The ongoing trade war is adding pressure to PepsiCo's already challenging position in the cola market, as tariffs target its soda concentrate imports. According to The Wall Street Journal, PepsiCo's decision to produce concentrate in Ireland over 50 years ago, driven by low corporate taxes, has now become a liability with a 10% tariff on imports affecting nearly all US sales of Pepsi and Mountain Dew.

Concentrates, the secret-recipe essence of sodas, are made in specialized facilities and shipped to bottling plants where they are mixed with water, bubbles, and sweetener. While PepsiCo relies heavily on Ireland for its US concentrate supply, Coca-Cola produces most of its concentrate for American sodas in Atlanta and Puerto Rico, a US territory, making drinks like Coke and Sprite less vulnerable to tariffs. "Ireland has long had the tax advantage – until the tariffs hit," said Carlos Laboy, an analyst at HSBC, as reported by The Wall Street Journal. He noted that PepsiCo is at a clear disadvantage, with the duration of the tariffs uncertain.

Both companies face challenges from a 25% US tariff on aluminum imports introduced in March, which could raise soda prices. Coca-Cola, which imports some aluminum from Canada, is exploring options like using more plastic bottles or sourcing US aluminum, according to The Wall Street Journal. Coke's CEO, James Quincey, acknowledged the potential price impact but emphasized mitigation strategies. PepsiCo, already grappling with a declining US market share, faces a tougher road. Last year, Dr Pepper overtook Pepsi-Cola as America's No. 2 soda, a low point for PepsiCo, which has shifted focus to food and energy drinks but is now trying to revive its soda sales, per The Wall Street Journal.

PepsiCo also produces concentrate in Texas, Uruguay, and Singapore but has not disclosed plans to counter the tariffs or whether they will increase soda prices. The trade war's impact extends beyond soda, affecting industries like apparel and toothpaste. Levi Strauss faces 10% tariffs on goods from several countries, while Wrangler benefits from producing 40% of its jeans in the Western Hemisphere, including Mexico, where products comply with the US-Mexico-Canada Agreement and avoid a 25% tariff on Mexican imports, as noted by The Wall Street Journal. Similarly, most Crest toothpaste is made domestically, but Colgate's production in Mexico could face tariff-related costs.

For PepsiCo's independent bottlers, many of whom are family-owned and already struggling with Pepsi's market share decline, the tariffs are a fresh blow. These bottlers, receiving concentrate in 55-gallon containers or tanker trucks, anticipate higher costs that could weaken PepsiCo's ability to compete, according to The Wall Street Journal. PepsiCo's heavy investment in Ireland, including a $189 million expansion of its Cork facilities in 2022, underscores its commitment to the region despite the new trade challenges. Keurig Dr Pepper, which opened an Irish concentrate plant in 2022 but also produces in St. Louis, declined to specify its US import volumes.

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According to Lebanese media reports, the modern Lebanese company S.M.L.C, the bottler of Pepsi Cola in Lebanon, has caused an uproar by introducing a new commercial logo design reminiscent of the Israeli flag.

The company, users claim, placed this redesigned logo solely on the caps of its bottles while retaining the old logo on the bottle itself. This unexpected move, launching the dual-logo products in Lebanese markets three days ago, prompted attorney Mohammed Ziad Jaafil to file a formal complaint with the Public Prosecution Office in Beirut on Wednesday. Although Pepsi has not announced a change to its logo, users were outraged after noticing a blue-and-white redesign on its caps. Israel Hayom could not independently confirm the photos.

على اثر اقدام الشركة العصرية اللبنانية ـ شركة S.M.L.C. - الشركة العصرية اللبنانية للتجارة – (معبئ بيبسي كولا في لبنان) على تعديل شعارها التجاري بشكل مشابه لعلم اسرائيل ووضعه فقط على اغطية عبواتها..وابقاء شعارها القديم على العبوة بذات الوقت.. وطرحها بشكل مفاجئ في الأسواق اللبنانية… pic.twitter.com/2bvmCznyzt

— الشيخ حسن مرعب (@imammoraib) June 19, 2024

Jaafil's complaint demands an immediate halt to the distribution of the company's products bearing the controversial logo and the withdrawal of all such products from the market. Additionally, he calls for an investigation into the company's representatives and the referral of those responsible for these actions to the relevant criminal court, with the aim of prosecuting them for crimes of inciting strife, attempts at normalization, and violations of the boycott laws against the Israeli enemy.

Rebranding sparks global controversy

In March of this year, Pepsi announced its new global brand identity, unveiling a redesigned primary logo for the first time in 14 years across 120 countries. The rebranding campaign strategically targeted prominent international locations to showcase the updated design.

Consumers in over 200 countries and regions worldwide enjoy PepsiCo's products more than a billion times daily. In 2023, the company generated over $91 billion in net revenue from its diverse range of food and beverage offerings, including Lay's, Doritos, Cheetos, Gatorade, Pepsi Cola, Mountain Dew, and Quaker. PepsiCo's portfolio encompasses a wide variety of delicious foods and beverages, with numerous brands each generating over $1 billion in annual retail sales.

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