Pepsi Company’s Ethical Issues

free essayPepsiCo is an American based corporation that specializes in the production of food and beverages (Nooyi, 2013). The company is ranked to be among the top foodstuffs producing corporations in the world, and it sells over 18 products in its chain stores. The annual revenue that is attained by the corporation is $98 billion, and it sells its goods in over two hundred countries globally (Pepsico Inc). In addition, the corporation commands approximately 36% of the overall snack-food market in the United States (Pepsico Inc). Over the years, PepsiCo has been involved in several ethical issues.

Brief Summary of the Ethical Issue

In 2007, PepsiCo had faced a global ethical issue when it was charged with compromising its ethical standards by offering misleading information about one of its products (Berch, Montoya, & Sawayda, 2010). This was evidenced when the corporation produced the refined drinking water themed Aquafina Water. What the company did wrong was placing a picture of a mountain and springs on its container, which made the product’s customers perceive that the water sold in the bottles had been obtained from mountain springs (Berch, Montoya, & Sawayda, 2010). After the launching of the Aquafina, thousands of products were sold to consumers in the United States, as well as in other parts of the world. Although the Aquafina bottles did not have the title “Spring Water” on them, it was captioned “Pure Water, Perfect Taste” on its labels (New York Law Journal, 2008). This statement drove the water consumers to reach a conclusion that the company’s product had been sourced from mountain springs.

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Analysis of the Issue Using Philosophical and Business Ethical Theories

PepsiCo’s ethical issue can be analyzed using the Altruism theory. This is a philosophical theory that states that people or establishments should have a moral obligation to assist, serve and benefit the public even if this happens at the expense of the people or establishments’ own interests (Batson, 2011). In PepsiCo’s ethical case, the corporation had failed in its efforts to uphold its perceived ethical standards. The cause for this is that the company had failed to produce a product that had the right instructions on the ingredients that were used when making it. The Aquafina product had only been obtained from the tap water. However, the labeling on the water container had pictures of mountains and springs that misled the consumers into thinking that the source of water had been from the mountain springs.

Although, the philosophical altruism theory can support PepsiCo’s ethical issue, it could also be refuted by the virtue ethics theory (Hooft, 2014). According to the latter theory, an individual’s character should be employed as the primary factor in ethical thinking, instead of accentuating on the acts or consequences of the attained acts after executing a phenomenon. In the light of this theory, PepsiCo corporation did not compromise any of its ethical standards. This can be validated by the reason that although the labeling of the container was a bit misleading, the company had still developed a high-quality product for its consumers. On this ground, it is justifiable to state that the corporation had the interests of the targeted consumers in focus when developing the product.

The moral realism theory can also be employed to support the argument that PepsiCo violated its ethical standards when it did not offer a clear clarification that the Aquafina product was made of the ordinary tap water. On the one hand, the theory asserts that there should be an objective moral value to ensure that all evaluative statements, employed in the description of a phenomenon, are fundamentally factual claims (Sterelny & Fraser, 2016). On the other hand, the utilitarianism can work against such arguments by stating that the PepsiCo Corporation did not violate any ethical standards when it developed its Aquafina product (Gandjour, 2007). According to the theory of utilitarianism, the moral value of a specified product can only be evaluated through the product’s contribution in realizing its targeted utility on the targeted persons. In this case, although the labeling of the Aquafina product was misleading to some people, the product was still satisfying to all the users.


In reference to the four philosophical and business theories used in the analysis, the product satisfied the philosophical, ethical theories of altruism and moral realism theory. This is because it was not right for the corporation to place its self-interests of making profits at the expense of the targeted customers’ ethical interests on the company’s products. In order for the company to maintain its good ethical reputation, it had to ensure that correct imaging or statements about the Aquafina product had been placed on the bottle labels and not be misleading in any ways.

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Description of How the Ethical Problem Affected the Corporation’s Stakeholders Groups

After the media had publicized the corporation’s ethical issue, the corporation faced several negative effects in reference to its stakeholders. First, millions of customers who had already started consuming the product lost their confidence in PepsiCo’s products (Batson, 2011). A significant proportion of consumers has shifted their consumption preferences to substitute the products produced by rival corporations (Batson, 2011). This has led to a reduction in the corporation’s annual sales turnover and a consequential decline in the shareholders’ dividends. In addition, the reduction has also led to a reduction in the amount revenues attained by the federal government from the corporation in the form of taxes.


PepsiCo is among the largest producers of food and beverages in the world. It has grown vastly over the years and expanded its operations to over 200 countries in the world (Pepsico Inc). Nevertheless, over the years it has been facing several ethical issues that have affected its operations. In 2007, the corporation was stated to have compromised its ethical standards when it offered misguiding depictions, pertaining to the source of its ingredients on the Aquafina bottle. The moral realism theory, as well as the altruism theory, can be used to support the hypothesis that the corporation compromised its ethical standards by producing a product with misleading information on the product labels. Moreover, the utilitarianism and virtue ethics theory can also be employed to support the argument that the corporation did not defy its ethical status when producing the Aquafina products.