Research Paper on:
PepsiCo In Mexico - Case Study

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more of the market in soft drink beverages. Mexico itself is the worlds second-largest soft drink market, which makes this country a key in the Latin America market. The initial  strategies used by PepsiCo seemed to work for a short period of time but by end of 1995, it was clear they were losing the battle. PepsiCos market share  plunged in Mexico, in most of Latin America, in fact. The companys initial plan led to a degree of success but it was temporary. Issues and problems have to do  with packaging, marketing, relationships, capitalization and overextension by affiliates. While the affiliates had no way to predict the value of the New Peso falling so dramatically, they nonetheless overextended themselves  with capital improvements. They also knew the value of the peso was falling slowly and should have taken this into consideration when recapitalizing. Lack of control by the parent  company was also an issue but while major competitor Coca-Cola took swift action to mitigate this factor by taking a stronger equity interest in bottlers, PepsiCos executives dragged their feet.  Even with their efforts, there was a problem with Molina and GEMEX because Molina and his family initially rebuffed PepsiCos attempts until it was too late. Molina and his family  also controlled a number of other enterprises, including sugar. PepsiCo then made another huge mistake by not agreeing to take a large enough equity in the Cisneros Group in Venezuela,  which led to Cisneros selling to Coca-Cola. It was in Venezuela that PepsiCo outperformed Coca-Cola; failing to support Cisneros was a severe lack of good management judgement. The Cisneros family  had been loyal to PepsiCo for decades and when they wanted to have the company take a larger equity interest, the company did not meet their need. The company