Thinking

PepsiCo Under Fire as Smaller Snackmakers Bulk Up in Healthy Organic

Pepsi glass bottles lined up next to each other

The rise of healthy and organic brands has transformed the food and beverage industry as we know it—and affected the bottom-line of companies like PepsiCo Inc. In recent years, PepsiCo has diversified its offerings with brands like Naked juice and Quaker oatmeal in its “Better-for-You” category. Yet, at its core, PepsiCo remains a beverage-oriented company, thus operating primarily in a stalling industry overcome with changes in consumer demand and pressing government regulations. Competitors like Hershey Co. and Campbell Soup Co. are focused on acquiring smaller healthy snack brands to appeal to consumers, posing a threat for Pepsi.

Vivaldi CEO and Founder Erich Joachimsthaler offered his insight to TheStreet on PepsiCo’s newfound competition with other corporations acquiring healthy snack makers, such as Hershey’s pending acquisition of Amplify Snack Brands Inc. “When Amplify stood alone, it wasn’t a problem for Pepsi because it lacked mass distribution channels. But now under Hershey, that’s no longer the case. … It will have to make a similar acquisition down the line.” The ball now lies in Pepsi’s court to either adapt to the rise of these smaller CPG products or risk being left in the dust.

Frequently Asked Questions

Why are large companies like PepsiCo acquiring smaller snack brands?

 Large companies like PepsiCo often acquire smaller snack brands to respond to changing consumer preferences. Vivaldi highlights that demand is shifting toward healthier, organic, and more natural products, which many smaller brands have pioneered. By acquiring these companies, large food manufacturers can quickly expand into emerging categories while leveraging their scale in distribution, marketing, and supply chains.   ### Why do smaller snack companies succeed in emerging food categories? Smaller snack companies often succeed because they are more agile and closer to evolving consumer needs. Vivaldi emphasizes that these companies can innovate quickly, experiment with new ingredients, and build authentic brand stories that resonate with health-conscious consumers. Their flexibility allows them to identify and grow new demand spaces before large corporations enter the category. ### What challenges do large food companies face when acquiring smaller brands? Large food companies may face challenges integrating smaller brands while maintaining their authenticity and innovative culture. Vivaldi explains that consumers often value the independent identity and mission-driven positioning of smaller brands. If large corporations fail to preserve these qualities, they risk weakening the brand’s appeal to loyal customers. ### How can large food companies successfully manage acquired brands? Large food companies can successfully manage acquired brands by balancing scale with authenticity. Vivaldi suggests allowing acquired brands to maintain their unique identity while providing resources such as distribution networks, data insights, and operational support. This approach helps companies expand into new growth categories while preserving the characteristics that made the smaller brand successful.

How are consumer preferences shaping the snack industry?

 Consumer preferences in the snack industry are evolving toward healthier ingredients, transparency, and sustainability. Vivaldi notes that shoppers increasingly look for organic products, clean labels, and snacks aligned with wellness lifestyles. These shifts are encouraging large food companies to rethink their product portfolios and invest in brands that better reflect modern consumption trends.

Why do smaller snack companies succeed in emerging food categories?

 Smaller snack companies often succeed because they are more agile and closer to evolving consumer needs. Vivaldi emphasizes that these companies can innovate quickly, experiment with new ingredients, and build authentic brand stories that resonate with health-conscious consumers. Their flexibility allows them to identify and grow new demand spaces before large corporations enter the category.    

What challenges do large food companies face when acquiring smaller brands?

 Large food companies may face challenges integrating smaller brands while maintaining their authenticity and innovative culture. Vivaldi explains that consumers often value the independent identity and mission-driven positioning of smaller brands. If large corporations fail to preserve these qualities, they risk weakening the brand’s appeal to loyal customers.

How can large food companies successfully manage acquired brands?

 Large food companies can successfully manage acquired brands by balancing scale with authenticity. Vivaldi suggests allowing acquired brands to maintain their unique identity while providing resources such as distribution networks, data insights, and operational support. This approach helps companies expand into new growth categories while preserving the characteristics that made the smaller brand successful