CASE STUDY PEPSICO IN MEXICO ANATOMY OFAN AFFILIATE S EXPOSURE
History This case describes the complexity of PepsiCos competitive position in the Mexican soft-drink market in late 1996. Following PepsiCos anchor bottler in Mexico, Gemex, the case details the strategies employed by PepsiCos senior management beginning in 1993 to expand its market share versus its traditional "red nemesis," Coca-Cola. ... Focusing on the financial implications of the peso devaluation, the case then describes PepsiCos response which only seemed to increase the financial burdens imposed on the faltering Pepsi market share. This case is of interest with regards to both marketing and finance. ... In 1993 PepsiCo was the second largest soft-drink company, after the great opponent the Coca-Cola. ... In the beginning it seemed that the PepsiCo would be the winner of the competition. ... But after the depression in Mexico, and lack of capital problems in other countries the PepsiCo’s market share just fall. They lost their Venezuelan partner and their partner in Mexico was experiencing significant losses. The issues that PepsiCo is facing in Mexico are: 1. PepsiCo’s strategy. ... The Mexican Peso’s impact on Gemex’ competitiveness in the Mexican market. ... PepsiCo’s strategy is to try and gain additional management control over the Latin American markets with the use of a single representative called a “super bottler” in each of these countries. ... PepsiCo is intending to simultaneously infuse a substantial amount of capital into each “super bottlers” operation. This strategy has not been successfully executed in Mexico. We did not take equity interest in Gemex in 1993, which was one of the main points in our strategy to take market share away from Coca-Cola in Mexico. We have seriously underestimated the role of Enrique Molina and the Molina Families business relationships within the Mexican market and their very strong and still growing position on the soft-drink market in Mexico.