PepsiCo is one of the biggest companies in the food, snack, and beverage sector with international presence; however, they faced problems when trying to enter the Ukrainian market. The distribution system they operated was through exportation of their products to Ukrainian bottling companies, which then sold the products to independent distributors. This system did not only generate more costs for PepsiCo, but also it was not able to reach all the rural areas were prospective customers were.
The high interdependence of distributors and the management on the supply chain led that PepsiCo loses control over its operations and their modus operandi as the cultural differences also played an important role in the situation.
In order not to keep the losses, PepsiCo established an own distribution system in agreement with local organizations to invest in bottling plants in the country and reinforce their presence in the international market, recovering the power over the distribution channels and reaching to more consumers.
This case study of Pepsi provides evidence of the situation that a company faces when its distribution strategy in the international supply-chain management is ineffective.
The discrepancies in demand and supply, conflicts between channel members, the environmental impact and theft along the way, seriously harm the Pepsi’s profitability. With Coca Cola entering the market, Pepsi needs to redefine and redesign its supply-chain strategy to meet the challenges faced in the market and sustain its position in the country.
Let’s discuss in detail the challenges faced by Pepsi, and the possible solutions for the company to improve its supply chain and marketing channels, in order to sustain the market leadership.
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