Published: 08/08/2011

After the announcement of Kraft splitting into two separate companies, analysts on wall Street started to question whether US food and drinks giant PepsiCo could also consider dividing itself in two.

The analysts speculate about the split of PepsiCo given the seemingly changed tone from CEO Indra Nooyi and often discussing PepsiCo as a tale of two companies.

The analysts note that there may be many options for a breakup as one global snacks company (SnacksCo) and one global beverages company (Bevsco) would likely be the best structure, given the benefits of shared marketing, technology and suchlike.

Some of the analysts still think that having a combined business brings advantage to PepsiCo over retailers and quick service restaurants and give PepsiCo some pricing power.

Analysts also anticipate that a possible split could provide value to PepsiCo shareholders as the stock is being weighed down by the soft drink business.  
PepsiCo’s snacks business has significant competitive advantages in brand equity and distribution compared to its soft drink business.

If PepsiCo see Kraft and Fortune Brands unlocking value after their splits, it’s not ridiculous to think they could follow suit.

In the event of such a split, unions organized both in snacks and soft drink businesses of PepsiCo need to ensure that they will build strong representation and cooperation to prepare themselves for the re-structuring of the company.

For more information please visit here.