PepsiCo, Inc.
Food and beveragesFounded 1965- Updated June 2026
Reviewed by Swet Parvadiya
Last reviewed: June 2026
CorpDigest
PepsiCo, Inc.
Company History
Founded 1965 in Purchase, New York
Last reviewed: 2026-06-03 · By Swet Parvadiya
Pepsi-Cola existed for sixty years before PepsiCo did. Caleb Bradham invented the drink in a North Carolina pharmacy in 1893, named it Pepsi-Cola in 1898, and built a bottling network that twice went bankrupt — once in 1923 during a sugar price collapse, once in 1931 during the Depression. The brand survived both failures because someone always believed the formula was worth saving.
Frito-Lay arrived through an entirely separate lineage. Elmer Doolin bought a corn chip recipe in San Antonio in 1932 and built Frito Company from it. Herman Lay started as a route salesman in Nashville and grew Lay's Potato Chips into a regional powerhouse. Frito merged with Lay's in 1961, creating a national snack food company with distribution infrastructure that no beverage company had thought to build.
The 1965 merger combined Pepsi-Cola with Frito-Lay under the PepsiCo name. At the time it looked like an unusual pairing. Over the following decades it proved to be the defining strategic advantage: the same trucks delivering Pepsi-Cola products to stores could carry Lay's and Doritos. The direct-store delivery network became a distribution moat that kept smaller snack competitors off the best shelf positions.
The Quaker Oats acquisition in 2001 for $13.9 billion added Gatorade — which Quaker had acquired years earlier — to the PepsiCo portfolio. Gatorade's sports nutrition market position gave PepsiCo a beverage that competed on function rather than taste, and carried the associated pricing power. Tropicana came first, in 1998, and was ultimately divested in 2022 when margin pressure in refrigerated juice made continued ownership harder to justify.
Donald M. Kendall was the Pepsi-Cola executive most closely associated with creating PepsiCo through the 1965 merger with Frito-Lay. His specific contribution was recognizing that the cola war could be strengthened by owning adjacent food occasions rather than simply spending more on soda advertising. After the merger, Kendall served as PepsiCo's chief executive and helped build the company into a more aggressive global competitor. He pushed international expansion, youth-oriented marketing, and broader diversification, including the later restaurant strategy that would eventually be unwound. Kendall's legacy is strategically mixed: he made PepsiCo more ambitious than a beverage company, but some later diversification moved too far from the packaged-goods core. His lasting influence is PepsiCo's willingness to compete through portfolio breadth, retail relationships, and cultural marketing rather than cola alone.
Herman W. Lay was the snack entrepreneur whose distribution culture became central to PepsiCo's long-term advantage. He supported the 1965 merger because he saw that snacks and beverages shared retailers, consumer occasions, and promotional opportunities. After the merger, Lay served as chairman and helped preserve the strength of the Frito-Lay business inside the larger PepsiCo structure. His contribution was not merely brand ownership; it was the direct-store-delivery mindset that kept products visible and fresh in thousands of outlets. That operating approach still defines PepsiCo's snack advantage in North America. Lay's lasting influence is visible whenever Frito-Lay controls shelf presentation, launches a new flavor quickly, or uses route density to defend share. PepsiCo's most durable advantage owes as much to Lay's distribution instincts as to Pepsi's marketing history.
PepsiCo acquired Tropicana to expand into premium juice and reduce dependence on carbonated soft drinks. Tropicana gave PepsiCo a strong refrigerated juice brand at a time when juice looked aligned with healthier beverage demand.
PepsiCo acquired Quaker Oats primarily to gain Gatorade, a leading sports drink brand, while also adding Quaker breakfast and grain products. The deal strengthened PepsiCo's position in non-carbonated beverages and gave it a major platform outside cola.
PepsiCo acquired SodaStream to enter at-home sparkling water and reduce reliance on traditional bottled and canned beverage formats. The deal aligned with health, customization, and packaging-waste reduction themes.
PepsiCo acquired Rockstar to strengthen its owned position in energy drinks after years of being less forceful in the category than Monster and Red Bull. The deal allowed PepsiCo to use its beverage distribution and marketing capabilities in a faster-growing category.
PepsiCo acquired Pioneer Foods to strengthen its presence in South Africa and broader sub-Saharan Africa. The company brought local food brands, manufacturing, and distribution capability in a region PepsiCo views as a long-term packaged-food growth market.
PepsiCo acquired BFY Brands, maker of PopCorners, to expand Frito-Lay's better-for-you snack portfolio and add popped snack manufacturing capabilities. The deal gave PepsiCo a brand aligned with demand for lighter snack formats.
PepsiCo acquired Siete Foods to add Mexican-American, grain-free, and better-for-you food products to its portfolio. The brand brought tortillas, chips, sauces, seasonings, cookies, beans, and other products with strong cultural identity and simple-ingredient positioning.
PepsiCo acquired Poppi to enter the fast-growing prebiotic soda category with an established challenger brand. The deal supports PepsiCo's push into lower-sugar, functional, health-adjacent beverages aimed at younger consumers.
Pepsi-Cola was invented in 1893 by Caleb Bradham, a pharmacist in New Bern, North Carolina, who originally called the carbonated mixture Brad's Drink and sold it at the soda fountain inside his drug store on the corner of Pollock and Middle Streets. In 1898 Bradham renamed the beverage Pepsi-Cola, with the name referencing pepsin (a digestive enzyme) and kola nuts, reflecting his marketing of the drink as a digestive tonic that boosted energy. He incorporated the Pepsi-Cola Company in 1902 and registered the trademark in 1903. By 1910 Bradham had built a franchise network of 240 bottlers across 24 states. The company collapsed twice in its early decades. Bradham over-purchased sugar in 1920 expecting wartime prices to keep rising; when sugar collapsed from 22 cents to 3 cents per pound, the firm went bankrupt in 1923. Loft Candy Company executive Charles Guth bought the brand in 1931 after a second bankruptcy and rescued it by introducing the 12-ounce bottle priced at five cents during the Depression, doubling the volume of competitor Coca-Cola for the same nickel. That value pitch, captured in the jingle Pepsi-Cola hits the spot, drove rapid share gains through the 1930s and 1940s and made the brand a permanent challenger to Coke.
PepsiCo was created on June 8, 1965 when Pepsi-Cola Company merged with Frito-Lay Inc. in a stock transaction valued at approximately $510 million. Donald Kendall, the Pepsi-Cola CEO who had famously gotten Soviet Premier Nikita Khrushchev to sip Pepsi at the 1959 American National Exhibition in Moscow, led negotiations with Frito-Lay chairman Herman Lay. Kendall became PepsiCo's first CEO and Lay became chairman. The merger combined Pepsi-Cola's beverage franchise with Frito-Lay's salty snack lineup including Lay's potato chips (acquired by Frito in 1961), Fritos corn chips, Cheetos, Ruffles, and Doritos (launched 1964 nationally). The strategic insight was that beverages and snacks shared the same retail buyers, distribution channels, and consumption occasions, allowing combined sales calls and shared promotional spending. Snacks would also smooth out the seasonal volatility of soft drinks. The merged entity reported combined sales of roughly $510 million in 1965 and was positioned to challenge a much larger Coca-Cola, which then had no comparable food business. The PepsiCo blueprint of pairing beverages with branded snacks proved durable; six decades later, Frito-Lay generates roughly 55% of PepsiCo revenue and the majority of consolidated operating profit, with margins materially higher than the beverage business.
The Pepsi Challenge was a national blind taste test marketing campaign launched in 1975 in Dallas, Texas under Pepsi-Cola Company president John Sculley. Consumers were asked to sip from two unmarked cups labeled M and Q and choose the one they preferred; a majority consistently chose Pepsi, which is slightly sweeter than Coca-Cola. Pepsi rolled the campaign nationally by 1977 and used the results to attack Coke's market lead. The pressure was severe enough that on April 23, 1985 Coca-Cola announced New Coke, a reformulated sweeter product designed to beat Pepsi in blind tests. Consumer backlash forced Coke to bring back the original within 79 days as Coca-Cola Classic, one of the most studied marketing failures in history. Pepsi gained roughly 1.5 points of share during the episode and used New Coke as evidence that Coca-Cola had abandoned its heritage. The cola wars continued through the 1980s and 1990s with Pepsi spending heavily on celebrity endorsements including Michael Jackson (a roughly $5 million deal in 1983), Madonna, Britney Spears, Beyoncé, and Shaquille O'Neal. By the 2000s the rivalry shifted from cola to total beverages, where Coca-Cola retained a dominant share lead while PepsiCo built superior diversification through Frito-Lay and Quaker Oats.
PepsiCo spun off Pizza Hut, Taco Bell, and KFC in October 1997 as a separate publicly traded company called Tricon Global Restaurants, which was renamed Yum Brands in 2002. The spin-off followed two decades of acquiring restaurants (Pizza Hut in 1977, Taco Bell in 1978, KFC in 1986) on the theory that owning fast-food chains would give Pepsi guaranteed beverage placement and a captive distribution channel. By the mid-1990s the strategy had clearly failed. Restaurant operations were capital-intensive, low-margin, and management-heavy compared with beverages and snacks. Worse, owning Pizza Hut, Taco Bell, and KFC made it impossible for PepsiCo to sell fountain drinks to McDonald's, Burger King, Wendy's, or any independent operator that viewed PepsiCo as a competitor. McDonald's chose Coca-Cola exclusively in 1955 and has never switched. CEO Roger Enrico, who took over in 1996, prioritized returning to a pure beverage-and-snack focus. The restaurant spin-off freed roughly $4.5 billion of capital and immediately opened fountain accounts that had been closed to PepsiCo for decades. Tricon went public at $29 per share and the position would later generate substantial value as Yum Brands. The spin-off is generally regarded as the cleanest strategic decision of the Enrico era and set up the 1998 Tropicana and 2001 Quaker Oats acquisitions.
The 2001 acquisition of Quaker Oats for $13.4 billion in stock was the largest strategic move of the century, primarily to gain Gatorade, which Quaker had owned since 1983 and which dominated the sports drink category. Gatorade and Tropicana (acquired 1998 for $3.3 billion) gave PepsiCo a non-carbonated beverage portfolio Coca-Cola could not match. Indra Nooyi, who had architected the Tropicana and Quaker deals as CFO, became CEO in 2006 and pursued Performance with Purpose, broadening the portfolio toward healthier snacks (Naked Juice acquired 2007, Bare Snacks 2018) and reducing salt, sugar, and saturated fat across the lineup. In 2010 PepsiCo bought back its two largest bottlers, Pepsi Bottling Group and PepsiAmericas, for roughly $7.8 billion to regain control of distribution. SodaStream was acquired in 2018 for $3.2 billion. Tropicana and Naked Juice were sold to PAI Partners in 2022 for $3.3 billion in cash plus a 39% stake retained, as PepsiCo concluded chilled juices no longer fit the portfolio. Ramon Laguarta succeeded Nooyi as CEO in 2018. In 2025 PepsiCo announced the acquisitions of Siete Foods (Mexican-American snacks, roughly $1.2 billion) and Poppi (prebiotic soda, roughly $1.95 billion), addressing better-for-you growth segments.