Summary
This article is about Pepsi offering $6 billion to buy back the bottling companies which they separated from in 1990s. Separating from bottling companies was once thought to be a brilliant plan. Pepsi followed Coca-Cola’s decision to spin-off bottling companies in the 1990s because it would give main beverage shareholders a bigger benefit. Pepsi’s decision to combine companies may weigh down its financial measures. However, combining companies would still be a good decision because not only does Pepsi not just a soda company anymore, it also sells fruit juices and sports drinks. Since more than just soda bottles are to be produced, it would be smart to combine its different distribution channel in bottling.
Connections
Our chapter talks about different types of distribution channels. With Pepsi buying back its bottling company, this would allow Pepsi to own more than one part of the distribution channel therefore turning into an integrated channel of distribution. In this situation, Pepsi has owned both aspects of production, primary manufacturing and secondary manufacturing. This would cause producing the different types of beverage and bottling it to become more convenient. Shipping out different Pepsi products would also become more efficient since they will come from same bottling company.
Reflection
This article is interesting to me because I never thought producing and bottling Pepsi would not happen at the same company. It is strange to think that the Pepsi drink and the Pepsi bottle did not actually come from the same place and that it was quite complicated to produce a bottle of Pepsi until now. If Pepsi followed Coca-Cola’s decision to separate bottling companies during the 1990s, would Coca-Cola now follow its rival to join the company together again? I actually don’t have a preference to which drink is better but it’s fascinating to watch both companies follow each other’s financial plans.
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