specific serving sizes to discourage overconsumption, among other changes.[65] One
of the earlier ingredient changes involved sugar and caloric reduction, with the introduction of Diet Pepsi in 1964 and Pepsi Max
in 1993 – both of which are variants of their full-calorie counterpart, Pepsi. More recent changes have consisted of saturated fat
reduction, which Frito-Lay reduced by 50% in Lay's and Ruffles potato chips in the U.S. between 2006 and 2009.[98] Also in
2009, PepsiCo’s Tropicana brand introduced a new variation of orange juice (Trop50) sweetened in part by the plant Stevia, which
reduced calories by half.[98] Since 2007, the company also made available lower-calorie variants of Gatorade, which it calls
“G2”.[99]
Distribution to children
As public perception placed additional scrutiny on the marketing and distribution of carbonated soft drinks to children, PepsiCo
announced in 2010 that by 2012, it will remove beverages with higher sugar content from primary and secondary schools
worldwide.[100] It also, under voluntary guidelines adopted in 2006, replaced “full-calorie” beverages in U.S. schools with “lower-
calorie” alternatives, leading to a 95 percent reduction in the 2009 sales of full-calorie variants in these schools in comparison to
the sales recorded in 2004.[101] In 2008, in accordance with guidelines adopted by the International Council of Beverages
Associations, PepsiCo eliminated the advertising and marketing of products that do not meet its nutrition standards, to children
under the age of 12.[102][103]
In 2010, First Lady Michelle Obama initiated a campaign to end childhood obesity (titled Let's Move!), in which she sought to
encourage healthier food options in public schools, improved food nutrition labeling and increased physical activity for children.
In response to this initiative, PepsiCo, along with food manufacturers Campbell Soup, Coca-Cola, General Mills and others in an
alliance referred to as the "Healthy Weight Commitment Foundation", announced in 2010 that the companies will collectively cut
one trillion calories from their products sold by the end of 2012 and 1.5 trillion calories by the end of 2015.[104]
See also
Pepsi Stuff
Cola wars
List of assets owned by PepsiCo
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PepsiCo - Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/PepsiCo
External links
Official website (http://www.pepsico.com)
PepsiCo Canada (http://www.pepsico.ca/en/index.html)
PepsiCo India (http://www.pepsiindia.co.in/)
PepsiCo UK (http://www.pepsico.co.uk)
PepsiCo Benelux (Belgium/Netherlands/Luxembourg) (http://www.pepsico.nl) (Dutch)
PepsiCo France (http://www.pepsico.fr) (French)
PepsiCo Germany (http://www.pepsico.de) (German)
PepsiCo Spain (http://www.pepsico.es) (Spanish)
Yahoo! – PepsiCo, Inc. Company Profile (http://biz.yahoo.com/ic/11/11166.html)
Retrieved from "http://en.wikipedia.org/wiki/PepsiCo"
Categories: Companies listed on the New York Stock Exchange | Companies listed on NASDAQ | Beverage companies of the
United States | Companies established in 1986 | Companies based in Westchester County, New York | Multinational food
companies | Multinational companies headquartered in the United States | PepsiCo
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