Pepsi Bottling Group (PBG)

The Pepsi brands licensed to PBG are among the best-known in the world, and PBG benefits from this brand recognition.

After PBG turned down Pepsi's acquisition offer, Pepsi will be forced to offer a higher price for the bottler. Analyst consensus is that the new offer will be in the mid to high $30s, which would offer anywhere between a 10-20% premium on current share prices. Pepsi really needs this acquisition to be competitive against Coca-Cola, so the initial rebuttal does not mean that the deal is off the table.

PBG's 2009 agreement with CytoSport Inc. to bottle and distribute its Muscle Milk line of protein drinks will allow the company to expand into the growing health drink market. According to analysts at Goldman Sachs, the agreement is expected to increase net profit by 5% in 2009.

PBG's losses at the end of FY2008 are attributable to a large impairment charge of $340 million. While a large loss to take, the company did not and has not lost any actual revenue flows. It actually grew both in terms of revenues and profits (before the impairment charge is factored in) despite the poor economic conditions.

PepsiCo's low concentrate price increases have helped PBG to control production costs.

Pepsi Bottling Group has a crucial role in the Pepsi system; without it, PEP would not be able to get its products to consumers. This relationship ensures that PBG will remain viable as long as the Pepsi brands stay strong.