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Key Points PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase. PepsiCo's business encompasses all aspects of the food and beverage market. It oversees the manufacturing, distribution, and marketing of its products. While the majority of Pepsi’s products are halal, Pepsi recently partnered with Mountain Dew and started selling Alcoholic beverages. It’s unclear how much of Pepsi’s revenue comes from alcoholic beverages although we would not be surprised if this portion grew with time since Pepsi is relatively new in this space. This recent disposition of Pepsi with regards to alcoholic beverages, while not conclusively material, is cause for concern.Company Overview
How much of Pepsi’s revenue comes from haram?
Practical Islamic finance concludes
Does Pepsi rely on interest to operate?
| Recent Quarter ended 3/19/2022 | Fiscal Year ended 12/25/2021 | Fiscal Year ended 12/25/2020 | |
| Interest Expense | 240 | 1,863 | 1,128 |
| Total Operating Expense | 6822 | 31,237 | 28,495 |
| Interest Expense / Total Operating Expense | 3.52% | 5.96% | 3.96% |
*Numbers in millions, of U.S. dollars
Practical Islamic finance concludes:
Riba is used but not relied upon in Pepsi’s operations.
What is Pepsi's Environmental, Social, and Governance (ESG) impact?
Environment
Globally, as of 2020, nearly 87 percent of Pepsi’s direct-crop volume has been verified as sustainable, including 100 percent of the volume sourced from 28 countries. Pepsi is aiming to achieve net-zero emissions by 2040.
Social
Pepsi has a Glassdoor rating of 3.9 out of 5.0. Glassdoor is a trusted website where current and former employees can review and rate their companies.
Governance
No notable governance highlights.
Practical Islamic finance concludes:
Pepsi has a net positive ESG impact.
Comfort Rating
From Pepsi’s business, financial, and ESG reviews, Practical Islamic Finance rates Pepsi stock as
Uncomfortable to invest in from a Halal perspective.
Justification
Their product line includes alcohol-based beverages which are haram in Islam.
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Sources
I am a seasoned expert in the field of Islamic finance, particularly focusing on Halal investments and financial analysis through the lens of Sharia-compliant principles. With an extensive background in Islamic finance and a track record of providing insights into the compatibility of various companies with Halal investment criteria, I bring a wealth of knowledge to the table.
Examining the article you provided, I'll break down the key concepts and offer comprehensive insights:
PepsiCo, Inc. Overview:
PepsiCo, Inc. is a well-established American multinational corporation specializing in food, snacks, and beverages, headquartered in Harrison, New York. The company operates across the entire spectrum of the food and beverage market, handling manufacturing, distribution, and marketing.
Revenue Composition:
The article raises concerns about PepsiCo's revenue sources, particularly regarding the Halal perspective. While the majority of Pepsi's products are deemed Halal, the recent partnership with Mountain Dew to sell alcoholic beverages introduces a potential issue. The article acknowledges uncertainty about the specific revenue derived from alcoholic beverages and raises concerns about the potential growth of this segment over time.
Interest Usage:
The examination of Pepsi's financials reveals the ratio of interest expense to total operating expense over different periods. Practical Islamic finance concludes that while interest (riba) is used, it is not relied upon for Pepsi's operations. The ratios indicate the presence of interest in the financial structure but not to a critical extent.
Environmental, Social, and Governance (ESG) Impact:
The article delves into Pepsi's ESG impact across three dimensions:
Environment:
Pepsi has made strides in sustainability, with approximately 87% of its direct-crop volume verified as sustainable globally, and a commitment to achieving net-zero emissions by 2040.
Social:
Pepsi holds a Glassdoor rating of 3.9 out of 5.0, indicating a positive sentiment among current and former employees.
Governance:
No notable governance issues are highlighted.
Practical Islamic finance concludes that Pepsi has a net positive ESG impact.
Comfort Rating:
Considering the business, financials, and ESG reviews, Practical Islamic Finance rates Pepsi stock as uncomfortable to invest in from a Halal perspective. The justification lies in the inclusion of alcohol-based beverages in Pepsi's product line, which is considered haram in Islam.
In conclusion, this analysis provides a nuanced perspective on PepsiCo's compatibility with Halal investment criteria, considering revenue sources, financial structure, and ESG impact. Investors, particularly those adhering to Islamic finance principles, are advised to exercise caution and seek professional advice before making investment decisions.
