the home of business intelligence -...

PepsiCo, Inc. New York Stock Exchange, Inc. (PEP)

January 2015

REFERENCE CODE: 2D95A557-82B0-4089-986A-49989FAA8ED4

PUBLICATION DATE: January 2015

WWW.MARKETLINE.COM

MARKETLINE. THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED

MarketLine Strategy, SWOT and Corporate Finance Report

an informa business

http://www.marketlineinfo.com/

COMPANY SNAPSHOT

PepsiCo, Inc. - STRATEGY, SWOT AND CORPORATE FINANCE REPORT 2D95A557-82B0-4089-986A-49989FAA8ED4 / Published 01/2015

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 2

COMPANY SNAPSHOT

Reference Code : 2D95A557-82B0-4089-986A-49989FAA8ED4 Publication Date: January 2015

PepsiCo, Inc.

700 Anderson Hill Road

Purchase

New York 10577

United States

Fax: 1 914 253 2070

Phone: 1 914 253 2000

Website: www.pepsico.com

Industry: Consumer Packaged Goods

Overview

PepsiCo, Inc. (Pepsi or 'the company') is a global consumer goods company, primarily engaged in production,

marketing and sales of a variety of food, snacks and beverage products. The company operates in the

Americas, Europe, Asia, the Middle East and Africa. It is headquartered in New York and employed about 274,000 people as of December 28, 2013.

The company recorded revenues of $66,415 million in the financial year ended December 2013 (FY2013), an

increase of 1.4% over FY2012. The operating profit of the company was $9,705 million in FY2013, an increase of 6.5% over FY2012. The net profit was $6,740 million in FY2013, an increase of 9.1% over FY2012.

SWOT

Strengths Weaknesses

Strong market position

Diverse product portfolio and strong brand equity

Widening presence in the emerging markets

Market controversies could hamper consumer confidence

Opportunities Threats

Increasing spending on food in emerging markets

Increasing local-focus

Changing consumer preferences creating opportunities in the health and nutrition space

Rising competition from private labels is posing a threat to national brands

Water scarcity and poor quality could impact production costs and capacity

Rising labor wages and healthcare costs in the US

Key Employees

Employee Name Job Title Board

Indra K. Nooyi Chairman and Chief Executive Officer Executive Board

Albert P. Carey Chief Executive Officer, PAB Senior Management

Cynthia M. Trudell Executive Vice President and Chief Senior Management

COMPANY SNAPSHOT



Human Resources Officer

Deborah Rosado Shaw Senior Vice President, Chief Global

Diversity and Engagement Officer Senior Management

Financial Deals Activity Overview

PepsiCo, Inc.: Deal Activity by Deal Type (2011 - YTD*2015)

SOURCE: MARKETLINE

PepsiCo, Inc.: Recent Deal Activity

12 Sep 2013

Indofood Asahi Sukses and Asahi

Indofood acquire 100% stake in Pepsi-

Cola Indobeverages

06 Jun 2013 PepsiCo not to acquire SodaStream

International

29 Mar 2012 Almarai acquires additional 4% stake in

International Dairy & Juice

01 Mar 2012 Relational Investors acquires stake in

PepsiCo

10 Nov 2011 PepsiCo acquires Biscoitos Mabel

(Mabel Group)

SOURCE: MARKETLINE

Recent Developments

Date Headline Category

Oct 29, 2014 Papa John's partners with PepsiCo to create Fritos Chili

Pizza

Financial Deals-->Partnership /

Strategic Alliance

Aug 11, 2014 Papa Murphy's signs multi-year agreement with PepsiCo Contracts-->Others

Jul 4, 2014 7-Eleven and PepsiCo launch Doritos Loaded and Mtn

Dew Solar Flare

Business Expansion-->Products/

brands launch

Jun 19, 2014 PepsiCo inaugurates baking center in Mexico Business Expansion-->Geography

TABLE OF CONTENTS



TABLE OF CONTENTS

Company Snapshot _____________________________________________________________________ 2

Table of Contents _______________________________________________________________________ 4

PepsiCo, Inc.: Company Overview ________________________________________________________ 8

PepsiCo, Inc.: Overview and Key Facts ________________________________________________ 8

PepsiCo, Inc.: Overview _________________________________________________________________ 8

PepsiCo, Inc.: Key Facts ________________________________________________________________ 8

PepsiCo, Inc.: Key Employees ________________________________________________________ 9

PepsiCo, Inc.: Key Employee Biographies ____________________________________________ 11

PepsiCo, Inc.: Major Products and Services ___________________________________________ 19

PepsiCo, Inc.: Company History _____________________________________________________ 22

PepsiCo, Inc.: Management Statement ________________________________________________ 30

PepsiCo, Inc.: Locations and Subsidiaries ____________________________________________ 35

PepsiCo, Inc.: Key Competitors ______________________________________________________ 36

PepsiCo, Inc.: Company Analysis ________________________________________________________ 37

PepsiCo, Inc.: Business Description__________________________________________________ 37

PepsiCo, Inc.: SWOT Analysis _______________________________________________________ 39

PepsiCo, Inc.: SWOT Overview__________________________________________________________ 39

PepsiCo, Inc.: Strengths _______________________________________________________________ 39

PepsiCo, Inc.: Weaknesses _____________________________________________________________ 40

PepsiCo, Inc.: Opportunities ____________________________________________________________ 41

PepsiCo, Inc.: Threats _________________________________________________________________ 43

PepsiCo, Inc.: Corporate Financial Deals Activity __________________________________________ 44

PepsiCo, Inc.: Financial Deals Overview ______________________________________________ 44

PepsiCo, Inc.: Targets and Partners __________________________________________________ 45

PepsiCo, Inc.: Top Deals 2011 - 2015YTD* _____________________________________________ 46

PepsiCo, Inc.: Advisors _____________________________________________________________ 47

PepsiCo, Inc.: Top Legal Advisors _______________________________________________________ 47

PepsiCo, Inc.: Mergers and Acquisitions ______________________________________________ 48

PepsiCo, Inc.: Partnership __________________________________________________________ 49

PepsiCo, Inc.: Divestments __________________________________________________________ 50

PepsiCo, Inc.: Private Equity and Ownership __________________________________________ 51

PepsiCo, Inc.: Recent Developments _____________________________________________________ 52

TABLE OF CONTENTS



PepsiCo, Inc.: News and Events Summary ____________________________________________ 52

PepsiCo, Inc.: Business Expansion __________________________________________________ 54

PepsiCo, Inc.: Contracts ____________________________________________________________ 55

PepsiCo, Inc.: Corporate Social Responsibility ________________________________________ 56

PepsiCo, Inc.: Financial Deals _______________________________________________________ 56

PepsiCo, Inc.: Financial Performance _________________________________________________ 56

PepsiCo, Inc.: Strategy and Operations _______________________________________________ 57

Appendix _____________________________________________________________________________ 58

Contact Us ________________________________________________________________________ 58

Methodology ______________________________________________________________________ 58

About MarketLine __________________________________________________________________ 59

TABLE OF CONTENTS



LIST OF TABLES

Table 1: PepsiCo, Inc.: Key Facts ..................................................................................................................................... 8

Table 2: PepsiCo, Inc.: Key Employees ............................................................................................................................ 9

Table 3: PepsiCo, Inc.: Locations and Subsidiaries....................................................................................................... 35

Table 4: PepsiCo, Inc.: Key Competitors ........................................................................................................................ 36

Table 5: PepsiCo, Inc.: Deal Activity by Deal Type - Volume (2011 - YTD*2015)............................................................ 44

Table 6: PepsiCo, Inc.: M&A Average Deal Size - Value (US$m) .................................................................................... 44

Table 7: PepsiCo, Inc.: Targets and Partners ................................................................................................................. 45

Table 8: PepsiCo, Inc.: Top Deals 2011 - 2015YTD* ....................................................................................................... 46

Table 9: PepsiCo, Inc.: Legal Advisor Ranking by Value (US$m) .................................................................................. 47

Table 10: PepsiCo, Inc.: M&A Volume and Value Trend (2011 - YTD*2015) ................................................................... 48

Table 11: PepsiCo, Inc.: M&A Activity by Geography (2011 - YTD*2015) ...................................................................... 48

Table 12: PepsiCo, Inc.: Partnership Volume and Value Trend (2011 - YTD*2015) ........................................................ 49

Table 13: PepsiCo, Inc.: Partnership Trend by Deal Type (2011 - YTD*2015) ................................................................ 49

Table 14: PepsiCo, Inc.: Divestments Volume and Value Trend (2011 - YTD*2015) ...................................................... 50

Table 15: PepsiCo, Inc.: Divestments by Geography (2011 - YTD*2015) ....................................................................... 50

Table 16: PepsiCo, Inc.: Private Equity and Ownership Volume and Value Trend (2011 - YTD*2015) .......................... 51

Table 17: PepsiCo, Inc.: Private Equity and Ownership Volume by Deal Type (2011 - YTD*2015) ................................ 51

Table 18: PepsiCo, Inc.: News and Events Summary .................................................................................................... 52

Table 19: PepsiCo, Inc.: Business Expansion ................................................................................................................ 54

Table 20: PepsiCo, Inc.: Contracts ................................................................................................................................. 55

Table 21: PepsiCo, Inc.: Corporate Social Responsibility ............................................................................................. 56

Table 22: PepsiCo, Inc.: Financial Deals ........................................................................................................................ 56

Table 23: PepsiCo, Inc.: Financial Performance ............................................................................................................ 56

Table 24: PepsiCo, Inc.: Strategy and Operations ......................................................................................................... 57

TABLE OF CONTENTS



LIST OF FIGURES

Figure 1: PepsiCo, Inc.: Deal Activity by Deal Type - Volume (2011 - YTD*2015) .......................................................... 44

Figure 2: PepsiCo, Inc.: M&A Average Deal Size - Value (US$m) .................................................................................. 44

Figure 3: PepsiCo, Inc.: M&A Volume and Value Trend (2011 - YTD*2015) ................................................................... 48

Figure 4: PepsiCo, Inc.: M&A Activity by Geography (2011 - YTD*2015) ....................................................................... 48

Figure 5: PepsiCo, Inc.: Partnership Volume and Value Trend (2011 - YTD*2015) ........................................................ 49

Figure 6: PepsiCo, Inc.: Partnership Trend by Deal Type (2011 - YTD*2015) ................................................................ 49

Figure 7: PepsiCo, Inc.: Divestments Volume and Value Trend (2011 - YTD*2015) ....................................................... 50

Figure 8: PepsiCo, Inc.: Divestments by Geography (2011 - YTD*2015) ........................................................................ 50

Figure 9: PepsiCo, Inc.: Private Equity and Ownership Volume and Value Trend (2011 - YTD*2015) ........................... 51

Figure 10: PepsiCo, Inc.: Private Equity and Ownership Volume by Deal Type (2011 - YTD*2015) .............................. 51

PEPSICO, INC.: COMPANY OVERVIEW




PepsiCo, Inc.: Overview and Key Facts

PepsiCo, Inc.: Overview

PepsiCo, Inc. (Pepsi or 'the company') is a global consumer goods company, primarily engaged in production,

marketing and sales of a variety of food, snacks and beverage products. The company operates in the

Americas, Europe, Asia, the Middle East and Africa. It is headquartered in New York and employed about 274,000 people as of December 28, 2013.

The company recorded revenues of $66,415 million in the financial year ended December 2013 (FY2013), an

increase of 1.4% over FY2012. The operating profit of the company was $9,705 million in FY2013, an increase of 6.5% over FY2012. The net profit was $6,740 million in FY2013, an increase of 9.1% over FY2012.

PepsiCo, Inc.: Key Facts

Table 1: PepsiCo, Inc.: Key Facts

Corporate Address: 700 Anderson Hill Road

Purchase

New York 10577

Country: United States

Fax: 1 914 253 2070

Phone: 1 914 253 2000

Web Address: www.pepsico.com

Turnover (US$m): 66,415

Employees: 274,000

Financial Year End: December

Industry: Consumer Packaged Goods

Primary Stock Exchange (Ticker): New York Stock Exchange, Inc. (PEP)

SOURCE: MARKETLINE




PepsiCo, Inc.: Key Employees

Table 2: PepsiCo, Inc.: Key Employees

Employee Name Job Title Board Age Since

Indra K. Nooyi Chairman and Chief Executive

Officer Executive Board 58 2007

Albert P. Carey Chief Executive Officer, PAB Senior Management 62 2011

Cynthia M. Trudell Executive Vice President and

Chief Human Resources Officer Senior Management 60 2011

Deborah Rosado Shaw

Senior Vice President, Chief

Global Diversity and

Engagement Officer

Senior Management 2014

Enderson Guimaraes

Executive Vice President,

Global Categories and

Operations

Senior Management 54 2014

Grace Puma Whiteford Senior Vice President and Chief

Procurement Officer Senior Management

Hugh F. Johnston Executive Vice President and

Chief Financial Officer Senior Management 52 2010

Jon Banner Executive Vice President,

Communications Senior Management 2014

Katty Lam Chairman, PepsiCo Greater

China Region Senior Management 2013

Laxman Narasimhan Chief Executive Officer,

PepsiCo Latin America Foods Senior Management 2014

Marie T. Gallagher Senior Vice President and

Controller Senior Management 54 2011

Mehmood Khan

Executive Vice President and

Chief Scientific Officer, Global

R&D

Senior Management 55 2012

Rich Beck Senior Vice President, Global

Supply Chain Operations Senior Management 2011

Richard Evans President, PepsiCo West

Europe and South Africa Senior Management

Robert Dixon Senior Vice President and Chief

Information Officer Senior Management 2007

Ruth Fattori Senior Vice President, Talent

Management Training and Senior Management 2013




Development

Sanjeev Chadha Chief Executive Officer,

PepsiCo AMEA Senior Management 54 2013

Tim Minges

Senior Vice President, Strategic

Business Initiatives, PepsiCo

North America Beverages


Tony West

Executive Vice President,

Government Affairs, General

Counsel and Corporate

Secretary


Umran Beba

Senior Vice President and Chief

Human Resource Officer,

PepsiCo AMEA

Senior Management

Zein Abdalla President Senior Management 55 2012

Alberto Ibarguen Independent Director Non Executive Board 70 2005

Alberto Weisser Independent Director Non Executive Board 58 2011

Daniel Vasella Independent Director Non Executive Board 60 2002

David C. Page Independent Director Non Executive Board 2014

Dina Dublon Independent Director Non Executive Board 60 2005

George W. Buckley Independent Director Non Executive Board 67 2012

Ian M. Cook Independent Director Non Executive Board 61 2008

Lloyd G. Trotter Independent Director Non Executive Board 68 2008

Ray L. Hunt Independent Director Non Executive Board 70 1996

Rona A. Fairhead Independent Director Non Executive Board 52 2014

Sharon Percy Rockefeller Independent Director Non Executive Board 69 1986

Shona L. Brown Independent Director Non Executive Board 48 2009

SOURCE:MARKETLINE




PepsiCo, Inc.: Key Employee Biographies

Indra K. Nooyi

Ms. Nooyi has been the Chairman at Pepsi since 2007 and the Chief Executive Officer since 2006. She was

elected to Pepsi's Board and became the President and Chief Financial Officer in 2001 after serving as a Senior

Vice President and the Chief Financial Officer from 2000. Ms. Nooyi also served as the Senior Vice President of

Corporate Strategy and Development from 1996 to 2000 and as the Senior Vice President of Strategic Planning

from 1994 to 1996. Prior to joining the company, she spent four years as the Senior Vice President of Strategy,

Planning and Strategic Marketing for Asea Brown Boveri. Earlier, Ms. Nooyi was a Vice President and the Director of Corporate Strategy and Planning at Motorola from 1986 to 1990.

Board: Executive Board

Job Title: Chairman and Chief Executive Officer

Salary (US$): 14,280,877

Since: 2007

Age: 58

Albert P. Carey

Mr. Carey has been the Chief Executive Officer of PAB, a business division of Pepsi, since 2011. Prior to that,

he has been the President and Chief Executive Officer at FLNA from 2006 to 2011. Mr. Carey began his career

with Frito-Lay in 1981 where he spent 20 years in a variety of roles. He served as the President, PepsiCo Sales

from 2003 until 2006. Prior to that Mr. Carey served as the Chief Operating Officer, PepsiCo Beverages and

Foods North America from 2002 to 2003 and as Pepsi's Senior Vice President, Sales and Retailer Strategies from 1998 to 2002.

Board: Senior Management

Job Title: Chief Executive Officer, PAB

Since: 2011

Age: 62

Cynthia M. Trudell

Ms. Trudell has been the Executive Vice President of Human Resources and Chief Human Resources Officer at

Pepsi since 2011. Prior to assuming this role, she served as a Senior Vice President and the Chief Personnel

Officer at Pepsi from 2007 until 2011. Ms. Trudell also served as a Director at Pepsi from 2000 to 2007. She was

formerly a Vice President at Brunswick Corporation and the President at Sea Ray Group during 2001-06. From

1999 until 2001, she served as a Vice President at General Motors (GM) and as the Chairman and President at

Saturn Corporation, a wholly owned subsidiary of GM. Ms. Trudell began her career with the Ford Motor Co. as

a Chemical Process Engineer. In 1981, she joined GM and held various engineering and manufacturing supervisory positions.





Job Title: Executive Vice President and Chief Human Resources Officer

Since: 2011

Age: 60

Enderson Guimaraes

Mr. Guimaraes has been the Executive Vice President, Global Categories and Operations at Pepsi since

December 2014. Prior to assuming his current position, he served as the Chief Executive Officer of PepsiCo

Europe from 2012. Mr. Guimaraes also served as the President, Global Operations at Pepsi from 2011. In the

past, he was an Executive Vice President at Electrolux and as the Chief Executive Officer of its major appliances

business in Europe, Africa and the Middle East. Earlier, Mr. Guimaraes served at Philips Electronics for 10 years

in various roles, including Regional Marketing Executive, Brazil; Senior Vice President and Head of Global

Marketing Management and General Manager of the company's WidiWall LED display business. He also served

as the Chief Executive Officer of Philips' Lifestyle Incubator group, an innovation engine which created new

businesses and developed them over several years. In the past, Mr. Guimaraes also served in various marketing positions at Danone and Johnson & Johnson.


Job Title: Executive Vice President, Global Categories and Operations

Since: 2014

Age: 54

Hugh F. Johnston

Mr. Johnston has been an Executive Vice President and the Chief Financial Officer at Pepsi since 2010. He

joined the company in 1987, and has served in a variety of positions, including Chief Financial Officer,

Beverages and Foods, Pepsi; Senior Vice President, Mergers and Acquisitions, Pepsi; President, Pepsi-Cola

North America Beverages; and most recently Executive Vice President, Global Operations, Pepsi. Prior to joining Pepsi, Mr. Johnston served at General Electric Company in a variety of finance positions.


Job Title: Executive Vice President and Chief Financial Officer

Salary (US$): 9,797,279

Since: 2010

Age: 52

Jon Banner

Mr. Banner has been the Executive Vice President, Communications at Pepsi May 2014. He previously served

as the company's Senior Vice President for global strategy and planning. Prior to joining Pepsi, Mr. Banner held

senior-level executive and editorial positions at ABC News. Previously, he held a number of senior editorial

positions at ABC News, including Senior Broadcast Producer of 'ABC's World News Tonight with Peter Jennings'. From 1999 to 2000, Mr. Banner was Senior Producer of 'Good Morning America' news segments.





Job Title: Executive Vice President, Communications

Since: 2014

Laxman Narasimhan

Mr. Narasimhan has been the Chief Executive Officer of Latin America Foods business at Pepsi since

September 2014. Previously, he served as a Senior Vice President and the Chief Financial Officer at PAF. Prior

to PepsiCo, Mr. Narasimhan was a Director and Location Manager at McKinsey's New Delhi Office. He worked

with McKinsey for 19 years around the world. Mr. Narasimhan had responsibility for consumer-facing industries

in India, co-led the Global Consumer and Shopper Insights Practice and led McKinsey's research and on the

emerging market consumer. Previously, he co-led the Global Retail Knowledge Council of McKinsey's Retail

Practice. Prior to joining McKinsey, Mr. Narasimhan spent three years as a Line Business Manager in a

manufacturing startup in India. He is currently a member of the Council on Foreign Relations, a Fellow of the

Foreign Policy Association, Co-Chairman of the Advisory Board at the G20Y Conference and is an Advisory Board member of the Jay H. Baker Retailing Center at the Wharton School, University of Pennsylvania.


Job Title: Chief Executive Officer, PepsiCo Latin America Foods

Since: 2014

Mehmood Khan

Dr. Khan has been the Executive Vice President and Chief Scientific Officer, Global R&D at Pepsi since 2012.

He previously served as the Chief Executive Officer of Pepsi's Global Nutrition Group from 2010 and as the

Chief Scientific Officer from 2008. Prior to joining the company, Dr. Khan served for five years at Takeda

Pharmaceuticals in various leadership roles including President of R&D and Chief Medical Officer. He also

served at the Mayo Clinic until 2003 as the Director of the Diabetes, Endocrinology and Nutrition Clinical Unit and as a Consultant Physician in Endocrinology.


Job Title: Executive Vice President and Chief Scientific Officer, Global R&D

Salary (US$): 7,120,831

Since: 2012

Age: 55

Sanjeev Chadha

Mr. Chadha has been the Chief Executive Officer of PepsiCo AMEA, a business division of Pepsi, since 2013.

Prior to this role, he was the President of PepsiCo's Middle East and Africa region. Previously, Mr. Chadha

served as the President, PepsiCo India and South Asia; Senior Vice President, Commercial, Asia Pacific,

including China and India; and Senior General Manager, Vietnam and the Philippines, as well as served in other

leadership roles in sales, marketing, innovation and franchise. He joined the company 1989 as a Founding Member of the PepsiCo beverage business in India.





Job Title: Chief Executive Officer, PepsiCo AMEA

Since: 2013

Age: 54

Zein Abdalla

Mr. Abdalla has been the President at Pepsi since 2012. Prior to his current role, he served as the Chief

Executive Officer, European operations at Pepsi from 2009 to 2012. Mr. Abdalla joined Pepsi in 1995 and has

held a variety of senior positions, including General Manager of Pepsi's European Beverage Business, General

Manager of Tropicana Europe and Franchise Vice President for Pakistan and the Gulf region. Prior to joining Pepsi, he worked for Mars Incorporated.


Job Title: President

Salary (US$): 10,960,181

Since: 2012

Age: 55

Alberto Ibarguen

Mr. Ibarguen has been an Independent Director at Pepsi since 2005. He has been the President and Chief

Executive Officer at the John S. and James L. Knight Foundation since 2005. Mr. Ibarguen previously served as

the Chairman at Miami Herald Publishing Co., and as a Publisher of The Miami Herald and El Nuevo Herald. He is a member of the Board at American Airlines Group (formerly AMR Corporation) and AOL.

Board: Non Executive Board

Job Title: Independent Director

Salary (US$): 200,000

Since: 2005

Age: 70

Alberto Weisser

Mr. Weisser has been an Independent Director at Pepsi since 2011. He served as the Chairman, Chief

Executive Officer and Executive Chairman at Bunge, a global food, commodity and agri-business company, from

1999 until 2013 and its Chief Financial Officer from 1993 to 1999. Mr. Weisser is a board member at the Council of the Americas and served as a Director at International Paper Company from 2006 until 2012.






Salary (US$): 200,000

Since: 2011

Age: 58

Daniel Vasella

Dr. Vasella has been an Independent Director at Pepsi since 2002. He served as the Chairman of the Board at

Novartis from 1999 to 2013. Dr. Vasella also served as the Chief Executive Officer at Novartis from 1996 to

2010. During 1992-96, he held the positions of Chief Executive Officer, Chief Operating Officer, Senior Vice

President and Head of Worldwide Development and Head of Corporate Marketing at Sandoz Pharma. Dr.

Vasella also served at Sandoz Pharmaceuticals Corporation from 1988 to 1992. Dr. Vasella is also a Director at American Express Company.



Salary (US$): 216,025

Since: 2002

Age: 60

David C. Page

Dr. Page has been an Independent Director at Pepsi since 2014. He has been a Director at the Whitehead

Institute at Biomedical Research since 2005. Dr. Page has also been a Professor of Biology at MIT since 1997

and an Investigator at the Howard Hughes Medical Institute since 2000. Currently, he is a member of the National Academy of Sciences, the American Academy of Arts and Sciences and the Institute of Medicine.



Since: 2014

Dina Dublon

Ms. Dublon has been an Independent Director at Pepsi since 2005. Previously, she served as an Executive Vice

President and the Chief Financial Officer at JP Morgan Chase & Co. from 1998 until her retirement in 2004. Ms.

Dublon is also a Director at Microsoft Corp. and Accenture and serves on the Supervisory Board at Deutsche Bank. She is also a Trustee at Carnegie Mellon University.



Salary (US$): 220,000

Since: 2005




Age: 60

George W. Buckley

Sir George has been an Independent Director at Pepsi since 2012. He has been the Chairman at Smiths Group

since 2013. Sir George has also been the Chairman of the Board at Arle Capital, a private equity firm, since

2012. From 2005 to 2012, he served as the Chairman, President and Chief Executive Officer at 3M Company.

Earlier, between 1997 and 2005, Sir George was the Chairman and Chief Executive Officer at Brunswick

Corporation, a boat and recreational product manufacturer. At present, he serves on the Board at Stanley Black & Decker, Archer-Daniels Midland Company and Hitachi.



Salary (US$): 200,000

Since: 2012

Age: 67

Ian M. Cook

Mr. Cook has been an Independent Director at Pepsi since 2008. He was appointed the Chief Executive Officer

and was elected to the Board of Colgate-Palmolive Company in 2007 and became Chairman of its Board in

2009. Mr. Cook joined Colgate-Palmolive Company in the UK in 1976 and progressed through a series of senior

management roles around the world. In 2002, he became the Executive Vice President, North America and

Europe. In 2004, Mr. Cook became the Chief Operating Officer with responsibility for operations in North

America, Europe, Central Europe, Asia and Africa. In 2005, he became responsible for all Colgate-Palmolive Company operations worldwide.



Salary (US$): 219,167

Since: 2008

Age: 61

Lloyd G. Trotter

Mr. Trotter has been an Independent Director at Pepsi since 2008. He has also been a Managing Partner at

GenNx360 Capital Partners since 2008. Mr. Trotter served as the Vice Chairman at General Electric and as the

President and Chief Executive Officer at GE Industrial from 2006 to 2008. Between 1989 and 2006, he held

various positions at GE, including Executive Vice President, Operations from 2005 to 2006. Mr. Trotter also

served as the President and Chief Executive Officer at GE Consumer and Industrial Systems from 1998 to 2005.

He was also the President and Chief Executive Officer, Electrical Distribution and Control during 1992-98. Currently, Mr. Trotter is also a Director at Textron and Daimler.






Salary (US$): 220,000

Since: 2008

Age: 68

Ray L. Hunt

Mr. Hunt has been an Independent Director at Pepsi since 1996. He has been the Chairman, Chief Executive

Officer and President at Hunt Consolidated, a holding company for oil production and exploration and real estate

investment management businesses, since 1976. Mr. Hunt began his association with Hunt Oil Company in

1958. He is also a Director of numerous corporate organizations, including Bessemer Securities Corporation,

Bessemer Securities and King Ranch, as well as a Trustee of numerous charitable organizations, including The Cooper Institute and Southern Methodist University.



Salary (US$): 215,000

Since: 1996

Age: 70

Rona A. Fairhead

Ms. Fairhead has been an Independent Director at Pepsi since March 2014. She served as the Chairman and

Chief Executive officer at the Financial Times Group, a division of Pearson, from 2006 to 2013. Ms. Fairhead

previously served as Pearson's Chief Financial Officer from 2002 to 2006. Prior to joining Pearson, she held

several leadership positions at Bombardier, in the Aerospace division, and at Imperial Chemical Industries, a

specialty chemicals company, where she ultimately served as Executive Vice President of strategy and group financial control.



Since: 2014

Age: 52

Sharon Percy Rockefeller

Ms. Rockefeller has been an Independent Director at Pepsi since 1986. She has been the President and Chief

Executive Officer at WETA public radio and television stations in Washington since 1989. Ms. Rockefeller was a

member of the Board of Directors at WETA from 1985 to 1989. Formerly, she served as a Director at the Public

Broadcasting Service (PBS) in Washington. Ms. Rockefeller currently serves as a Trustee at Museum of Modern

Art, Johns Hopkins Medicine and Sibley Memorial Hospital. She also serves as the President at the International

Council of The Museum of Modern Art, and as the Chairman of the Board of Trustees at the National Gallery of




Art.



Salary (US$): 200,000

Since: 1986

Age: 69

Shona L. Brown

Ms. Brown has been an Independent Director at Pepsi since 2009. She has also been a Senior Advisor to

Google since 2013. Previously, Ms. Brown served as the Senior Vice President, Google.org at Google from

2011 to 2012. She also served as the Senior Vice President, Business Operations at Google from 2006 to 2011

and as the Vice President, Business Operations from 2003 to 2006. From 1995 to 2003, Ms. Brown was at

McKinsey and Company, a management consulting firm, where she had been a Partner since 2000. She is a

Director at a number of non-profit organizations including The Bridgespan Group; The Exploratorium; The Nature Conservancy; and Code for America.



Salary (US$): 200,000

Since: 2009

Age: 48




PepsiCo, Inc.: Major Products and Services

Pepsi is a global consumer goods company, primarily engaged in production, marketing and sales of a variety of

food, snacks and beverage products. The company's key products include the following:

Products:

Foods:

Cereals

Rice

Pastas

Dairy products

Mixes and syrups

Side dishes

Snacks:

Potato chips

Tortilla chips

Dips

Cheese flavored snacks

Corn chips

Pretzels

Multigrain snacks

Popcorn

Cookies and wafers

Beverages:

Carbonated soft drinks

Low-calorie beverages

Active hydration beverages

Juices and juice drinks

Bottled water

Sports drinks

Ready to drink teas and coffees

Brands:

Agusha

Amp Energy

Aquafina

Aquafina Flavorsplash

Aunt Jemima

Cap'n Crunch

Cheetos

Chester's

Chipsy

Chudo

Cracker Jack

Diet Mountain Dew

Diet Mug




Diet Pepsi

Diet Sierra Mist

Domik v Derevne

Doritos

Duyvis

Elma Chips

Emperador

Frito-Lay

Fritos

Fruktovy Sad

Frustyle

Gatorade

G2

G Series

Grandma's

Imunele

Izze

Kurkure

Lay's, Life

Lubimy Sad

Manzanita Sol

Marias Gamesa

Matutano

Mirinda

Miss Vickie's

Mother's

Mountain Dew

Mountain Dew Code Red

Mountain Dew Kickstart

Mug

Munchies

Naked

Near East

O.N.E.

Paso de los Toros

Pasta Roni

Pepsi

Pepsi Max

Pepsi Next

Propel

Quaker

Quaker Chewy

Rice-A-Roni

Rold Gold

Rosquinhas Mabel

Ruffles

Sabritas

Sakata

Saladitas

Sandora

Santitas

7UP (outside the US)

7UP Free (outside the US)

Sierra Mist

Simba




Smartfood

Smith's

Snack a Jacks

SoBe

SoBe Lifewater

SoBe V Water

Sonric's

Stacy's

Sting

SunChips

Tonus

Tostitos

Trop 50

Tropicana

Tropicana Farmstand

Tropicana Pure Premium

Tropicana Twister

Vesely Molochnik

Walkers Ya




PepsiCo, Inc.: Company History

Pepsi-Cola was created in the late 1890s by Caleb Bradham, an American pharmacist. Many years later, Frito-

Lay, Inc. was formed by the 1961 merger of the Frito Company (founded by Elmer Doolin in 1932) and the H. W. Lay Company (founded by Herman W. Lay in 1932).

In 1965, the present company of PepsiCo, Inc. was founded by Donald M. Kendall, the then President and Chief

Executive Officer of Pepsi-Cola, and Herman W. Lay, the then Chairman and Chief Executive Officer of Frito-Lay, through the merger of the two companies.

By 1966, Pepsi entered the Japanese and Eastern Europe markets. In 1969, the company introduced a new

color theme and changed its packaging using red, white and blue colors to reflect the new theme. During the same year, Frito-Lay introduced Funyuns brand onion flavored snacks.

By 1970, the company's sales crossed the $1 billion mark. In the same year, the company's headquarters was

moved from New York City to the current world headquarters in Purchase, New York in the US. During the year,

Frito-Lay introduced W.C. Fritos as its new advertising mascot marking the expansion of this brand. Over the

following decade, Frito Lay's opened, on an average, more than one new plant a year. The year 1970 also

marked some of the company's innovations in packaging such as the introduction of the industry's first two-liter bottle and the introduction of lightweight, recyclable, plastic bottles in response to consumer preferences.

Later in 1972, the company officially became the first foreign product sold in the then Union of Soviet Socialist

Republics. During the same year, Pepsi was given exclusive rights to import Stolichnaya Russian vodka into the

US. In the following year, Foods International, later called PepsiCo Foods International and subsequently named Frito-Lay International, was established to market snack foods around the world.

By 1974, the company's revenues surpassed the $2 billion mark and it became the first American consumer

product to be produced, marketed and sold in the former Soviet Union. In 1975, the company launched Pepsi Light, with a distinctive lemon taste, an alternative to traditional diet colas.

In 1977, Pepsi acquired Pizza Hut, an American restaurant chain, and in the same year, the company surpassed

the $3 billion mark revenues. The next year, in 1978, Pepsi acquired Taco Bell, an American chain of fast-food

restaurants. In 1979, the company established its first R&D center in Valhalla, New York. The company introduced 12-pack cans for the first time in the same year and also reached the $5 billion mark in sales.

In 1980, the company established PepsiCo Food Service International, its food service division, to focus on

overseas development of restaurants. In the same year, Frito-Lay launched the new Grandma's brand cookies

across the US. Pepsi's expanding business helped it gain the number one place in sales in take-home market in

the US in 1980. In 1981, Frito-Lay launched the Tostitos brand crispy round tortilla chips and also started

nutritional labeling on all its products sold in the US. In the same year, the company launched PepsiCo Food

Systems, its restaurant supply company, and entered into an agreement with China to manufacture soft drinks.

The following year (1982), Pepsi inaugurated the first Pepsi-Cola operation in China and also launched Pepsi

Free and Diet Pepsi Free, world's first major brand caffeine-free colas. In 1983, the Bottler Hall of Fame was established to recognize the achievement and dedication of international bottlers.

In 1984, the company underwent a major restructuring program to organize its business into three focus areas:

soft drinks, snack foods and restaurants. The company's transportation and sporting goods businesses were

sold in the same year. During the year, Pepsi launched a reformulated version of Diet Pepsi with 100%

NutraSweet. During the same time, Slice and Diet Slice, the first major soft drinks with fruit juice, were also

introduced. In the same year, the company achieved a new breakthrough in advertising through the concept of music marketing by signing up with Michael Jackson and his brothers to do a TV commercial for the company.

By 1985, the company expanded into 150 countries and territories around the world, while its snack food

operations were being marketed in 10 international markets. Frito-Lay also expanded into a new headquarters in

Texas. In the same year, Pepsi's first line of sweet snacks, Sonrics, was launched in Mexico, while the




company's Chinese operations started distribution activities.

In 1986, the company underwent a second major reorganization to decentralize its various business operations.

Under the new structure, beverage operations were combined under PepsiCo Worldwide Beverages while the

snack food operations were combined under PepsiCo Worldwide Foods. Further, the company was

reincorporated in North Carolina, the US. In the same year, Pepsi added Kentucky Fried Chicken (KFC), a quick

service restaurant, to its food service portfolio. Apart from KFC, the company also purchased 7Up International,

the third largest franchise soft drink operation outside of the US, and Mug Root Beer, a branded root beer

company. In the same year, the company got listed on the Tokyo Stock Exchange while its second bottling plant

in China was launched. The year also marked the launch of Santitas brand restaurant style tortilla chips by Frito-Lay. In 1987, Frito-Lay pioneered the use of hand-held computers for marketing.

In 1988, Pepsi-Cola International entered into a landmark joint venture agreement in India, while renewing its

trade accord with the Soviet Union. During the same year, worldwide retail sales of Doritos brand tortilla chips

reached the $1 billion mark and Doritos officially became the world's largest selling snack chips brand. In 1989,

Pepsi acquired Walkers Crisps and Smith Crisps, two of the UK's leading snack food companies, and

Smartfood, a ready-to-eat popcorn business. In 1990, Pepsi acquired a controlling interest in Gamesa, Mexico's

largest cookie company. The company also signed one of the largest commercial trade agreements in history with the Soviet Union.

Pepsi acquired an equity interest in Wedel SA, a manufacturer of chocolate and confectionery in Poland, in

1991. The company also formed a joint venture with Thomas J. Lipton Co. to develop and market tea-based

drinks. Also in 1991, Pepsi purchased an equity position in Carts of Colorado, a manufacturer and marketer of

mobile merchandising equipment. The year also marked several new product launches by Frito-Lay, including

Sunchips, its first multigrain snack; Cheetos Paws and Tostitos brand restaurant-style tortilla chips. In the same year, Pepsi introduced a new logo, its eighth in 93 years.

In 1992, Pepsi purchased an equity interest in California Pizza Kitchen, while Frito-Lay and General Mills signed

an agreement to merge snack food businesses in Europe. The company began distribution of Lipton's line of

ready-to-drink teas in the US in the same year, while Frito-Lay launched the reformulated variants of Doritos

brand Nacho Cheesier flavored tortilla chips. Frito-Lay's new launches continued into the following year (1993)

with the introduction of new Doritos brand Tortilla Thins, Baked Tostitos brand Tortilla Chips and Wavy Lay's

Original and Au Gratin flavors. In the same year, Pepsi introduced The Cube, an innovative 24-can multi-pack

that satisfied growing consumer demand for convenient large size soft drink packaging; and Pepsi Max, a new

variant of soft drink that delivered maximum cola taste in a no-sugar product. Pepsi also introduced the Aquafina

bottled water into test market. The year also marked several acquisitions by Pepsi, including East Side Mario's Restaurants and D'Angelo Sandwich Shops chain.

In 1994, the company became the first major soft drink maker to begin producing and distributing its product in

Vietnam. The company's arm, Pepsi-Cola International, acquired an Indian company, its first big bottling plant in

Bombay, India. During the same year, the company further expanded its operations by forming the North

American Coffee Partnership with Starbucks to jointly develop ready-to-drink coffee beverages. Along with

business expansions, the year also saw several new launches, including All Sport, a new sports drink; Lay's

Masterpiece brand Barbecue Flavor Potato Chips by Frito-Lay and K.C. Masterpiece Original Brand Barbecue

Sauce; new baked Rold Gold Fat Free Thins Pretzels, the first fat free reduced sodium pretzel by Frito-Lay;

Cheese-less Cheetos (launched in China) and Doritos (launched in the UK). Furthermore, Pepsi entered into a

licensing agreement with The Procter & Gamble Co. to launch a line of fountain juices and drinks under the Citrus Hill trademark.

The year 1995 was marked with several landmark launches by the company. By this year, the Lay's brand

potato chips were expanded to 20 markets throughout the world, while the snack business aggressively

expanded its low/no-fat snack segment with the launch of new Baked Lays. Frito-Lay also test-marketed Baked

Tostitos, Rold Gold Fat Free Pretzels, Ruffles Reduced Fat Potato Chips and Tostitos Fat-Free Salsas and

Black Bean Dip brands during the year. In the meanwhile, the company's beverage business saw two new

launches: the introduction of Smooth Moos Smoothies, a line of low-fat dairy shakes; and 7Up International launching 7UP Ice Cola, a new clear cola. The year 1995 saw the launch of the company's official website.




In 1996, the company underwent another business reorganization exercise with Pepsi-Cola domestic and

international operations being combined into Pepsi-Cola Company, while the international and domestic snack

food operations were combined into one business unit called Frito-Lay Company. At the same time, the

company announced its plans to spin off its restaurant businesses as an independent publicly-traded company,

and sell its food distribution company to focus on its core beverage and snack food businesses. In line with its

focus on core business areas, the company entered into a partnership with MTV to develop international

programming, cross promotions, marketing tie-ins and special events. The company also entered into a

promotional alliance with Lucasfilm linking existing and future Star Wars series with Pepsi beverage, snack

foods and restaurant brands worldwide. In the same year, the company launched Smooth Moos Smoothies, a line of low-fat dairy shakes.

In 1997, the company's centenary year of operation, Pepsi-Cola North American bottling operations became a

separate unit called The Pepsi-Cola Bottling Co. and the company rolled out the Aquafina brand of bottled water

in the US. In the same year, Frito-Lay announced plans to buy the 104-year-old snack, Cracker Jack, a candy-

coated mix of popcorn and peanuts, from Borden Foods Corp. Within its snack portfolio, Frito-Lay also launched Doritos 3D's Tortilla Chips, a triangle-shaped chip.

The year 1998 saw some of the breakthrough innovations happening for the company's beverage business with

the launch of products like Pepsi One, the first ever one-calorie cola made available in the US with a Food and

Drug Administration-approved sweetener Sunett. The company also introduced two-liter plastic bottle with built-

in grip handle to make it easier to grip and pour. In the same year, the company also made one of its largest

acquisitions, Tropicana Products, from Seagram Company. Following this, Tropicana Products acquired

Alimentos del Valle, one of Spain's leading chilled juice and soup companies, further expanding Pepsi's portfolio.

The snack food business also made some acquisitions during the year including the purchases of Smith's

Snackfood Company in Australia from United Biscuits Holdings; Barcel, Chile's second-largest snack company;

and Tasty Foods Egypt. Following these acquisitions, Frito-Lay also became the snack chip leader in South and Central America as it entered into a joint venture with Empreseas Polar SA of Venezuela.

In the year 1999, Pepsi started trading on the New York Stock Exchange under the symbol PBG, following a

$2.3 billion public offering. Pepsi and Suntory Limited signed an agreement to create a joint venture linking

bottling networks in North Carolina and New York, the US to create a new company, Pepsi Bottling Ventures,

which became the third largest bottler in the Pepsi system. Another breakthrough in the company's history was

Tropicana juices entering the huge Indian market for the first time in that year. In the same year, Tropicana

launched two new calcium-fortified Pure Premium juices, Pure Premium Grovestand Calcium and Pure Premium

Ruby Red Grapefruit Calcium, while Lipton launched Iced Tea Green Tea with Honey and Diet Peach.

Furthermore, Frito-Lay signed an agreement with Oberto Sausage to be the exclusive distributor of the natural-style jerky.

The company's acquisition spree continued in the year 2000 with the buying of a majority stake in South Beach

Beverage Company, whose highly innovative SoBe brand made it one of industry's most successful companies.

The company also reached an agreement with The Quaker Oats Company to merge its operations. The

company teamed up with Yahoo, the biggest web navigation company, in a multimedia marketing campaign

aimed at teens and young adults. Other remarkable events in the year included the launch of an icy smoothie

soy milk-and-fruit drink by Tropicana, in a joint venture with Galaxy Foods Co.; Sierra Mist, a caffeine-free,

lemon/lime soda by Pepsi; and a caramel-flavored bottled Frappuccino coffee drink by The North American Coffee Partnership.

In 2001, Pepsi acquired Tasali Foods, a Saudi Arabian snack company. Newly launched products during the

year included Tropicana Smoothies, Mountain Dew Code Red, Lay's Bistro Gourmet potato chips, Pepsi Twist -

regular and diet versions of the crisp new cola with lemon, SLAM - the orange brand Mirinda (in Italy), and Diet Sierra Mist.

In 2002, Pepsi reorganized again to unite all North American beverage operations, including Pepsi-Cola,

Tropicana and Gatorade, into one new division, PepsiCo Beverages and Foods North America. New product

launches during the year included Go Snacks by Frito-Lay, Gatorade ICE in three new fruity flavors, Tropicana

Pure Premium single-serve resalable bottle for on-the-go consumers, Mr. Green - a green-tinted carbonated soft




drink with caffeine and ginseng under SoBe's New Age beverage line, and a new line of Gatorade brand drinks

called Xtremo. During the year, the company shifted its focus to healthy snacking and beverage options with the

introduction of several new products under the healthy-theme. For the first time, Pepsi published its Health and

Wellness Philosophy and announced its plans to eliminate trans-fats from Doritos, Tostitos, and Cheetos and

also launched Lay's Reduced Fat chips and Cheetos Reduced Fat snacks. Aquafina Essentials target active,

targeted at health-conscious adults in four lightly sweetened varieties, including B-Power, Calcium+, Daily C and

Multi-V, was launched on the same lines. At the same time, Quaker's Nutrition for Women team developed a

Food Guide Pyramid for Women as well as an online nutritional assessment. Tropicana Pure Premium and

Quaker Oatmeal together launched the Heart and Soul Mates Support Network featuring nutrition tips,

motivational messages and coaching advice, to help consumers turn healthy habits into life-long changes. The

company also introduced Marathon Kids, a program that encouraged kids and their families to be more physically active.

In 2003, the company signed several sporting sponsorship deals like US Open Snowboarding Championships, a

four-year sponsorship deal with the Canadian Hockey Association, and a four-year sponsorship agreement with

the UK Football Association. In another round of reorganization, the company created PepsiCo International that

consolidated all international snack, beverage and food units in an effort to drive faster growth and improved

profitability around the world. New product launches during the year included Quaker Chewy Wholesome

Favorites and Quaker Chewy Trail Mix, Mt. Dew LiveWire, a new line of snacks made with organic ingredients called Natural Snacks, new Oatmeal Breakfast Squares, Pepsi Vanilla and Tropicana 100% Juice Blends.

In 2004, Pepsi Bottling Group (PBG) bought Phil Gaudreault et Fils Ltee, a Quebec-based Pepsi bottler. During

the year, the company launched several new products under various brands including Doritos and Cheetos

Halloween Treat Multi-Sacks, Doritos Black Pepper Jack, Sugar-Free No Fear by SoBe, Doritos Edge and

Tostitos Edge - line extensions with 60% fewer carbohydrates, Quaker Chewy Cookies and Milk granola bars

and Quaker Fruit and Oatmeal cereal bars, Pepsi Edge - the first full-flavored cola with 50% less sugar,

carbohydrates and calories than regular cola, and Gatorade Endurance Hydration Formula - a specialized sports

drink to meet the needs of endurance athletes. The company continued launching many new products in 2005

like Tropicana Twister Soda, Pepsi Lime and Diet Pepsi Lime, Dole line of 100% and 50% juices, reformulated

Pepsi ONE with Splenda brand sweetener, Wasabi Funyuns under the Frito-Lay portfolio, Tropicana Sensations,

Quaker's Weight Control Instant Oatmeal, Quaker Milk Chillers, MDX Energy Soda, Twistos Croutons for the

Russian market, Gatorade Propel Calcium (the first Calcium-enriched fitness water), and Pepsi Max Cino by

Britvic. In the same year, Pepsi was chosen as the exclusive beverage provider for Soup Kitchen International

and The Original SoupMan. The company also partnered with Harvey's, Swiss Chalet and Milestone's Restaurants during the year.

In 2006, Pepsi completed the acquisition of Stacy's Pita Chip Company and IZZE Beverage Company. During

the same year, the company also acquired Naked Juice Company and the New Zealand snack company

Bluebird Foods. In line with its health-focus, Frito-Lay launched reformulated variants of Lay's Ruffles by cutting

more than 50% saturated fats by using NuSun Sunflower Oil. In the same year, Diet Pepsi also launched Jazz, a

new line of zero-calorie colas made available in Black Cherry French Vanilla and Strawberries and Cream flavors.

In 2007, the company made one of the largest corporate purchases of Renewable Energy Certificates and joined

the US Climate Action Partnership as part of its commitment to sustainability. In the same year, Aquafina

launched Aquafina Alive, a low calorie, vitamin-enhanced water beverage while Tropicana launched Tropicana

Fruit Squeeze, a 20-calorie drink with real Tropicana fruit juice. Other health-focused launches in the year

included IZZE Esque, a low-calorie, nothing artificial beverage; Quaker Mini Delights offering great taste and

portion control; and Diet Pepsi Jazz in caramel flavor. In the same year, Pepsi and Pepsi Americas jointly acquired Sandora, a juice company in Ukraine.

In 2008, Pepsi completed the acquisition of Spitz International, a Canadian maker of sunflower and pumpkin

seeds, while PAF announced plans to invest $3 million in Mexico to expand Sabritas and Gamesa brands in the

region. In the same year, the company announced its plans to invest $1 billion in China as part of its strategy to

expand in emerging markets and broaden the portfolio of locally-relevant products. The company also made

public its plans to buy Bulgaria's leading nuts and seeds company and the Russian juice leader, Lebedyansky. In




the same year, the company acquired the UK based vitamin water brand, V Water.

In 2009, Pepsi joined Ceres, a coalition of investors, environmental groups and public interest organizations

working to address sustainability efforts. The company's joint venture with Almarai acquired a stake in Jordanian

dairy company, Teeba. Pepsi created a new business unit named Baked Snacks North America to meet

consumers' interest in more nutritious snacks and foods. In the same year, Pepsi opened a new Russian

beverage plant in Domodedovo, the largest bottling plant in Pepsi's global system. The company also signed

merger agreements with PBG and PepsiAmericas (PAS). Pepsi also announced the acquisition of Amacoco,

Brazil's largest coconut water company. As part of its business restructuring plans, the company also announced

its plans of forming a new bottling unit. The company also entered into a strategic alliance with Calbee Foods

Company to make and sell a wide range of food products in Japan. In the same year, FLNA announced a

partnership with Terra Cycle, a company that would repurpose Frito-Lay snack packaging into merchandise.

FLNA and Oberto Sausage Co. reached an agreement to end partnership for distribution and sales of OhBoy!

Oberto brand meat snack products in the US and Canada. The company acquired Karinto snack business in

Peru in the same year and also announced its plans to acquire PBG and PAS, its two largest anchor bottlers. It

was in the same year that Pepsi launched its first climate-friendly vending machines in the US. In West China,

PepsiCo Greater China opened a new bottling plant, Chengdu Pepsi Beverage Co. The company also announced a multi-year distribution agreement with Rockstar Energy Drink in 2009.

In 2010, Pepsi completed the strategic acquisitions of its two largest bottlers, PBG and PAS. Around the same

time of the year, Pepsi Beverages Company (PBC), a division of Pepsi, and Tampico Beverages announced an

agreement to distribute TAMPICO PLUS fruit-flavored beverage products through Pepsi's direct store delivery

system in select US markets. In the same year, PBC completed the acquisition of Pepsi-Cola Bottling Co of Yuba City.

During mid-2010, PepsiCo Beverages Americas signed an agreement with The FRS Company for distribution of

its FRS Healthy Energy brand of products. In the same year, the company announced an investment of $3

million over the next three years to create the Agricultural Development Center of Peru. The Center will focus on

the development of new varieties of potatoes and other tubers and roots. Around the same time, the company

announced its plans to invest $250 million in Vietnam over the next three years. Pepsi also collaborated with Senomyx for a four-year agreement related to Senomyx's sweet-taste technology in the same year.

The company also announced its plans to invest $140 million to build its 10th plant in Russia, towards the end of

2010. Furthermore, the company announced plans to roll-out its new i-crop farming technology globally. I-crop, a

web-based tool developed by Pepsi in conjunction with Cambridge University, is a crop management system

that enables farmers to monitor, manage and reduce their water use and carbon emissions, while also

maximizing potential yield and quality. The company also signed an agreement with the VSIP Bac Ninh, to

confirm its development of a beverage production plant in the VSIP Bac Ninh Integrated Township and Industrial Park.

Pepsi and GNC, a specialty retailer of nutritional products for the active consumer, announced a joint venture

agreement towards the end of 2010 to develop and sell fortified coconut water products under the newly created

Phenom brand name. The company also announced its plans to acquire Wimm-Bill-Dann Foods (WBD), a

Russian branded food-and-beverage company, around the same time. In the same year, the company increased

its investment in O.N.E., a Los Angeles based coconut water company, thereby acquiring a majority stake in the

company. Furthermore, Pepsi announced that approximately 50% of Pepsi's FLNA's product portfolio will be

made with all natural ingredients, including three of its biggest brands, Lay's potato chips, Tostitos tortilla chips

and SunChips multigrain snacks. The products made with all natural ingredients will not have any artificial or

synthetic ingredients, artificial flavors or artificial preservatives, or ingredients such as monosodium glutamate. The acquisition of WBD was completed by the end of 2010.

In 2011, Pepsi and Strauss Group announced a joint venture partnership to produce and sell fresh dips and

spreads in key markets outside of North America. The two companies earlier operated a North American joint

venture since 2007 under the Sabra brand. In the same year, Burger King Corporation signed a multi-year

agreement with Pepsi. As per the agreement, Pepsi became the exclusive soft drink supplier in more than 1,000

Burger King Corporation restaurants throughout the Latin America and Caribbean region. Also in the same year,




Lipton Iced Tea launched a 100% Natural Lipton Iced Tea, a new line of beverages with all-natural ingredient list.

The company launched five varieties of eco-friendly, recyclable and compostable cups to foodservice customers

in the US in 2011. During the same time, Tropicana Trop50 introduced Lemonade and Raspberry Lemonade, two new low-guilt lemonade flavors that contain 50% less sugar and calories, and no artificial sweeteners.

PepsiCo Beverages Canada strengthened its commitment towards sustainable business practices with the

introduction of 7UP EcoGreen bottle, Canada's and North America's first soft drink bottle made from 100%

recycled polyethylene terephthalate plastic, in 2011. The company also signed a partnership with Grupo

Embotelladoras Unidas, S.A.B. de C.V., a Pepsi bottler in Mexico, and Empresas Polar, a Venezuela-based food and beverage manufacturer, to form a new joint venture, creating a nationwide beverage company in Mexico.

Further in 2011, the company added Doritos and Cheetos Fiery Fusion snacks to its portfolio of spicy snacks. In

the same year, Pepsi created the Global Snacks Group, a new business initiative to drive innovation across its

portfolio of global snack food brands. Also in 2011, the company entered into a strategic alliance with Tingyi

(Cayman Islands) Holding Corp. (Tingyi Holding), one of the major food and beverage companies in China.

Through this alliance, Tingyi Holding's beverage subsidiary, Tingyi-Asahi Beverages Holding Co Ltd, will become

Pepsi's franchise bottler in China. Around the same time, the company announced the acquisition of Mabel, a

producer of cookies, crackers and snacks in Brazil. The acquisition added Mabel's well-known brands such as

Mabel, Elbi's, Kelly and Skiny to Pepsi's existing food and beverage portfolio and created new opportunities for

future growth and expansion. The company also entered into a multi-year partnership with Jersey Mike's Subs,

an American sub sandwich chain, to sell several of Pepsi's beverage and snack brands in 500 locations across 30 states in the US.

In 2012, Pepsi formed a strategic alliance with Ocean Spray Cranberries, a US-based, grower-owned

cooperative that produces cranberry and grapefruit juice drinks in Latin America. As part of the alliance, Pepsi

will gain exclusive rights to manufacture and distribute a portfolio of cranberry and blueberry-based beverages

through its Latin America Beverages division. The companies will also share marketing responsibilities for the

products and intend to collaborate on product innovation. Further in 2012, the company announced that three

more iconic brands, Diet Mountain Dew, Brisk and Starbucks ready-to-drink beverages, were added to its

portfolio of billion-dollar brands. In FY2011, these brands generated more than $1 billion in annual retail sales, expanding Pepsi's portfolio of billion-dollar brands to 22.

The company announced a new global structure and strengthened management team in 2012, in line with its

strategy to become a fully integrated, global food and beverage company. As per the new structure, Pepsi's

global groups will work across the regions to fully leverage the power and scale of the company. In accordance with this development, Pepsi also announced some leadership changes.

Also in 2012, Pepsi and its joint venture partner, Strauss Group, introduced Obela, a fresh, refrigerated dips and

spreads brand, for the Mexican market. The joint venture will launch several varieties of hummus under the new

brand to meet the growing consumer demand for health and wellness options. In the same year, Pepsi signed a

multi-year relationship with the Pittsburgh Steelers to be the franchise's exclusive non-alcoholic beverage, salty

snacks and sports fuel provider. The deal marks the Steelers' first partnership with Pepsi's expanded portfolio,

which includes brands such as Pepsi, Frito-Lay and Gatorade. Further in the same year, Pepsi opened a new

food manufacturing facility in Wuhan, China. The plant, which is PepsiCo's sixth food manufacturing site in the

country, is part of the company's plans to drive the continued growth of its China business and expand further into central and western China.

Pepsi entered into a strategic alliance with Suntory Holdings, a global beverage and wellness company based in

Japan, in 2012 to form a joint venture in Vietnam. Under the terms of the agreement, Suntory Holdings will

acquire a 51% stake in Pepsi's Vietnam beverage business, while Pepsi will be a 49% shareholder. The new

joint venture will serve as the bottler for both companies in Vietnam. Around the same time, the company

opened a new beverage manufacturing plant in Zhengzhou, China. The new plant was built in collaboration with

Tingyi Holding, one of the leading food and beverage companies in China. The new Zhengzhou PepsiCo

Beverages facility is the first plant opened since the two companies formed their strategic alliance earlier in the




year. Later in 2012, Pepsi opened a new food and beverage innovation center in Shanghai, China. The new

facility is the company's largest R&D center outside of North America, and will serve as a hub of new product, packaging and equipment innovation for Pepsi's businesses throughout Asia.

Towards the end of 2012, Rice-A-Roni launched new single-serve, microwavable, flavored rice cups for people

on-the-go. The company also announced plans to expand its Quaker brand in India to include ready-to-cook

upma and poha mixes. During the same time, Pepsi forayed into the fruit-and-vegetable category, with the

launch of Tropicana Farmstand. The company announced plans to roll out its flagship juice brand Tropicana in a powder format in India. This marks Pepsi's entry into the Indian powder concentrate category.

The company launched Trop50, a new range of drinks with half the calories and sugar of conventional juice, in

the UK in January 2013. In the same month, Pepsi India consolidated all of its company-owned bottling plants

under two market units to improve operating efficiencies. Further in January 2013, the company partnered with

Burger King Corporation to be the exclusive supplier of soft drinks in over 100 Burger King Corporation restaurants throughout China.

In March 2013, Pepsi and two of its independent bottlers, Pepsi Bottling Ventures (PBV) and Honickman Group's

Pepsi-Cola Bottling Company of New York (PCNY), announced their intention to transfer certain franchise

ownerships in New York, North Carolina, Idaho and Vermont. Pepsi agreed to swap five counties of its

company-owned North Carolina territory, including Charlotte, to PBV in exchange for PBV's 11 counties in

Vermont and 18 counties in Idaho. In exchange, PBV agreed to sell its Long Island, New York territory, including

Nassau and Suffolk counties, to the Honickman Group's PCNY, which already operates in each of New York

City's five areas (Manhattan, the Bronx, Brooklyn, Queens and Staten Island) and New York's Westchester

County. These moves are expected to drive operating efficiencies and improve customer service. In the same

month, the company launched a new single-serve bottle for its Pepsi trademark portfolio, including Pepsi, Diet Pepsi, Pepsi Max and Pepsi Next, marking its first design update since 1996.

Muller Quaker Dairy, a joint venture between Pepsi and Theo Muller Group, opened a new yogurt manufacturing

facility in Batavia, New York, in June 2013. The new facility will serve as a national production and distribution

center for Muller yogurt. In the same month, Pepsi's FLNA segment opened a compressed natural gas (CNG)

fueling station in Beloit, Wisconsin. FLNA is investing in natural gas infrastructure for large commercial vehicles as part of its commitment to alternative fuel.

In July 2013, Ruffles brand introduced Crispy Fries Potato Strips in the US, the French fry-shaped snacks sliced

from real potatoes. During the same month, Manchester United Football Club and Pepsi announced a multi-year

regional sponsorship agreement in Asia Pacific. Under terms of the agreement, Pepsi will become the official

soft drinks partner of Manchester United Football Club in Thailand, Malaysia, Singapore, Myanmar, Cambodia,

Laos and Brunei. The company will also hold exclusive rights to use Manchester United branding on its products and point of sale materials within these markets.

Aquafina FlavorSplash, a product of PAB, launched a new line of sparkling water beverages and liquid water

enhancers, offering a portfolio of zero calorie hydration options to teen consumers, in October 2013. Stacy's

Snacks, a brand of FNLA, introduced Stacy's Bake Shop Bakery Crisps, a sweet and savory line-up of artisan

bakery bread snacks. These crisps are made from real bakery breads and include herbed baguette, pretzel bread and banana nut, and vanilla pound cake.

In November 2013, Pepsi announced plans to invest approximately $5.5 billion in India by 2020. The investment

is expected to further strengthen and expand the capabilities of Pepsi and its partners in the following strategic

areas: innovation, manufacturing, infrastructure and agriculture. The Quaker Oats Company, a subsidiary of

Pepsi, introduced a range of innovative products in December 2013. These new oat-based innovations include Quaker Warm & Crunchy Granola, Quaker Instant Oatmeal Cups and Quaker Real Medleys Cereal.

In January 2014, Pepsi announced plans to invest $5 billion in Mexico over the next five years. The investment

is designed to further strengthen Pepsi's food and beverage business in Mexico.

Pepsi and LOTTE-MGS Beverage (Myanmar) Co., the company's bottler in Myanmar, opened Pepsi-Cola




bottling plant in the country in March 2014.

In April 2014, Pepsi announced an exclusive supply and partnership agreement with Cartoon Network Amazone,

the world's first Cartoon Network-themed waterpark, which is set to open later in 2014. As part of the multi-year agreement, Pepsi will be the park's official snack and beverage provider.

NourishCo Beverages, a joint venture between Tata Global Beverages and PepsiCo India, announced plans to

enter the sparkling water (carbonated) segment, in August 2014. In September 2014, Quaker Oats, a division of Pepsi, launched Quaker Instant Oats Caldo, a new range of instant porridge products in the Philippines.

In October 2014, PepsiCo Foods Vietnam Company (PFVC) signed a Memorandum of Understanding (MoU)

with the Department of Agriculture and Rural Development (DARD) and the Phivang Collaboration of Farmers in

Vietnam to introduce a sustainable contract potato farming model into Vietnam. As a part of the MOU, PFVC will

agree a fixed price for the purchase of potatoes from Phivang Collaboration of Farmers at the start of each growing season. The Tostitos brand introduced the Tostitos Rolls! tortilla chips in December 2014.




PepsiCo, Inc.: Management Statement

A statement by Indra K. Nooyi, the Chairman and Chief Executive Officer at Pepsi, is given below. The

statement has been taken from the company's Annual Report for FY2013.

Dear Fellow Shareholders,

Last year I described the dual goals we have unwaveringly pursued since we began our transformation back in

2007: continue to deliver the strong, consistent financial results our shareholders expect year after year, while

at the same time investing in and transforming the company to ensure it is built for long-term, sustainable growth. In short, perform while we transform.

Looking back, 2012 was an important year in PepsiCo's transformation journey. We took the necessary actions

to strengthen our company. We made significant investments behind our largest global brands. And we

changed our operating model moving from a loose federation of countries and regions to a more efficient and effective model that leverages PepsiCo's talent, capabilities and resources globally.

In 2013, we continued to reinforce these actions and began to realize the benefits. Despite a very challenging

operating environment that included economic instability and uncertainty in many of our key markets around the

world, we delivered on, or exceeded, each and every one of the financial goals we announced to shareholders at the beginning of the year.

Our performance in 2013 was strong:

- Our organic revenue grew 4%.

- Core constant currency earnings per share (EPS) grew 9%.

- Core gross margins improved by 90 basis points and core operating margins improved by 40 basis points,

even while we increased investments in the company.

- We captured more than $900 million of productivity, exceeding our target and keeping us on track to deliver

our three-year $3 billion productivity target for 2012- 2014. This success gave us the confidence to extend our goal of $1 billion in annual productivity savings for five years beyond the existing goal (2015-2019).

- Core net return on invested capital (ROIC) improved 110 basis points, 60 points ahead of our target.

- Free cash flow excluding certain items was strong at $8.2 billion.

- PepsiCo increased its annual dividend for the 41st consecutive year in 2013 and returned $6.4 billion to our

shareholders through share repurchases and dividends.

Equally important were the investments and capacity-building initiatives we undertook over the past five years

to position ourselves for superior value creation over the long term:

1. We invested to enhance the equity of our 22 billion dollar brands, which together account for more than 70%

of our total revenue. Advertising and marketing (A&M) increased and now stands at 5.9% of net revenue up

from 5.2% in 2011. More importantly, this investment led to significant brand equity improvement. For example,

brand equity scores for our global beverage and snack brands held or gained in 90% of our strategic markets,

and six of our global brands saw brand equity hold or gain in 100% of their strategic markets. Our brand-

building efforts are paying off. PepsiCo has nine of the 40 largest packaged goods trademarks in the U.S.

according to IRI, and, according to Euromonitor International, nine of the top 50 packaged food and soft drink

brands measured at Global Brand Name in Russia, seven of the top 50 in Mexico, and six of the top 50 in the U.K.

2. We fine-tuned and ramped up our innovation machine, increasing our rate of success of new innovations to




make this one of PepsiCo's best years ever for innovation. In fact, in 2013, PepsiCo had nine of the top 50 new

food and beverage product introductions across all measured U.S. retail channels. Additionally, six new

products are on track to achieve at least $100 million each in estimated annual retail sales in the U.S.: Mountain

Dew Kickstart, Tostitos Cantina tortilla chips, Starbucks Iced Coffee, Lipton Pure Leaf Tea, Muller Quaker

Yogurt and Gatorade Frost Glacier Cherry. We also opened a state-of-the art food and beverage innovation

center in Shanghai, China to fuel new product, packaging and equipment innovation for our businesses

throughout Asia. Innovation as a percentage of net revenue grew to 9% in 2013, and as a whole our R&D investments have increased more than 25% since 2011.

3. Our developing and emerging markets, a major investment area, continued to perform well despite significant

volatility in key regions. As a group, our developing and emerging markets posted 10% organic revenue growth,

with particularly strong performance in China, Pakistan, Saudi Arabia, Mexico, Brazil and Turkey. Our

convenient, on-trend and affordable products, coupled with a long runway for growth in developing and emerging markets, give us confidence that they can sustain solid growth over the long term.

4. Building from our positions of strength with four of the most important nutrition platforms and brands Quaker

(grains), Tropicana (fruits and vegetables), Gatorade (sports nutrition for athletes) and Naked Juice (super-

premium juices and protein smoothies) we continued to expand our portfolio of nutritious products across

multiple markets and unlock growth opportunities in new product categories, such as dairy, hummus and other

fresh dips, and baked grain snacks. Over the last decade our nutrition business revenue has grown substantially and, in 2013, represented approximately 20% of PepsiCo's net revenue.

In 2013, we also remained focused on improving the nutritional profile of many of our social snacks and

beverages. In snacks, we continued our efforts to reduce saturated fat levels and sodium content in certain key

brands while dialing up our baked offerings and whole grains. In beverages, we added new low- and zero-

calorie choices and continued to work to reduce added sugar in certain key brands. We also continued to accelerate our research and technology investments in the development of sweetener innovation.

5. Our global go-to-market capability is one of PepsiCo's most important strategic advantages, and, in 2013, we

further reinforced this key differentiator in very tangible ways. We increased our number of routes in key

markets and greatly improved our in-store presence for our snack and beverage portfolio. We also empowered

our sales teams globally with mobile technology to help them enhance their merchandising capabilities and drive increased sales.

6. We redoubled our efforts on talent development and improved the quality of the training we offer employees

by, among other actions, investing in a new foundational leadership training program and completely revamping PepsiCo University.

PepsiCo associates are highly engaged globally as reflected in our 2013 Organizational Health Survey. An

impressive 89% of our professional and executive populations responded they are proud to work for PepsiCo,

which is well above a respected cross-industry benchmark. We have seen sustained improvement in both

employee commitment and satisfaction results over the past decade a testament to our continued focus on making PepsiCo a great place to work.

The continued focus on execution discipline to drive results in the short term, and investments to build

capabilities and advantage for the long term, has been financially rewarding for PepsiCo and our shareholders:

- Over the past decade, our net revenue compound annual growth rate was 9%.

- Today, our operating margin stands at 15%, in the top tier of our food and beverage peer group. In addition,

core net return on invested capital improved 110 basis points in 2013.

- In the last 10 years, earnings per share grew at an 8% compound annual growth rate, and we returned $57

billion in cash to shareholders through a combination of dividends and share repurchases.

- PepsiCo's Cumulative Total Shareholder Return has outpaced the S&P 500 on an annualized basis by 170

basis points since 2000.




This strong performance is the foundation upon which we will build our future. I am more confident than ever

that PepsiCo today has the right model, capabilities, people and portfolio to continue to deliver for our consumers, customers and shareholders well into the future.

2014 and Beyond

Delivering on our 2013 financial targets demanded the very best of the entire PepsiCo management team. The

operating environment was volatile and challenging, and going forward we expect the amplitude and frequency of change only to increase.

Growth will continue to be fueled by developing and emerging markets. The growth rates of developing and

emerging markets are expected to continue to outpace developed markets for the foreseeable future. And by

2030, experts estimate an additional 3 billion people may join the middle class. These trends present excellent

growth opportunities, but will require significant investment and development of the right people, skills and tools

to compete. We have already established strong positions in developing and emerging markets, but need to continue to invest in building our capabilities in these markets to capture these growth opportunities.

The consumer shift to more nutritious products will accelerate. Trends such as a desire for convenient,

functional nutrition, local and natural ingredients, and better-for-you snack and beverage options have firmly

taken hold and will continue to accelerate around the world. We anticipated these trends early on and have

taken significant actions to balance our portfolio of offerings. Additionally, we have improved the nutritional

profile of many of our social snacks and beverages by reducing added sugar, sodium and saturated fat in key

brands. We are building from an advantaged portfolio, but need to accelerate our efforts to continue to meet this consumer demand and capture this growth opportunity.

Digital technology is disrupting every business at every point in the value chain, and the way we interact with

retailers, shoppers and consumers is changing at a dramatic pace. Being a laggard is simply not an option. In a

digital landscape that is incredibly dynamic, we are focusing on new digital tools, technologies and retail

platforms to allow us to reach consumers differently, shift our advertising and marketing model, improve our

analytics and enhance the efficiency of our sales force. Cybersecurity is also a real concern, requiring focused investment and constant diligence against threats.

We should anticipate geopolitical and social instability to be the norm, not the exception. Income inequality,

competition for natural resources, and geopolitical tensions and conflict will continue to pose risks to doing

business in many countries around the world. Doing business in this environment requires continued investment

to keep our people safe and protect our supply chain against potential threats. Fortunately, PepsiCo's local

teams have an intimate understanding of how to do business in each community in which we operate, allowing

them to adapt to changing circumstances. For example, in Egypt, amid political unrest, PepsiCo associates

ensured operations were not disrupted and looked for opportunities to expand the business even in a challenging period.

Extreme weather patterns are expected to persist, forcing companies to deal with commodity scarcity and

volatility. Warmer temperatures, erratic rainfall patterns, new pests, floods and wildfires all threaten the

productivity and availability of agricultural inputs. Our size and scale allow us to manage our commodity supply

cost and inflation risks through our centralized strategic platforms and our multiple sourcing pipelines. But

managing through these fluctuations requires additional investment and contingency planning. For example, our

R&D team is working on developing multiple formulations of various products to be able to cope with changes in raw material availability and price, while delivering on taste and quality.

This "new normal" will require continued focus and investment, and we are confident we have the ingredients

for success: geographic diversity; a complementary, related and diverse product portfolio; an efficient and

effective operating model; an experienced, top-notch management team; and a culture and ethics that are second to none.

Better Together: The Benefits of the PepsiCo Portfolio




PepsiCo's portfolio competes in two focused, related categories: foods and beverages. Both categories have

attractive global growth prospects of 5% or more, and our convenient foods and beverages businesses are

fairly evenly balanced, with about half of our 2013 revenue coming from each. More importantly, our categories

and products are highly complementary, sharing the same customers, consumers and occasions. It is the "related diversity" of the PepsiCo portfolio that we believe gives us an advantaged position over the competition.

The Power of PepsiCo's Portfolio to Enable the Next Wave of Growth. Foods and beverages are consumed

together, and PepsiCo's portfolio offers delicious and convenient food and beverage options for a wide range of

occasions from morning to evening. For example, our consumers might wake up to a breakfast of Quaker Real

Medleys and Trop50, enjoy a Pepsi MAX and SunChips with lunch, unwind with Stacy's pita chips, Sabra

hummus and a Lipton beverage, and host a party with an array of Frito-Lay and Pepsi products. No matter the consumer or the occasion, we seek to provide a food or beverage solution.

With joint consumer insights, R&D and innovation across foods and beverages, we have capabilities that give

us a leg up on the competition when it comes to knowing and developing what consumers want to eat and drink

throughout the day. There are overlapping "demand moments" or "need states" that could be satisfied by a food

or a beverage. Our capabilities position us to develop the best solutions, be it a food or beverage, or even something in-between, to meet the needs of our consumers.

Our portfolio allows us to capture coincident eating and drinking occasions using joint marketing and selling.

When consumers reach for a Frito-Lay snack, we want them to pair it with a refreshing Pepsi beverage or any

of our other diverse beverage offerings. Our scale and relationship with our retailers allow us to create in-store

destinations to influence consumer shopping patterns and decisions to increase this coincidence of purchase.

For example, during the 4th of July holiday season this past year in the U.S., the combination of Pepsi and

Lay's potato chips at one major retail chain drove increases in display inventory of approximately 40% and resulting gains in sales and share over the holiday.

And having both foods and beverages allows us to launch and broadly distribute new, convergent food and

beverage products for example, foods through chilled beverage distribution, beverages through ambient food distribution and convergent products that " snackify" beverages.

The Power of PepsiCo's Portfolio for Our Customers. The retail landscape today is more competitive than ever

before, including competition for share of the shopper's basket and the retail shelf. The scale, ubiquity and

related velocity of our categories make us an essential partner for retailers, who look to PepsiCo to drive a

significant share of their growth. Our relationships with our retail partners enable us to support the growth of our

complementary categories. For example, an existing PepsiCo beverage business in a market can enable us to enter the snacks business in that market.

And our broad portfolio has been a strong competitive advantage in foodservice. The runaway success of

Doritos Locos Tacos, a culinary innovation to drive growth for a PepsiCo foodservice customer, is just one

example. Doritos Locos Tacos have exceeded $1 billion in retail sales since their launch in 2012. In 2013,

PepsiCo won the Buffalo Wild Wings account, giving us access to more than 1,000 locations, by demonstrating

the advantages of our combined portfolio. Foodservice customers also see the advantage of partnering with

PepsiCo because of our access to retail partners and the option of getting foodservice customerinspired snacks onto the shelves in grocery stores.

The Structural Cost Benefits and Global Capability. Beyond what the customers and consumers see on the

shelf, our business model drives structural cost benefits of $800 million to $1 billion across PepsiCo globally

each year. These financial benefits are achieved through regional scale cost leverage obtained through

procurement, supply chain, go-to-market and selling functions, and G&A. We also see significant financial

benefits and savings from having corporate functions integrated globally, such as Global Procurement, R&D, Human Resources and Business Information Services.

Looking beyond direct cost savings, these global platforms create capability advantages for us across the entire

value chain. For example, our global marketing capabilities allow us to increase the share of dollars that go to

working A&M, facilitate the sharing of sports and talent properties, and enable "lift and shift" of brand-building




models. With a global R&D function, investments made are leveraged to drive innovation across both foods and beverages.

I began this letter by talking about our focus on two goals: delivering on the short term while investing for the

long term. One of the great balancing acts as CEO is to manage for both level and duration. And I believe any CEO should be able to answer the question "How are you futureproofing your company?"

As the operating environment has become more volatile and complex, this is a tall order. But I firmly believe that

the goals we articulated in 2007 under Performance with Purpose hold the answer. As long as Performance with Purpose is our guide, I believe PepsiCo will continue to deliver long-term, sustainable growth.

Performance with Purpose is PepsiCo's recognition that the company's success is inextricably linked to

society's success. In order to do well by our shareholders, we also have to take into account the needs and

concerns of a wide range of stakeholders. If our financial success comes at the expense of the environment, our consumers or our communities, we will not be viable in the long run.

In practice, Performance with Purpose means we provide a range of foods and beverages from treats to healthy

eats; we find innovative ways to minimize our impact on the environment and lower our costs through energy

and water conservation as well as reduced use of packaging material; we provide a safe and inclusive

workplace for our employees globally; and we respect, support and invest in the local communities in which we operate.

Performance with Purpose remains our true north, and it is more important than ever. I encourage you to please

take the time to read our latest Sustainability Report, which details our work and progress toward our goals around the world.

As 2014 begins, every PepsiCo associate feels an incredible sense of duty and responsibility to those who

depend on us to offer sustainable financial returns over the long term. It is for these long-term investors that we run PepsiCo.

I'm confident that PepsiCo's best days are yet to come, and I'm honored more than ever to serve as Chairman

and CEO.




PepsiCo, Inc.: Locations and Subsidiaries

Table 3: PepsiCo, Inc.: Locations and Subsidiaries

Frito-Lay Canada

Cambridge

Ontario N1R 5S9

Canada

1 800 376 2257

Frito-Lay North America, Inc.

7701 Legacy Drive

Plano

Texas 75024

United States

http://www.fritolay.com

Gatorade

Chicago

Illinois 60604 9003

United States

1 800 884 2867

PepsiCo Americas Beverages

1 Pepsi Way

Somers

New York 10589

United States

http://www.pepsicobeveragefacts.com

1 914 767 6000

PepsiCo Asia, Middle East, Africa

Emaar Square

Level 3

Emaar Building 2

Sheikh Zayed Road

Dubai

United Arab Emirates

971 4 4253700

PepsiCo Beverages Canada

5205 Satellite Drive

Mississauga

Ontario

L4W 5J7

Canada

1 905 212 7377

PepsiCo Chicago

555 West Monroe Street

Chicago

Illinois 60661

United States

1 312 821 1000

PepsiCo Europe

Rue du Rhone 50

1204 Geneva

Switzerland

41 914 253 2000

Quaker

14 Hunter Street East

Peterborough

Ontario

K9J 7B2

Canada

http://www.quakeroats.ca

1 800 267 6287

Tropicana Products, Inc.

Chicago

Illinois 60604 9003

United States

1 800 237 7799

SOURCE: MARKETLINE




PepsiCo, Inc.: Key Competitors

Table 4: PepsiCo, Inc.: Key Competitors

ConAgra Foods, Inc. General Mills, Inc.

Kellogg Company Nestle S.A.

SOURCE: MARKETLINE

PEPSICO, INC.: COMPANY ANALYSIS




PepsiCo, Inc.: Business Description

Pepsi is one of the world's largest food and beverage companies, which primarily operates in the snacks and

beverages manufacturing space. The company has presence in over 200 countries globally, and has key presence in North America.

Pepsi's operations are organized into four business units: PepsiCo Americas Foods (PAF), PepsiCo Americas

Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). These four business

units comprise six reportable segments: PAB, Frito-Lay North America (FLNA), Europe, Latin America Foods (LAF), AMEA, and Quaker Foods North America (QFNA).

PAF is the company's food and snack business in North and Latin America. Its portfolio of businesses includes

FLNA, QFNA and LAF.

FLNA is primarily engaged in producing, marketing, selling and distributing branded snack foods, including Lay's

potato chips, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips, branded dips, Ruffles

potato chips, Fritos corn chips and Santitas tortilla chips. In addition, FLNA operates a joint venture with Strauss

Group, an Israeli food and beverage company, which produces, markets, sells and distributes Sabra-branded

refrigerated dips and spreads. Either independently or through contract manufacturers, FLNA's branded

products are sold to independent distributors and retailers. This segment owns or leases approximately 40 food

manufacturing and processing plants and approximately 1,710 warehouses, distribution centers and offices

across North America. In addition, FLNA's joint venture with Strauss Group also utilizes three plant facilities and one office, all of which are owned or leased by the joint venture.

QFNA is actively engaged in the production, marketing and sale of a portfolio of good-for-you products that

include cereals, rice, pasta, dairy, and other branded products. QFNA's key branded products include Quaker

oatmeal, Aunt Jemima mixes and syrups, Quaker Chewy granola bars, Cap'n Crunch cereal, Quaker grits, Life

cereal, Rice-A-Roni side dishes, Quaker rice cakes, Quaker Oat Squares and Quaker Natural Granola. These

products are sold to independent distributors and retailers. QFNA owns a plant in Cedar Rapids, Iowa. It also

owns four plants and production processing facilities, and leases one office and one distribution center in North America.

LAF is the company's food and snacks business based in Latin America. This segment is responsible for

producing, marketing and selling various snack and cereal products under well-known brands like Doritos,

Marias Gamesa, Cheetos, Ruffles, Emperador, Saladitas, Sabritas, Elma Chips, Tostitos and Rosquinhas

Mabel, as well as many Quaker-branded cereals and snacks. Primary customers of this business segment are

independent distributors and retailers. LAF has four snack manufacturing plants in Brazil (Guarulhos) and the

Mexican cities of Celaya, Monterrey and Mexico City (Vallejo). The segment also owns or leases approximately

50 food manufacturing and processing plants and approximately 640 warehouses, distribution centers and offices across Latin America.

PAB is Pepsi's beverage business unit that is engaged in marketing, selling and distribution of beverage

concentrates, fountain syrups and finished goods under various brands including Pepsi, Gatorade, Mountain

Dew, Diet Pepsi, Aquafina, 7UP (outside the US), Diet Mountain Dew, Tropicana Pure Premium, Sierra Mist and

Mirinda. The ready-to-drink tea and coffee products portfolio is produced by PAB either independently or through

joint ventures with Unilever (under the Lipton brand name) and Starbucks. Furthermore, PAB manufactures and

distributes certain brands like Dr Pepper, Crush and Schweppes under license from Dr Pepper Snapple Group, and certain juice brands under license from Dole Food Company and Ocean Spray Cranberries.

PAB operates its own bottling plants and distribution facilities and sells branded finished goods directly to

independent distributors and retailers. It also sells concentrate and finished goods for its brands to authorized

and independent bottlers, who, in turn, sell its brands as finished goods to independent distributors and retailers




in certain markets. PAB owns a manufacturing facility in Florida, where the Tropicana branded products are

manufactured. It also has concentrate manufacturing plants in Cork, Ireland and a research and development

(R&D) facility in Valhalla, New York. Additionally, PAB owns or leases approximately 80 bottling and production plants and production processing facilities and about 470 warehouses, distribution centers and offices.

PepsiCo Europe, Pepsi's European business division, is engaged in producing, marketing and selling a range of

snack food brands including Lay's, Walkers, Doritos, Cheetos and Ruffles, as well as many Quaker-brand

cereals and snacks. PepsiCo Europe operates both through consolidated businesses as well as through non-

controlled affiliates. Apart from snack foods, this business division is also engaged in manufacturing, marketing

and selling of beverage concentrates, fountain syrups and finished goods under various beverage brands

including Pepsi, Pepsi Max, 7UP, Diet Pepsi and Tropicana. Furthermore, PepsiCo Europe, either independently

or through contract manufacturers, produces, markets and sells ready-to-drink tea products through an

international joint venture with Unilever (under the Lipton brand name). In addition, this division manufactures,

markets, sells and distributes a number of well-known dairy brands including Domik v Derevne, Chudo and

Agusha. PepsiCo Europe has a beverage plant in Lebedyan, Russia; a dairy plant in Moscow, Russia; a snack

manufacturing and processing plant located in Leicester, the UK (leased); and a snack R&D facility in Leicester,

the UK. It also owns or leases approximately 125 plants and approximately 525 warehouses, distribution centers and offices.

PepsiCo AMEA is the company's division operating in the Asia, Middle East and Africa regions, which markets

and sells a variety of snack food brands including Lay's, Kurkure, Chipsy, Doritos, Cheetos, and Smith's, through

consolidated businesses as well as through non-controlled affiliates. Further, either independently or through

contract manufacturers, PepsiCo AMEA produces, markets and sells several Quaker-brand cereals and snacks.

The division also produces, markets and sells beverage concentrates, fountain syrups and finished goods under

various brand names including Pepsi, Mirinda, 7UP, Mountain Dew, Aquafina and Tropicana. These branded

products are sold to authorized bottlers, independent distributors and retailers. In certain markets, PepsiCo

AMEA operates its own bottling plants and distribution facilities. Additionally, the division also operates an

international joint venture with Unilever to produce, market and sell its ready-to-drink tea products under the

Lipton brand name. PepsiCo AMEA has beverage manufacturing plants located in Egypt, Thailand and Jordan,

and has snack manufacturing and processing plants located in Egypt and Saudi Arabia. The division also owns

or leases approximately 45 plants and approximately 490 warehouses, distribution centers and offices across the AMEA region.




PepsiCo, Inc.: SWOT Analysis

PepsiCo, Inc.: SWOT Overview

Pepsi is a global consumer goods company, primarily engaged in production, marketing and sales of a variety of

food, snacks and beverage products. The company's diverse product portfolio, strong brand equity and robust

operating performance are helping it in sustaining a competitive positioning in the market. However, rising

competition from private labels in the food and beverage industry and constant increases in food commodity

prices are expected to erode the company's profits in future.

Strengths Weaknesses





Opportunities Threats







PepsiCo, Inc.: Strengths


The company has a strong market position in the markets it operates in as well as in the product

categories it offers. Across its largest markets, Pepsi has the dominant position among top brands, with

nine of the top 40 packaged food and beverage trademarks in the US. In addition, the company has nine

of the top 50 packaged food and soft drink brands in Russia, seven of the top 50 in Mexico and six of the

top 50 in the UK.

Pepsi holds number one position in the salty snacks category with the key brands such as Lay's, Cheetos

and Doritos; in the hot cereals category with the Quaker brand and the sports drinks category with the G2

brand. Pepsi is the second largest company globally in the juice and juice drinks and carbonated soft

drinks categories with the brands such as Tropicana, Pepsi, Mountain Dew, Mirinda, Sierra Mist and 7UP.

In addition, the company holds leading market position in its key strategic markets. Pepsi leads the

market, in terms of food and beverage retail sales, in the US, Russia, India, Egypt, Saudi Arabia, and the

UAE and ranks second in the UK and Mexico according to industry sources. In addition, through its

strategic alliances the company has added scale in China, the UK and Brazil and enhanced its market

presence. Through its strategic beverage alliance with Tingyi, the company distributes beverage brands

including Pepsi, Mirinda, Gatorade and Tropicana to Chinese consumers through the Pepsi-Tingyi

beverage system. Strong market position provides a competitive advantage and gives Pepsi considerable

bargaining power.





Pepsi's combined portfolio of food, snacks and beverage products spans across the value chain of the

processed food industry. In the beverage segment, the company's products include carbonated

beverages, fruit drinks, energy drinks and bottled water. On the other hand, the company's food and snack

business includes products such as savory snacks, chips, sweet snacks, meat snacks, ready-to-eat side

dishes, pastas, breakfast cereals, cereal bars, and mixes and syrups. Being seasonal in nature, the global

food and beverage industry is subject to differential sales during various seasons of the year. While

beverage sales are usually higher in the warmer months, certain food and snack sales are higher in the

cooler months. A company like Pepsi with products in both food and snacks and beverage segments has

an advantage over those that operate across only one of the segments. For instance, lower sales of

beverages in the summer due to relatively cooler climates can be offset with promoting sales of snacks

and foods during the rest of the year.

Besides the diversity in its product portfolio, Pepsi's strong brand equity offers it the advantages of

consumer loyalty, wider consumer acceptance, and the ability to charge premium prices. By the end of

FY2013, Pepsi had 22 mega brands that generated more than $1 billion in revenues each, globally. The

company also has over 40 brands that generate $250 million to $1 billion in annual retail sales.

Furthermore, in 2014, Pepsi was ranked among top 25 global brands in the top 100 best global brands list

by an industry source specializing in brand services and activities. It was also ranked among top 50

brands in the world's top 500 brands list in 2014 by an industry source specializing in brand valuation.

Such recognition testifies that the company enjoys a high customer recall value, which, in turn, ensures a

high customer lifetime value in the longer term. Additionally, Pepsi's diverse portfolio of strong brands in

both food and snacks and beverages segments also offers the company with diversified sources of

income.


Pepsi's wide geographic presence is one of the core strengths of the company in terms of providing it with

diverse income sources. As per the company's records, Pepsi presently operates in over 200 countries

worldwide. However, in the recent past, the company's focus on expanding in the emerging markets and

developing markets has paid off, pleasing its investors. In FY2013, the company registered organic

revenue growth of 10% from the developing and emerging markets with particularly strong performance in

China, Pakistan, Saudi Arabia, Mexico, Brazil and Turkey. The growth was attributable to Pepsi's

investments in existing and new emerging markets. For instance, the company made strategic acquisitions

to expand its business in emerging markets, including Lebedyansky (in 2008) and WBD (in 2010) in

Russia; Lucky snacks (in 2007) and Mabel cookies (in 2011) in Brazil; and Dilexis cookies (in 2011) in

Argentina. The company also has strategic alliances with Tingyi Holdings, a Chinese beverage company,

and Almarai, a food producer in Saudi Arabia. Pepsi also serves value consumers in India through its

fortified water joint venture with Tata Global Beverages. The company also made investments to sustain

and improve share, through increased marketplace spending on media, racks, or routes in countries such

as Mexico, Brazil, Russia and China. Pepsi also established a global value innovation center in India to

significantly reduce the cost of its marketplace equipment and to increase its investments in emerging

markets in an affordable way. All of these investments enabled the company to build strong positions in

these markets. For instance, Pepsi is the largest food and beverage company in Russia, India, and the

Middle East, and the second largest in Mexico. It is also one of the largest food and beverage companies

in many other emerging markets such as Brazil, Vietnam, the Philippines and Thailand.

Investments in the emerging markets will not only strengthen its long-term stability but also offset any

impact on the company's top line and bottom line due to weak North American sales.

PepsiCo, Inc.: Weaknesses





Tasty Foods, Pepsi's subsidiary in Greece that produces and distributes snacks under the Lay's brand,

was heavily fined by the Hellenic Competition Commission, Greece's competition regulator, in 2012. The

regulator levied a fine of E16.2 million (approximately $21.4 million) on Pepsi for adopting and

implementing anti-competitive strategies that sought to exclude its competitors from smaller retail outlets,

such as the street kiosks for nearly nine years between 2000 and 2008. The regulator also specified that

the allegations were made by Pepsi's strongest rival in the Greek market, Tsakiris Snacks. In the same

year, Pepsi got involved in another controversy along with its rival Coca-Cola for using carcinogenic

additives in its carbonated beverages, Pepsi and Diet Pepsi. The California-based Center for Science in

the Public Interest (CSPI) alleged that Pepsi's beverages contained very high levels of the harmful additive

that far exceeded the maximum safety level set by the State of California. In 2013, the company

announced that it will stop labeling its Naked juices as 'all natural', after a lawsuit claimed that Naked

juices contain ingredients like synthetic fibers and genetically modified organisms. The company settled

the lawsuit by paying $9 million. Furthermore, in 2014, a lawsuit was filed against Pepsi alleging that the

company failed to warn consumers that its diet soda, Pepsi One, contains a cancer-causing component.

Although the company is prone to such controversies like most other food companies, allegations like

these can adversely impact the company's results in future. More importantly, in the current times where

consumers are being more aware of the ethical, social and health issues related to the operations of such

large companies, such controversies may deeply affect consumer confidence and may also incite anti-

company campaigns in future.

PepsiCo, Inc.: Opportunities


As the global economic shift towards the emerging economies continues, opportunities for several

industries including the food and beverage manufacturing sector are created. According to the latest

industry estimates, approximately 58% of processed food is consumed by developing countries, owing to

factors like a rapid increase in population in these countries. Market analysts forecast that by 2020, the

number of middle-class consumers in emerging markets will exceed the combined population of middle-

class consumers in the US and Europe. Additionally, latest industry forecasts also indicate that emerging

economies will represent about 75% of the global urban population by 2015, and that there will be at least

one billion more consumers representing the consuming class in these countries by the next decade.

Counting on these huge markets being created, companies like Pepsi are increasing their investments in

emerging countries and looking at expanding their businesses.

In November 2013, Pepsi announced plans to invest approximately $5.5 billion in India by 2020. The

investment is expected to further strengthen and expand the capabilities of Pepsi and its partners in the

following strategic areas: innovation, manufacturing, infrastructure and agriculture. Pepsi plans to increase

its manufacturing capacity to meet the growing demand for its foods and beverages in the country. Pepsi

and its partners plan to expand their production capacity in India to more than double current levels by

2020. In January 2014, Pepsi announced plans to invest $5 billion in Mexico over the next five years to

further strengthen its food and beverage business in the country. By leveraging the increasing consumer

spending power in emerging markets, Pepsi's strategic investments in these markets are expected to

bolster its income sources.


While consumers across the world are increasingly favoring healthy foods, there is an equally rising

importance of locally-sourced and locally-grown foods. Government bodies like the US Department of

Agriculture (USDA) are also promoting local farmers and local produce through programs like 'Know Your

Farmer, Know Your Food' that help create new opportunities for farmers, ranchers, consumers and rural




communities, and expand access to healthy food throughout the country. The total number of farmers

registered with the USDA increased from 1,755 in 1994 to 8,268 in 2014. As per the industry estimates,

the local food sales in the US increased from $1 billion in 2005 to $7 billion in 2013. Companies like Pepsi

source many foods like fruits and potatoes every year. Specifically, Pepsi sources more than four million

tons of potatoes each year for its products. The company also adopted practices that allow it to work with

local farmers and understand every aspect of the growing process.

On the other hand, consumers are also demanding more of local flavors than global ones. For example, in

the Chinese markets, a green tea flavor is more preferred by consumers, while the Brazilians and

Mexicans prefer tropical fruit flavors in their drinks. Companies like Pepsi are responding to this trend by

focusing on catering to the consumer taste preferences. For instance, in 2011, Pepsi introduced brands

geared to local tastes like Tropicana Pulp Sacs in China and Hrusteam crisp breads in Russia.

By locally souring its raw materials, the company not only will ensure a consistent supply of quality

potatoes, but also will be able to mitigate risks related to global sourcing. Through local-sourcing, the

company will also be able to significantly reduce its supply chain costs. Furthermore, by introducing

products catering to the local tastes, the company can penetrate much quickly in local markets by gaining

wider customer acceptance.


Growing concerns over lifestyle-related health issues like obesity, diabetes, hypertension and chronic

heart disease are encouraging consumers to make a shift in their food preferences. In the recent past,

consumers have consciously made a preference shift towards healthy, fat-free and no-sugar options in

processed foods. As per industry estimates, the total market for diet-related food and beverage sales in

the US and Europe is expected to reach $128.5 billion by 2014. While in Europe it is estimated to increase

at a CAGR of 3.4% between 2008 and 2014, in the US it is expected to expand at a CAGR of 4.1% over

the same period. This growing market for healthy and nutritious food is proving to be an opportunity for

several food and beverage manufacturers like Pepsi that are aligning their strategies in line with the

changing consumer preferences.

In 2010, the company has affirmed its plans to build and expand its nutrition business to further grow its

Good-for-You portfolio of products. In line with this strategy, the company acquired WBD, one of Europe's

largest dairy products company, in 2010. As a result of the acquisition, Pepsi's annual revenues from

nutritious and functional foods increased to over $13 billion in FY2011 and the company intends to grow it

to $30 billion by 2020. In FY2012, the company launched Muller Quaker Dairy joint venture in the US

which provided it with new platforms in value-added dairy.

Additionally, the company is also focused on expanding its portfolio of products made with all-natural

ingredients, increasing the amount of whole grains, fruits, vegetables, nuts, seeds and low-fat dairy in

several of its products, while taking steps to reduce the amount of sodium, saturated fat and added sugar

per serving to strengthen its nutritional offerings. In FY2010, the company also established a Global

Nutrition Group to strengthen its research and innovation capabilities that support its Good-For-You

portfolio of products. In FY2012, Pepsi launched Quaker Real Medleys in the US, pairing oatmeal with

other whole grains, fruits and nuts in a portable cup and portion-controlled serving, which accelerated its

growth in hot cereal retail sales. The company also introduced Tropicana Farmstand in the US, with a

serving of both fruit and vegetables in an eight-ounce glass. Specifically, the company has been able to

leverage the growth trend in convenient nutrition globally. In FY2012, it increased Quaker retail sales in

the UK with the success of Oats so Simple, grew Quaker volume in China and India with breakfast foods

customized for local tastes, and leveraged Quaker's expertise in Russia by launching oats under the local

Chudo brand. Building from its positions of strength with four of the most important nutrition platforms and

brands, Quaker (grains), Tropicana (fruits and vegetables), Gatorade (sports nutrition for athletes) and

Naked Juice (super-premium juices and protein smoothies), the company continued to expand its portfolio

of nutritious products across multiple markets and new product categories, such as dairy, hummus and

other fresh dips, and baked grain snacks. Over the last decade, revenues of the nutrition business grew to




nearly 20% of the total revenues.

By responding to the changing preferences of its consumers, Pepsi is well positioned to capitalize on the

various opportunities created by the health and nutrition foods market in future.

PepsiCo, Inc.: Threats


The tightening economic conditions, especially in the developed and matured markets in the West are

prompting consumers to increasingly choose lower-priced private label food products, over the established

national brands. The food and beverage segment that Pepsi operates in is largely considered the non-

essential food or convenience foods segment. During the downturn, when consumers started tightening

their budgets, these segments were mostly hit. More and more people started opting for low-cost foods

and home-cooked meals as opposed to the higher priced convenience food or eating out options. As

private labels offer a value proposition by providing quality products at lower prices, more consumers are

attracted towards them, especially in the food and beverage sector. Additionally, private labels that are

manufactured by large retail houses like Kroger's Value line, Supervalu's Culinary Circle Premium Meals

and Wal-Mart's Great Value and Sam's Choice are more in demand due to their perceived quality.

According to industry sources, among all major US retail channels, private label sales increased by

approximately 3% in 2012. Since 2009, annual growth of store brands sales has averaged approximately

5%, compared to national brands sales annual growth of approximately 2%. With increasing competition

from private labels, established brands including Pepsi could be prompted to adopt more cost-focused

strategies like discounts and promotions than differentiation strategies like innovations in flavors to push

their products into the market, especially targeting the price-conscious consumers.


Water is one of key ingredients used by Pepsi to manufacture its beverage products. Rapid population

growth and continued pollution of existing freshwater sources have created water shortages in nearly

every country. The competition for water among domestic, agricultural and manufacturing users is

increasing in the countries where the company operates. The consumption rate of water globally is

doubling every 20 years, more than twice the rate of human population growth. According to the United

Nations (UN), by 2030 nearly half the world's population may face water scarcity, with demand exceeding

supply significantly. As a result, Pepsi may incur increasing production costs or face capacity constraints,

which could affect its profitability in the long run.


The labor costs for companies in the US have been rising as the healthcare costs and wages increased in

the recent times. Tight labor markets, increased overtime, government mandated increases in minimum

wages and a higher proportion of full-time employees are resulting in an increase in labor costs. The

federal minimum wage rate in the US, which remained at $5.15 per hour since 1998, increased to $5.85

per hour in 2008. It further increased to $6.55 per hour in 2009 and to $7.25 per hour in 2010. Moreover,

many states and municipalities in the country have a minimum wage rate even higher than $7.25 per hour

due to higher cost of living. The minimum wage rate has increased in the states of Arizona (from $7.8 in

2013 to $7.9 in 2014), Colorado (from $7.78 in 2013 to $8 in 2014), Florida (from $7.79 in 2013 to $7.93 in

2014), Ohio (from $7.85 in 2013 to $7.95 in 2014), Oregon (from $8.95 in 2013 to $9.1 in 2014) and

Washington (from $9.19 in 2013 to $9.32 in 2014) in the recent past. In addition, the healthcare costs for

employers in the US are increasing. According to industry estimates, healthcare costs for the US

employers are estimated to grow by 7% in 2014 compared to 2013.

Pepsi employed 274,000 people at the end of FY2013, of which nearly 106,000 people were employed in the US. Thus, rising labor costs can further weigh down on its profit margins.

PEPSICO, INC.: CORPORATE FINANCIAL DEALS ACTIVITY




PepsiCo, Inc.: Financial Deals Overview

Figure 1: PepsiCo, Inc.: Deal Activity by Deal Type - Volume (2011 - YTD*2015)

SOURCE: MARKETLINE

Figure 2: PepsiCo, Inc.: M&A Average Deal Size - Value (US$m)

SOURCE: MARKETLINE

Table 5: PepsiCo, Inc.: Deal Activity by Deal Type - Volume (2011 - YTD*2015)

Deal Type 2011 2012 2013 2014 2015

ACQ 3 - 1 - -

CR - - - - -

CV - - - - -

DIV 4 3 1 - -

P'SHIP 3 1 - - -

PE - 1 - - -

Total 10 5 2 - -

SOURCE: MARKETLINE

Table 6: PepsiCo, Inc.: M&A Average Deal Size - Value (US$m)

Year Deal Volume Average Deal

Size (US$m)

2011 3 1,438.3

2012 - -

2013 1 17

2014 - -

2015 - -

SOURCE: MARKETLINE

*ACQ = Acquisition; CR = Capital Raising; CV = Corporate Venturing; DIV = Divestment; P'SHIP = Partnership; PE =Private Equity & Ownership




PepsiCo, Inc.: Targets and Partners

Table 7: PepsiCo, Inc.: Targets and Partners

PepsiCo, Inc.-

Target/Partner (Country) Deal Headline Deal Type

Deal Value (US$m)

Deal Date

SodaStream International,

Ltd. (Israel)

PepsiCo not to acquire SodaStream

International Acquisition 2,000

Jun 06,

2013

Teeba Investment for

Developed Food

Processing Company

(Jordan)

International Dairy and Juice to acquire

remaining 25% stake in Teeba Investment for

Developed Food Processing

Acquisition 17 Apr 08,

2013

Theo Muller Group

(Germany)

PepsiCo to form joint venture with Theo Muller

Group Partnership - Jul 09, 2012

Bubba Burger Grill(R)

(United States) BUBBA burger Grill to partner with PepsiCo Partnership -

Oct 10,

2011

Wimm-Bill-Dann Foods

OJSC (Russian

Federation)

PepsiCo acquires remaining stake in Wimm-

Bill-Dann Foods Acquisition -

Sep 09,

2011

Empresas Polar SA

(Venezuela) , Grupo

Embotelladoras Unidas,

S.A.B. De C.V. (Mexico)

Grupo Embotelladoras Unidas, Empresas Polar

and PepsiCo to form joint venture Partnership - Jul 18, 2011

Strauss Group Ltd. (Israel) Strauss Group to form joint venture with

PepsiCo Partnership -

Mar 16,

2011

Wimm-Bill-Dann Foods

OJSC (Russian

Federation)

PepsiCo acquires 66% stake in Wimm-Bill-

Dann Foods Acquisition 3,800

Feb 03,

2011

SOURCE:MARKETLINE




PepsiCo, Inc.: Top Deals 2011 - 2015YTD*

Table 8: PepsiCo, Inc.: Top Deals 2011 - 2015YTD*

Target/Partner

(Country) Deal Headline Deal Date Deal Status Deal Type

Deal Value (US$m)

PT Pepsi-Cola

Indobeverages

(Indonesia)

Indofood Asahi Sukses and Asahi

Indofood acquire 100% stake in

Pepsi-Cola Indobeverages

12 Sep 2013 Completed Acquisition 30

SodaStream

International, Ltd.

(Israel)

PepsiCo not to acquire

SodaStream International 06 Jun 2013 Terminated Acquisition 2,000

International Dairy

and Juice, Ltd.

Almarai acquires additional 4%

stake in International Dairy & Juice 29 Mar 2012 Completed Acquisition 22

PepsiCo, Inc. (United

States)

Relational Investors acquires stake

in PepsiCo 01 Mar 2012 Completed

Private

Equity 600

PepsiCo acquires Biscoitos Mabel

(Mabel Group) 10 Nov 2011 Completed Acquisition 515

Sermsuk Public

Company Limited

(Thailand)

Thai Beverage Logistics to acquire

Serm Suk 09 Sep 2011 Announced Acquisition 515

PepsiCo, Inc. -

Franchise Bottling

Operations - Morocco

(Morocco)

RJ Corp acquires franchise

bottling operations in Morocco

from PepsiCo

03 Feb 2011 Completed Acquisition 100

Wimm-Bill-Dann

Foods OJSC (Russian

Federation)

PepsiCo acquires 66% stake in

Wimm-Bill-Dann Foods 03 Feb 2011 Completed Acquisition 3,800

SOURCE:MARKETLINE




PepsiCo, Inc.: Advisors

PepsiCo, Inc.: Top Legal Advisors

Table 9: PepsiCo, Inc.: Legal Advisor Ranking by Value (US$m)

Company Name Deal Volume Deal Value (US$m)

Jones Day 1 -

SOURCE:MARKETLINE




PepsiCo, Inc.: Mergers and Acquisitions

Figure 3: PepsiCo, Inc.: M&A Volume and Value Trend (2011 - YTD*2015)

SOURCE: MARKETLINE

Figure 4: PepsiCo, Inc.: M&A Activity by Geography (2011 - YTD*2015)

SOURCE: MARKETLINE

Table 10: PepsiCo, Inc.: M&A Volume and Value Trend (2011 - YTD*2015)

Year Deal Volume Deal Value

(US$m)

2011 3 4,315

2012 - -

2013 1 17

2014 - -

2015 - -

SOURCE: MARKETLINE

Table 11: PepsiCo, Inc.: M&A Activity by Geography (2011 - YTD*2015)

Geography Deal Volume

Asia-Pacific -

Europe 2

Middle East and Africa 1

North America -

South and Central

America -

SOURCE: MARKETLINE




PepsiCo, Inc.: Partnership

Figure 5: PepsiCo, Inc.: Partnership Volume and Value Trend (2011 - YTD*2015)

SOURCE: MARKETLINE

Figure 6: PepsiCo, Inc.: Partnership Trend by Deal Type (2011 - YTD*2015)

SOURCE: MARKETLINE

Table 12: PepsiCo, Inc.: Partnership Volume and Value Trend (2011 - YTD*2015)


(US$m)

2011 3 -

2012 1 -

2013 - -

2014 - -

2015 - -

SOURCE: MARKETLINE

Table 13: PepsiCo, Inc.: Partnership Trend by Deal Type (2011 - YTD*2015)

Deal Type Deal Volume

Commercialization 1

Joint Venture 3

SOURCE: MARKETLINE




PepsiCo, Inc.: Divestments

Figure 7: PepsiCo, Inc.: Divestments Volume and Value Trend (2011 - YTD*2015)

SOURCE: MARKETLINE

Figure 8: PepsiCo, Inc.: Divestments by Geography (2011 - YTD*2015)

SOURCE: MARKETLINE

Table 14: PepsiCo, Inc.: Divestments Volume and Value Trend (2011 - YTD*2015)


(US$m)

2011 4 1,130

2012 3 22

2013 1 30

2014 - -

2015 - -

SOURCE: MARKETLINE

Table 15: PepsiCo, Inc.: Divestments by Geography (2011 - YTD*2015)

Geography Deal Volume

Asia-Pacific 3

Europe 2

Middle East and Africa 1

North America 1

South and Central

America -

SOURCE: MARKETLINE




PepsiCo, Inc.: Private Equity and Ownership

Figure 9: PepsiCo, Inc.: Private Equity and Ownership Volume and Value Trend (2011 - YTD*2015)

SOURCE: MARKETLINE

Figure 10: PepsiCo, Inc.: Private Equity and Ownership Volume by Deal Type (2011 - YTD*2015)

SOURCE: MARKETLINE

Table 16: PepsiCo, Inc.: Private Equity and Ownership Volume and Value Trend (2011 - YTD*2015)


(US$m)

2011 - -

2012 1 600

2013 - -

2014 - -

2015 - -

SOURCE: MARKETLINE

Table 17: PepsiCo, Inc.: Private Equity and Ownership Volume by Deal Type (2011 - YTD*2015)

Deal Type Deal Volume

Private Equity 1

SOURCE: MARKETLINE

PEPSICO, INC.: RECENT DEVELOPMENTS




PepsiCo, Inc.: News and Events Summary

Table 18: PepsiCo, Inc.: News and Events Summary

Date Headline Category

Oct 29, 2014

Papa John's partners with PepsiCo to create Fritos Chili Pizza

Papa John's International, Inc., a restaurant company, has partnered

with Fritos corn chips of PepsiCo, Inc., a food and beverage company,

to create Fritos Chili Pizza.

Financial Deals--

>Partnership /

Strategic Alliance

Aug 11, 2014

Papa Murphy's signs multi-year agreement with PepsiCo

Papa Murphy's Holdings, Inc., a take 'n' bake pizza franchise, has

signed a multi-year agreement with PepsiCo.

Contracts-->Others

Jul 4, 2014

7-Eleven and PepsiCo launch Doritos Loaded and Mtn Dew Solar

Flare

7-Eleven, Inc. and PepsiCo have announced the launch of Doritos

Loaded and Mtn Dew Solar Flare for 7-Eleven customers in summer

2014.

Business Expansion--

>Products/ brands

launch

Jun 19, 2014

PepsiCo inaugurates baking center in Mexico

PepsiCo, Inc. has inaugurated its Baking Category Innovation Center in

Apodaca, Nuevo Leon, Mexico.


>Geography

Jun 18, 2014

Simba opens chip manufacturing facility in Prospecton, South

Africa

Simba, a part of PepsiCo South Africa, has opened a chip

manufacturing facility in Prospecton, KwaZulu-Natal.


>Geography

Jun 4, 2014

PepsiCo introduces Live For Now collection

PepsiCo Inc. has introduced the Live For Now collection featuring

streetwear, accessories and electronics created in partnership with

designers including Original Penguin by Munsingwear, B&O PLAY,

Gents, Goodlife, Del Toro and SHUT.


>Products/ brands

launch

May 29, 2014

PepsiCo and Perry Ellis International launch new capsule

collection

PepsiCo, Inc. and Perry Ellis International's Original Penguin by

Munsingwear have launched Original Penguin x Pepsi 'Live For Now'

Capsule Collection.


>Products/ brands

launch




May 9, 2014

Frito-Lay introduces new Cracker Jack'D Energy Trail Mixes

Frito-Lay, Inc., a snack food company, has announced the introduction

of new Cracker Jack'D Energy Trail Mixes.


>Products/ brands

launch

Apr 24, 2014

PepsiCo introduces new Cracker Jack chocolate and caramel

flavored popcorn

PepsiCo, a food and beverage company, has announced the

introduction of Cracker Jack chocolate and caramel flavored popcorn.


>Products/ brands

launch

Apr 23, 2014

PepsiCo announces availability of Near East Multigrain Chips

PepsiCo, Inc., a food and beverage company, has announced the

availability of Near East Multigrain Chips.


>Products/ brands

launch

Apr 23, 2014

PepsiCo introduces new Cheetos Flamin' Hot and Doritos Dinamita

Chile Limon Mix


introduction of new Cheetos Flamin' Hot and Doritos Dinamita Chile

Limon Mix.


>Products/ brands

launch

Apr 1, 2014

Frito-Lay announces launch of Cheeteau

Frito-Lay, a snacks division of PepsiCo, has announced the launch of

Cheeteau, the official fragrance of Cheetos.


>Products/ brands

launch

Mar 28, 2014

Frito-Lay launches Lay's Kettle Cooked Lattice Cut potato chips


Lay's Kettle Cooked Lattice Cut potato chips.


>Products/ brands

launch

Mar 4, 2014

Frito-Lay expands Kettle Cooked potato chip line

Lay's Kettle Cooked, a brand of PepsiCo's Frito-Lay division, has

expanded its potato chip line-up with the addition of two new flavors.


>Products/ brands

launch

Feb 28, 2014

Smartfood introduces new Smartfood Delight popcorn

Smartfood, a brand of PepsiCo's Frito-Lay division, has introduced

Smartfood Delight popcorn, a brand of reduced-fat popcorn for health-

conscious consumers.


>Products/ brands

launch

Jan 31, 2014

PepsiCo plans to invest $5 billion in Mexico

PepsiCo, Inc. has announced plans to invest $5 billion in Mexico over

the next five years.

Strategy and

Operations-->Others

Oct 4, 2013 PepsiCo appoints CEO of AMEA

PepsiCo, Inc., a food and beverage company, has appointed Sanjeev

Corporate

Governance--

>Management




Chadha as CEO of Asia, Middle East and Africa, or AMEA. change

Apr 29, 2013

PepsiCo reports lower Q1 net income, provides outlook for 2013

PepsiCo, Inc. has reported that net income attributable to company for

the first quarter ended March 23, 2013 was $1.07 billion, or $0.69 per

diluted share, compared to $1.13 billion, or $0.71 per diluted share, for

the first quarter ended March 24, 2012. Consistent with its previous

guidance for 2013, the company expects 7% core constant currency

EPS growth versus its fiscal 2012 core EPS of $4.10.

Financial

Performance

Apr 23, 2013

Doritos introduces new Locos Tacos tortilla chips

Doritos, a brand of PepsiCo's Frito-Lay division, has announced the

introduction of Doritos Locos Tacos, or DLT, tortilla chips in two

varieties.


>Products/ brands

launch

Apr 1, 2013

PepsiCo unveils new design for single-serve bottles across

beverage portfolio

PepsiCo Inc. has unveiled a new single-serve bottle for its brands,

including Pepsi, Diet Pepsi, Pepsi MAX and Pepsi NEXT.


>Products/ brands

launch

SOURCE: MARKETLINE

PepsiCo, Inc.: Business Expansion

Table 19: PepsiCo, Inc.: Business Expansion

Publication Date Headline Category

Apr 24, 2014

PepsiCo introduces new Cracker Jack chocolate and caramel

flavored popcorn

PepsiCo, a food and beverage company, has announced the

introduction of Cracker Jack chocolate and caramel flavored popcorn.

Products/ brands

launch

Apr 23, 2014

PepsiCo announces availability of Near East Multigrain Chips


availability of Near East Multigrain Chips.

Products/ brands

launch

Apr 23, 2014

PepsiCo introduces new Cheetos Flamin' Hot and Doritos Dinamita

Chile Limon Mix


introduction of new Cheetos Flamin' Hot and Doritos Dinamita Chile

Limon Mix.

Products/ brands

launch

Apr 1, 2014 Frito-Lay announces launch of Cheeteau


Products/ brands

launch




Cheeteau, the official fragrance of Cheetos.

Apr 23, 2013

Doritos introduces new Locos Tacos tortilla chips

Doritos, a brand of PepsiCo's Frito-Lay division, has announced the

introduction of Doritos Locos Tacos, or DLT, tortilla chips in two

varieties.

Products/ brands

launch

Apr 1, 2013

PepsiCo unveils new design for single-serve bottles across

beverage portfolio

PepsiCo Inc. has unveiled a new single-serve bottle for its brands,

including Pepsi, Diet Pepsi, Pepsi MAX and Pepsi NEXT.

Products/ brands

launch

Feb 20, 2013

PepsiCo unveils new juice beverage from Mountain Dew

PepsiCo, Inc. has announced the launch of Kickstart, a new juice

beverage from Mountain Dew.

Products/ brands

launch

Apr 26, 2011

Pepsi Lipton Tea Partnership announces launch of 100% Natural

Lipton Iced Tea

Pepsi Lipton Tea Partnership has announced the launch of 100%

Natural Lipton Iced Tea, a new line of beverages with an all-natural

ingredient list.

Products/ brands

launch

SOURCE: MARKETLINE

PepsiCo, Inc.: Contracts

Table 20: PepsiCo, Inc.: Contracts


Aug 11, 2014

Papa Murphy's signs multi-year agreement with PepsiCo

Papa Murphy's Holdings, Inc., a take 'n' bake pizza franchise, has

signed a multi-year agreement with PepsiCo.

Others

Aug 29, 2012

PepsiCo signs distribution agreement with Diamond Star

PepsiCo, Inc, a food and beverage company, has signed an agreement

with Diamond Star Co, Ltd, a unit of the Capital Diamond Star Group, to

distribute PepsiCo beverage brands in Myanmar.

Commercialization

and distribution

contracts (incl.

franchises)

Apr 5, 2011

Burger King selects PepsiCo as soft drink supplier

Burger King Corporation has signed a multi-year agreement with

PepsiCo to be the exclusive soft drink supplier in more than 1,000

restaurants throughout the company's Latin America and Caribbean

region.

Sourcing




SOURCE: MARKETLINE

PepsiCo, Inc.: Corporate Social Responsibility

Table 21: PepsiCo, Inc.: Corporate Social Responsibility


Feb 22, 2011

PepsiCo and IDB partner to drive development in Latin America

and Caribbean

PepsiCo, Inc., and the Inter-American Development Bank, or IDB, have

announced a partnership to drive social and economic growth in 26

countries across Latin America and the Caribbean.

Environmental

SOURCE: MARKETLINE

PepsiCo, Inc.: Financial Deals

Table 22: PepsiCo, Inc.: Financial Deals


Dec 20, 2012

PepsiCo Foodservice renews partnership agreement with Vail

Resorts

PepsiCo Foodservice, a food and beverage company, has renewed its

multi-year partnership agreement with Vail Resorts, Inc.

Partnership /

Strategic Alliance

Feb 22, 2011

PepsiCo and IDB partner to drive development in Latin America

and Caribbean

PepsiCo, Inc., and the Inter-American Development Bank, or IDB, have

announced a partnership to drive social and economic growth in 26

countries across Latin America and the Caribbean.

Partnership /

Strategic Alliance

SOURCE: MARKETLINE

PepsiCo, Inc.: Financial Performance

Table 23: PepsiCo, Inc.: Financial Performance


Apr 29, 2013

PepsiCo reports lower Q1 net income, provides outlook for 2013

PepsiCo, Inc. has reported that net income attributable to company for

the first quarter ended March 23, 2013 was $1.07 billion, or $0.69 per

diluted share, compared to $1.13 billion, or $0.71 per diluted share, for

Financial

Performance




the first quarter ended March 24, 2012. Consistent with its previous

guidance for 2013, the company expects 7% core constant currency

EPS growth versus its fiscal 2012 core EPS of $4.10.

Feb 18, 2013

PepsiCo Q4 net income increases

PepsiCo, Inc., a food and beverage company, has reported that net

income attributable to the company for the fourth quarter ended

December 29, 2012 was $1.66 billion, or $1.06 per diluted share,

compared to $1.41 billion, or $0.89 per diluted share, for the fourth

quarter ended December 31, 2011.

Financial

Performance

Aug 7, 2012

PepsiCo reports lower Q2 net income, reaffirms guidance for 2012

PepsiCo, Inc. has reported that net income attributable to the company

for the second quarter ended June 16, 2012 was $1.49 billion, or $0.94

per share, compared to $1.88 billion, or $1.17 per share, for the second

quarter ended June 11, 2011. The company has reaffirmed its 2012

core constant currency EPS guidance.

Financial

Performance

Apr 29, 2011

PepsiCo Q1 net income decreases

PepsiCo, Inc. has reported a net income attributable to the company of

$1.14 billion, or $0.71 per diluted share, for the first quarter ended

March 19, 2011, compared to $1.43 billion, or $0.89 per diluted share,

for the first quarter ended March 20, 2010.

Financial

Performance

Feb 11, 2011

PepsiCo Q4 net income down

PepsiCo has reported a net income attributable to the company of $1.36

billion, or $0.85 per diluted share, for the fourth quarter ended

December 25, 2010, compared to $1.43 billion, or $0.90 per diluted

share, for fourth quarter ended December 26, 2009.

Financial

Performance

SOURCE: MARKETLINE

PepsiCo, Inc.: Strategy and Operations

Table 24: PepsiCo, Inc.: Strategy and Operations


Dec 25, 2012

Tostitos to launch new Tostitos Cantina tortilla chips and salsas

Tostitos, a brand from PepsiCo's Frito-Lay division and a convenient

food products company, has announced that it will launch new Tostitos

Cantina tortilla chips and salsas.

Offerings - Products/

brands/ services

SOURCE: MARKETLINE

APPENDIX



APPENDIX

Contact Us

We hope that the data and analysis in this brief will help you make informed and imaginative business decisions. If you have further requirements/feedback please contact us at: [email protected]

For further information on MarketLine and our range of business information services please visit www.marketline.com

Methodology

MarketLine company reports are prepared under an established and tested methodology, which ensures proper checks and controls to capture and validate the quality and accuracy of data. The information is primarily sourced through:

Company annual reports

Company websites

SEC filings (10-K, 20-F, 10-Q etc)

Media releases

Investors presentations

MarketLine proprietary databases

Notes

*YTD (Year To Date) – The period beginning January 1st of the current year up until today's date.

*TTM (Trailing Twelve Months) – The timeframe of the past 12 months.

mailto:[email protected]

http://www.marketlineinfo.com/

APPENDIX



About MarketLine

In an information-rich world, finding facts you can rely upon isn’t always easy. MarketLine is the solution.

At MarketLine, we deliver accurate, up-to-date information on 300 industries and 150 countries as well as detailed

profiles of over 30,000 companies. By taking the chore out of business research, MarketLine gives you more time to focus on what really matters.

Profiling all major companies, industries and geographies, MarketLine is one of the most prolific publishers of business information today.

Our content is produced by an internal team of analysts, drawing on primary and secondary research and

prepared under an established methodology that’s been tried and tested over 10 years.

MarketLine is a wholly owned subsidiary of Informa.

«Footerline1» «FooterLine2»


MARKETLINE | CHRISTCHURCH COURT, 10-15 NEWGATE STREET | LONDON, UNITED KINGDOM, EC1A 7AZ T: + 44 20 3377 3045 | F: + 44 870 134 4371 W: WWW.MARKETLINE.COM E: [email protected]

the home of business intelligence -...

Documents