Pepsico in Mexico Business Analysis Essay - 2843 Words

Pepsico in Mexico Business Analysis This case describes the complexity of PepsiCos competitive position in the Mexican soft-drink market during the late 1990s. Between 1993 and 1996 PepsiCo and Coca-Cola waged a classic cola war in Latin America. The goal for both companies was to gain market share and by the end of 1996, Coca-Cola had clearly won the Latin America cola war. In 1993 PepsiCo enjoyed a 42% market share in Venezuela thanks to the success of its bottling partner, the Cisneros Group but by the end of 1996, PepsiCo held less than 1% of the Venezuelan cola market. Following PepsiCos anchor bottler in Mexico, Gemex, the case details the strategies employed by PepsiCos senior management beginning in 1993 to expand its†¦show more content†¦However, by the end of 1996 it was very clear that PepsiCo and its super bottler affiliate Gemex had made a series of poor decisions that allowed them to lose a substantial share of the Latin American market to Coke. PepsiCo intended to simultaneously infuse a substantial amount of capital into each super bottler operation but that was not successfully executed in Mexico. PepsiCo did not take equity interest in Gemex in 1993, which was one of the main points in their strategy to take market share away from Coca-Cola in Mexico. They had seriously underestimated the role of Enrique Molina and the Molina Families business relationships within the Mexican market and their very strong and growing position on the Mexico soft-drink market. After several proposal negotiations, Mr. Molina had very strong feelings against giving PepsiCo a look at his familys business and therefore rejected PepsiCos proposal. The objective of gaining a strong super bottler in the Mexican soft-drink market had failed. In addition, another mistake PepsiCo made was not taking more than a 10% to 20% stake in the main PepsiCo bottler, the Cisneros Group in Venezuela. 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