PepsiCo, Inc.

Company Profile
Publication Date: 11 Jul 2011

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PepsiCo, Inc.

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TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 Business Description...........................................................................................5 History...................................................................................................................7 Key Employees...................................................................................................12 Key Employee Biographies................................................................................14 Major Products and Services............................................................................21 Revenue Analysis...............................................................................................23 SWOT Analysis...................................................................................................25 Top Competitors.................................................................................................31 Company View.....................................................................................................32 Locations and Subsidiaries...............................................................................37

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PepsiCo, Inc.
Company Overview

COMPANY OVERVIEW
PepsiCo (or the company) is one of the largest food and beverages companies in the world. It manufactures, markets, and sells a variety of salty, sweet and grain-based snacks, as well as carbonated and non-carbonated beverages. The company has 19 brands in its portfolio which generate over $1,000 million each in annual retail sales. Some of these include: Pepsi-Cola, Mountain Dew, Diet Pepsi, Gatorade, Lay's and Tropicana. PepsiCo is headquartered in Purchase, New York and employs about 294,000 people. The company recorded revenues of $57,838 million during the financial year ended December 2010 (FY2010), an increase of 33.8% over 2009. The operating profit of the company was $8,332 million in FY2010, an increase of 3.6% over 2009. The net profit was $6,320 million in FY2010, an increase of 6.3% over 2009.

KEY FACTS
Head Office PepsiCo, Inc. PepsiCo, Inc. 700 Anderson Hill Road Purchase New York 10577 USA 1 914 253 2000

Phone Fax Web Address

http://www.pepsico.com

Revenue / turnover 57,838.0 (USD Mn) Financial Year End Employees New York Ticker December 294,000 PEP

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PepsiCo, Inc.
Business Description

BUSINESS DESCRIPTION
PepsiCo (or the company) is a global snack and beverage company. The company manufactures, markets, and sells a variety of salty, sweet and grain-based snacks; carbonated and non-carbonated beverages; and foods. PepsiCo operates in over 200 countries and has large scale operations in North America (Canada and the US), Mexico and the UK. PepsiCo operates through four business units: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). The company's four business units are further divided into six reportable segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), Latin America Foods (LAF), PepsiCo Americas Beverages (PAB), Europe, and Asia, Middle East and Africa (AMEA). The first three segments along with the Mexican businesses Sabritas and Gamesa comprise PAF. FLNA markets and distributes branded snacks. FLNA uses its own as well as third party manufacturing facilities to produce its snack products. These snacks include Lay's potato chips, Doritos and Tostitos tortilla chips, Cheetos cheese flavored snacks, Fritos corn chips, Quaker Chewy granola bars and Sun Chips multigrain snacks. FLNA branded products are sold to independent distributors and retailers. Furthermore, FLNA owns or leases approximately 40 food manufacturing and processing plants and approximately 1,755 warehouses, distribution centers and offices. QFNA manufactures, markets, and sells cereals, rice, pasta and other branded products. QFNA's products include Quaker oatmeal, Aunt Jemima mixes and syrups, Cap'n Crunch cereal, Quaker grits, Life cereal, Rice-A-Roni, Pasta Roni and Near East side dishes. The company sells all these products to independent distributors and retailers. QFNA utilizes approximately 25 manufacturing plants and production processing facilities and distribution centers in North America. LAF markets and sells salty and sweet snacks, which includes brands such as Gamesa, Doritos, Cheetos, Ruffles, Sabritas and Lay's in Latin American countries. It owns or leases approximately 50 food manufacturing and processing plants and approximately 645 warehouses, distribution centers and offices. The PAB business division sells beverage concentrates, fountain syrups and finished goods under various beverage brands including Pepsi, Mountain Dew, Gatorade, Tropicana, Sierra Mist, Electropura, Epura and Mirinda. PAB also manufactures or uses contract manufacturers to market and sell ready-to-drink tea, coffee and water products through joint ventures with Unilever (under the Lipton brand name) and Starbucks. In addition, the business division has licensed the Aquafina water brand to its bottlers. Further, PAB manufactures and distributes certain brands licensed from Dr Pepper Snapple Group, including Dr Pepper and Crush brands. PAB mainly sells concentrate and finished goods for its brands to authorized bottlers, as well as branded finished goods are sold directly to independent distributors and retailers.

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PepsiCo, Inc.
Business Description

PAB owns or leases approximately 115 bottling plants and production processing facilities and approximately 620 warehouses, distribution centers and offices. In addition, the company has an ownership interest in approximately 15 bottling plants. The company's contract manufacturers or co-packers also own or lease approximately 55 plants and production processing facilities and approximately 25 warehouses and distribution centers. The Europe and AMEA segment manufactures, markets and sells a number of leading snack foods including Lay's, Walkers, Doritos, Cheetos and Ruffles, as well as many Quaker-brand cereals and snacks, through consolidated businesses as well as through non-controlled affiliates. Europe segment also markets beverage concentrates, fountain syrups and finished goods under various beverage brands including Pepsi, 7UP and Tropicana. In addition, the segment licenses the Aquafina water brand to certain of its authorized bottlers. Besides, it also manufactures and markets ready-to-drink tea products under Lipton brand name. The Europe segment operates leased snack manufacturing and processing plants in Leicester, UK and owned beverage plant in Lebedyan, Russia. Europe segment also owns or leases approximately 65 plants and approximately 660 warehouses, distribution centers and offices. In addition, authorized bottlers of the segment operate two plants and five distribution centers. Europe segment also utilizes approximately 20 properties owned by contract manufacturers or co-packers. In addition, Europe segment utilizes one plant and production processing facility and three distribution centers which are co-owned or co-leased with a joint venture partner. The AMEA segment operates beverage plants located in Shenzhen, China; Sixth of October City, Egypt; and Amman, Jordan. It also operates snack manufacturing and processing plants in Sixth of October City, Egypt and Tingalpa, Australia. AMEA segment also owns or leases approximately 80 plants and approximately 1,175 warehouses, distribution centers and offices. In addition, the companys authorized bottlers own or lease approximately 25 plants and 100 distribution centers. AMEA also utilizes approximately 40 properties owned by contract manufacturers or co-packers. In addition, AMEA also utilizes approximately 25 plants and production processing facilities and approximately 15 distribution centers that are co-owned or co-leased with joint venture partners.

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PepsiCo, Inc.
History

HISTORY
PepsiCo (or the company) was formed in 1965 by Donald M. Kendall of Pepsi-Cola and Herman W. Lay of Frito-Lay, through the merger of Pepsi-Cola and Frito-Lay. The company introduced Doritos brand tortilla chips in 1966. In the same year, PepsiCo expanded its operations in Japan and Eastern Europe. PepsiCo established its food division to market its snack foods internationally in 1973. It acquired Pizza Hut and Taco Bell in the following two years. In 1982, PepsiCo started its first operation in China. It also introduced Pepsi Free and Diet Pepsi Free, the first caffeine-free colas during the same year. The company was restructured in 1984 to focus on its three core businesses: soft drinks, snack foods and restaurants. In 1986, PepsiCo was reorganized and decentralized. Beverage operations were combined under PepsiCo Worldwide Beverages and the snack food operations were combined under PepsiCo Worldwide Foods. PepsiCo was reincorporated in North Carolina in 1986. During the same year, PepsiCo purchased Kentucky Fried Chicken (KFC), 7UP International and Mug root beer. The company was listed on the Tokyo Stock Exchange in the same year. Pepsi Cola International entered into a joint venture agreement in India in 1988 with the government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991 when the use of foreign brands was allowed PepsiCo bought out its partners and ended the joint venture in 1994. The company acquired Walkers Crisps, Smith Crisps, and Smartfood's ready-to-eat popcorn business in 1989. It also formed a joint venture with Thomas J Lipton in 1991 to develop and market tea-based drinks. In the following year, Frito-Lay and General Mills agreed to merge their snack food businesses in Europe. PepsiCo and Starbucks formed the North American Coffee Partnership to jointly develop ready-to-drink coffee beverages in 1994. The company's domestic and international operations were combined with Pepsi-Cola in 1996. International and domestic snack food operations were combined into one business unit called Frito-Lay during the same year. KFC, Pizza Hut, and Taco Bell were spun off from PepsiCo in 1997 to form Tricon Global Restaurants. PepsiCo acquired Tropicana Products, Smith's Snack food Company and Barcel during 1998. Two years later, the company acquired South Beach Beverage, a manufacturer of noncarbonated juice and tea-based drinks and the owner of SoBe brands. In 2001, PepsiCo merged with the Quaker Oats to create a $25 billion food and beverage company. In the same year, PepsiCo acquired Tasali Foods, a snack company of Saudi Arabia. PepsiCo International came into being in 2003 to unite all international snacks, beverage and food units. During the same year, the company formed a joint venture with Unilever to expand the marketing and distribution of Unilever's range of Lipton ready-to-drink tea in select markets. PepsiCo launched a number of low carbohydrate and low fat products in 2004. In the early part of 2005, the company acquired Punica Getranke, a German maker of fruit juices and juice drinks, from Sunny Delight Beverages, a portfolio company of JW Childs Associates. Other key acquisitions made in 2005 include Sakata (Australia), a rice snacks manufacturer in Australia and PJ Smoothies (the UK), a fruit smoothie manufacturer. In the same year, PepsiCo International announced the

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History

appointment of Pioneer Foods, a leading South African food and beverage company, as its franchisee in South Africa. In early 2006, Snack Ventures Europe, a joint venture of PepsiCo and General Mills, announced the acquisition of Star Foods, a snack food manufacturer and distributor in Romania. The company also completed the acquisition of Stacy's Pita Chip Company, a pita chip maker during the same period. Further in the year, SoBe Beverages, a subsidiary of PepsiCo, launched SoBe Life Water, a line of vitamin enhanced water beverages containing vitamins C and E as well as vitamin B complex. PepsiCo launched two new additions to its beverage portfolio in mid 2006: Dole Sparklers and Sierra Mist Cranberry Splash. During the same period, PepsiCo and the National Hockey League (NHL) signed a multiyear deal, under which PepsiCo was given exclusive North American rights, as well as select marketing and promotional rights in the beverage, sports beverage, bottled water, and snack categories. PepsiCo replaced Coca-Cola, which had a similar deal with the NHL for 17 years. As part of the deal, Gatorade became the official sports drink of the NHL, replacing Coke's Powerade, and Aquafina became the official bottled water. Further, in 2006, Starbucks Coffee Company and PepsiCo through their joint-venture partnership, the North American Coffee Partnership, signed an agreement for distribution of Ethos water. As part of the agreement, the North American Coffee Partnership assumed responsibility for the co-packing, distribution and marketing of Ethos products in the US and Canada. PepsiCo utilized its resources, customer insights and knowledge of the water category to increase the reach of the brand outside of the Starbucks retail store environment. Further in the year, Ocean Spray, a cooperative owned by more than 650 cranberry and citrus growers in the US and Canada, and PepsiCo formed a long-term strategic alliance in which Pepsi-Cola North America marketed, bottled and distributed single-serve cranberry juice products in the US and Canada under the Ocean Spray brand name. The agreement also included opportunities for the development of new product innovations across multiple trade channels in the future. During late 2006, PepsiCo acquired IZZE Beverage Company, maker of all-natural, sparkling fruit juices. Further in 2006, Cold Stone Creamery, an ice-cream manufacturer signed a multi-year agreement with PepsiCo making Pepsi its exclusive beverage supplier. Cold Stone Creamery carried a variety of carbonated and non-carbonated Pepsi products including Pepsi, Diet Pepsi, Sierra Mist, Mountain Dew and Aquafina under the agreement. Also, during the same period, PepsiCo announced its agreement to acquire, California-based Naked Juice Company, a manufacturer of super premium juice category, from North Castle Partners, a private equity firm. Further, in the same year, PepsiCo Australia, the Australian business unit of PepsiCo International, acquired Bluebird Foods, New Zealand's snack maker, for NZ$245 million ($169 million). The acquisition was completed in the early part of 2007. In early 2007, PepsiCo signed Maria Sharapova, one of top ranking women tennis players of the world, for international endorsement of its Gatorade and Tropicana brands. During the same period, Aquafina, a brand of PepsiCo launched Aquafina Alive, a low calorie, vitamin-enhanced water beverage, in three different flavor combinations including Berry Pomegranate, Peach Mango and

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History

Orange. Further, in 2007, Pepsi Americas and PepsiCo announced that they had completed the joint purchase of 80% of Sandora, the leading juice company in Ukraine. PepsiCo and Unilever announced their agreement to expand their international partnership for marketing and distribution of ready-to-drink tea products under the Lipton brand, one of the world's best-selling tea brands during the same period. In late 2007, PepsiCo announced a restructuring initiative to split the company into three units, one for food in the US, one for US drinks and one for food and drinks abroad. During the same period, PepsiCo and Starbucks announced the launch of the coffee beverage in China. The joint venture between Starbucks and PepsiCo, the International Coffee Partnership (ICP), would offer Starbucks ready-to-drink coffee beverage in China through PepsiCo's established beverage distribution channels. Further, in 2007, PepsiAmericas and PepsiCo completed the joint purchase of the remaining 20% of Sandora, a juice company in Ukraine. In the early part of 2008, PepsiCo reached a definitive agreement to purchase Penelopa, Bulgaria's producer and seller of branded nuts and seeds. During the same period, PepsiCo announced its intention to repurchase approximately $4.3 billion in shares during 2008. Further in 2008, PepsiCo and Strauss Group completed formation of a joint venture partnership to operate Sabra. The Sabra joint venture would produce and sell fresh dips and spreads in the US and Canada, while drawing on both Strauss Group and Frito-Lay North America's (FLNA) marketplace expertise to continue building this growing business. During the same period, PepsiCo announced the acquisition of V Water, a vitamin water brand in the UK. This acquisition was followed by the takeover of Sobol-Aqua JSC, a beverage manufacturing company based in Novosibirsk, Russia. The acquisition was completed through PR Beverages, a joint venture of PepsiCo and The Pepsi Bottling Group. Also, during 2008, PepsiCo and The Pepsi Bottling Group completed a joint acquisition of a 75.5% stake in JSC Lebedyansky, Russia's leading branded juice company. Towards the end of 2008, PepsiCo entered into an agreement to acquire Spitz International, the maker of sunflower and pumpkin seeds in Canada. Further in 2008, PepsiCo made official its plan to invest $1 billion in China over the next four years. The investment was part of the company's strategy to expand in emerging markets and broaden its portfolio of locally-relevant products. In early 2009, PepsiCo announced a multiyear distribution agreement with Rockstar Energy Drink, an energy drink maker. As per the agreement, Rockstar would be distributed by The Pepsi Bottling Group, PepsiAmericas, Pepsi Bottling Ventures and other independent Pepsi-Cola bottlers in most of the US and all of Canada. During the same period, the company acquired Karinto, a Peru based manufacturer of corn chips, nuts and seeds. International Dairy and Juice Limited (IDJ), a PepsiCo-Almarai joint venture, acquired 75% of a Jordanian dairy producer, Teeba Investment for Developed Food Processing Company (Teeba), in 2009. Meanwhile, PepsiCo formed a strategic alliance with Calbee Foods to jointly produce and sell a range of food products such as potato chips, vegetable snacks, breakfast cereal and prawn crackers in Japan.

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History

In late 2009, the company agreed to acquire Amacoco Nordeste and Amacoco Sudeste (Amacoco), Brazil's largest coconut water company. In March 2010, PepsiCo completed the strategic acquisitions of its two largest bottlers, The Pepsi Bottling Group and PepsiAmericas. In April 2010, Pepsi Beverages Company (PBC), a division of PepsiCo and Tampico Beverages, announced an agreement to distribute TAMPICO PLUS fruit-flavored beverage products via PepsiCo's direct store delivery system in select US markets. Also, during the same month, PBC completed the acquisition of Pepsi-Cola Bottling Co of Yuba City. PepsiCo Beverages Americas (PBA) signed an agreement with The FRS Company in June 2010. The agreement was signed for distribution of its FRS Healthy Energy brand of products. In August 2010, the company announced investment of $3 million over the next three years to create the Agricultural Development Center of Peru (CEDAP). The Center will focus on the development of new varieties of potatoes and other tubers and roots. In the same month, the company announced its plans to invest $250 million in Vietnam over the next three years. Further in the month, Pepsi collaborated with Senomyx for a four-year agreement related to Senomyx's sweet-taste technology. The company announced its plans to invest $140 million to build its tenth plant in Russia, in October 2010. In the same month, the company announced plans to roll-out its new i-crop farming technology on a global basis. The web-based tool, which was 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. Further in the month, PepsiCo signed an agreement with the VSIP Bac Ninh, to confirm its development of a state-of-the-art beverage production plant in the VSIP Bac Ninh Integrated Township and Industrial Park. In November 2010, PepsiCo and GNC, a leading specialty retailer of nutritional products for the active consumer, announced a joint venture agreement to develop and sell fortified coconut water products under the newly created Phenom brand name. The company announced its plans to acquired Wimm-Bill-Dann Foods, Russia's leading branded food-and-beverage company, in December 2010. In the same month, the company increased its investment in O.N.E., Los Angeles based coconut water company, thereby acquiring a majority stake in the company. Further in the month, PepsiCo announced that approximately 50% of PepsiCo's Frito-Lay North Americas 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 (MSG).The acquisition of Wimm-Bill-Dann Foods was completed by the end of December 2010.

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History

In March 2011, PepsiCo 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. Burger King Corporation signed a multi-year agreement with PepsiCo in April 2011. As per the agreement, PepsiCo became the exclusive soft drink supplier in more than 1,000 Burger King Corporation restaurants throughout the Latin America and Caribbean region. In the same month, Lipton Iced Tea launched a 100% Natural Lipton Iced Tea, a new line of beverages with all-natural ingredient list. In May 2011, the company launched five varieties of eco-friendly, recyclable and compostable cups to Foodservice customers in the US.

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Key Employees

KEY EMPLOYEES
Name
Indra K. Nooyi Shona L. Brown Ian M. Cook Dina Dublon Victor J. Dzau Ray L. Hunt Alberto Ibarguen Arthur C. Martinez Sharon Percy Rockefeller James J. Schiro Lloyd G. Trotter Daniel Vasella John C. Compton Massimo Fasanella d'Amore Eric J. Foss Zein Abdalla Saad Abdul-Latif Albert P. Carey Richard Goodman Hugh F. Johnston Mehmood Khan

Job Title
Chairman and Chief Executive Officer Director Director Director Director Director Director Director Director Director Director Director Chief Executive Officer, PepsiCo Americas Foods Chief Executive Officer, PepsiCo Beverages Americas Chief Executive Officer, Pepsi Beverages Company Chief Executive Officer, PepsiCo Europe Chief Executive Officer, PepsiCo Asia, Middle East, Africa President and Chief Executive Officer, Frito-Lay North America Executive Vice President, PepsiCo Global Operations Chief Financial Officer Chief Scientific Officer and Chief Executive Officer, Global Nutrition Group Chief Personnel Officer and Executive Vice President, Human Resources

Board
Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Senior Management Senior Management Senior Management Senior Management Senior Management Senior Management Senior Management Senior Management Senior Management

Compensation
16175381 USD 270000 USD 250000 USD 300000 USD 260000 USD 280000 USD 250000 USD 310000 USD 250000 USD 300000 USD 250000 USD 250000 USD 5357215 USD 5225707 USD 15693562 USD

3860529 USD 3279360 USD

Cynthia M. Trudell

Senior Management

A. Salman Amin

Executive Vice President, Sales and Senior Management Marketing

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Key Employees

Name
Jill Beraud

Job Title

Board

Compensation

Chief Marketing Officer and Senior Management President, Joint Ventures, PepsiCo Beverages Americas Senior Vice President, Global Supply Chain Operations President, Tropicana Beverages North America Executive Vice President, Global Corporate Affairs Senior Vice President, Global Diversity and Inclusion Officer Senior Vice President and Chief Information Officer Senior Management Senior Management Senior Management Senior Management Senior Management

Rich Beck Neil Campbell Timothy P. Cost Pamela Culpepper Robert Dixon Tom Greco

Executive Vice President and Chief Senior Management Commercial Officer, Pepsi Beverages Company Senior Vice President, Chief Communications Officer Senior Management

Julie Hamp Jaya Kumar

President, Global Nutrition Senior Management Platforms, PepsiCo Global Nutrition Group President, Latin America Beverages Senior Management Chairman, PepsiCo China Senior Management

Luis Montoya Tim Minges Sarah Robb OHagan

President, Gatorade North America Senior Management and Global Chief Marketing Officer, Sports Nutrition President, PepsiCo Foods Mexico, Central America and Caribbean President, Quaker Foods and Snacks North America Senior Vice President and Chief Procurement Officer Executive Vice President, Government Affairs, General Counsel and Corporate Secretary President, South America Foods Senior Management Senior Management Senior Management Senior Management

Pedro Padierna Jose Luis Prado Grace Puma Maura Abeln Smith

Olivier Weber

Senior Management

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Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES

Indra K. Nooyi
Board: Executive Board Job Title: Chairman and Chief Executive Officer Since: 2007 Age: 53 Ms. Nooyi has been the Chairman and Chief Executive Officer at PepsiCo since 2007. She was elected to PepsiCo's board and became President and Chief Financial Officer in 2001 after serving as Senior Vice President and Chief Financial Officer since 2000. Ms. Nooyi also served as Senior Vice President, Strategic Planning and Senior Vice President, Corporate Strategy and Development from 1994 until 2000. Prior to joining PepsiCo, she spent four years as Senior Vice President of Strategy, Planning and Strategic Marketing for Asea Brown Boveri. Earlier, Ms. Nooyi was the Vice President and Director of Corporate Strategy and Planning at Motorola.

Shona L. Brown
Board: Non Executive Board Job Title: Director Since: 2009 Age: 44 Ms. Brown has been a Director at PepsiCo since 2009. Ms. Brown is the Senior Vice President, Business Operations at Google, a position she has held since 2006. Ms. Brown served as Vice President, Business Operations at Google from 2003 to 2006, where she led internal business operations and people operations. From 1995 to 2003, she was at McKinsey and Company, a management consulting firm, where she had been a Partner since December 2000. Ms. Brown is a Director of a number of non-profit organizations including San Francisco Jazz Organization, The Bridgespan Group, and The Exploritorium.

Ian M. Cook
Board: Non Executive Board Job Title: Director Since: 2008 Age: 57 Mr. Cook has been a Director at PepsiCo since 2008. He was appointed Chief Executive Officer and was elected to the board of Colgate-Palmolive Company in 2007. Mr. Cook joined Colgate in the UK in 1976 and progressed through a series of senior management roles around the world. In

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Key Employee Biographies

2002, he became Executive Vice President, North America and Europe. In 2004, Mr. Cook became Chief Operating Officer, with responsibility for operations in North America, Europe, Central Europe, Asia and Africa. In 2005, he was appointed President and Chief Operating Officer, responsible for all Colgate operations worldwide.

Dina Dublon
Board: Non Executive Board Job Title: Director Since: 2005 Age: 56 Ms. Dublon has been a Director at PepsiCo since 2005. Previously, she served as Executive Vice President and Chief Financial Officer at JP Morgan Chase & Company from 1998 until her retirement in 2004. Ms. Dublon is also a Director at Microsoft and Accenture.

Victor J. Dzau
Board: Non Executive Board Job Title: Director Since: 2005 Age: 64 Mr. Dzau has been a Director at PepsiCo since 2005. He is also the Chancellor for health affairs at Duke University, and President and Chief Executive Officer of the Duke University Health System since 2004. Prior to that, Mr. Dzau served as Hershey Professor of Medicine at Harvard Medical School and Chairman of the Department of Medicine at Brigham and Women's Hospital in Boston Massachusetts from 1996 to 2004. He is a Member of the Institute of Medicine of the National Academy of Sciences and the European Academy of Science and Arts.

Ray L. Hunt
Board: Non Executive Board Job Title: Director Since: 1996 Age: 67 Mr. Hunt has been a Director at PepsiCo since 1996. He is Chairman, Chief Executive Officer and President at Hunt Consolidated. Mr. Hunt began his association with Hunt Oil Company in 1958 and has held his current position since 1976. Mr. Hunt is also a Director of numerous charitable and corporate organizations, including Bessemer Securities Corporation, Bessemer Securities and King Ranch.

Alberto Ibarguen

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Key Employee Biographies

Board: Non Executive Board Job Title: Director Since: 2005 Age: 66 Mr. Ibarguen has been a Director at at PepsiCo since 2005. He is the President and Chief Executive Officer at the John S. and James L. Knight Foundation. Mr. Ibarguen previously served as Chairman of Miami Herald Publishing, and as publisher of The Miami Herald and of El Nuevo Herald. He is a member of the boards of AMR Corporation, American Airlines, ProPublica and The Council on Foreign Relations. Mr. Ibarguen is also the Chairman of the Board of The Newseum in Washington, and of the Worldwide Web Foundation in Switzerland.

Arthur C. Martinez
Board: Non Executive Board Job Title: Director Since: 1999 Age: 70 Mr. Martinez has been a Director at PepsiCo since 1999. He is the former Chairman, President and Chief Executive Officer of Sears, Roebuck and Company. Mr. Martinez was the Chairman and Chief Executive Officer of Sears Merchandise Group from 1992 to 1995; and served as Chairman, President and Chief Executive Officer of Sears, Roebuck and Company from 1995 to 2000. He served as Vice Chairman and Director of Saks Fifth Avenue from 1990 to 1992. Mr. Martinez is also a Director at Liz Claiborne, International Flavors & Fragrances and IAC/Interactive Corporation. He is the Chairman of the Supervisory Board of ABN AMRO Holding and HSN.

Sharon Percy Rockefeller

Board: Non Executive Board Job Title: Director Since: 1986 Age: 65 Ms. Rockefeller has been a Director at PepsiCo since 1986. She is also the President and Chief Executive Officer at WETA public stations in Washington, a position she has held since 1989. Ms. Rockefeller was a member of the Board of Directors of WETA from 1985 to 1989. She also serves as a Trustee on non-profit boards including National Gallery of Art, The Museum of Modern Art, Johns Hopkins Medicine, Colonial Williamsburg Foundation and Rockefeller Philanthropy Advisors.

James J. Schiro
Board: Non Executive Board Job Title: Director

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Key Employee Biographies

Since: 2003 Age: 64 Mr. Schiro has been a Director at PepsiCo since 2003. He was the Chief Executive Officer of Zurich Financial Services from 2002 to 2009, after serving as Chief Operating Officer and Group Finance since 2002. Earlier, Mr. Schiro joined Price Waterhouse in 1967, where he held various management positions. In 1994, he was elected Chairman and senior partner of Price Waterhouse, and in 1998 became Chief Executive Officer of PricewaterhouseCoopers, after the merger of Price Waterhouse and Coopers & Lybrand. Mr. Schiro is also a Director of Royal Philips Electronics and Goldman Sachs.

Lloyd G. Trotter
Board: Non Executive Board Job Title: Director Since: 2008 Age: 64 Mr.Trotter has been a Director at PepsiCo since 2008. He is a Partner at GenNx360 Capital Partners, a position he has held since 2008. Mr. Trotter served as Vice Chairman, General Electric, and as President and Chief Executive Officer of GE Industrial, from 2006 through 2008. Between 1989 and 2006, he held various positions at GE, including Executive Vice President, Operations, from 2005 to 2006. Mr. Trotter served as the President and Chief Executive Officer of 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. Mr. Trotter has been a Director at Genpact Limited. Currently, Mr. Trotter is a Director at Textron and Daimler.

Daniel Vasella
Board: Non Executive Board Job Title: Director Since: 2002 Age: 56 Dr. Vasella has been a Director at PepsiCo since 2002. He has been the Chairman of the board of Novartis since 1999. Dr. Vasella served as Chief Executive Officer of Novartis from 1999 to 2010, after serving as its President since 1996. From 1992 to 1996, 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.

John C. Compton
Board: Senior Management

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Key Employee Biographies

Job Title: Chief Executive Officer, PepsiCo Americas Foods Since: 2007 Age: 49 Mr. Compton has been the Chief Executive Officer, PepsiCo Americas Foods (PAF) at PepsiCo since 2007. He began his career at PepsiCo in 1983 as a Frito-Lay Production Supervisor. Mr. Compton has spent 26 years at PepsiCo in various assignments. From 2005 until 2006, he was the President and Chief Executive Officer of Quaker, Tropicana, Gatorade, and from 2006 until 2007, he was Chief Executive Officer of PepsiCo North America. Mr. Compton served as Vice Chairman and President of the North American Salty Snacks Division of Frito-Lay from 2003 until 2005. Prior to that, he served as Chief Marketing Officer of Frito-Lay's North American Salty Snacks Division from 2001 until 2003.

Massimo Fasanella d'Amore

Board: Senior Management Job Title: Chief Executive Officer, PepsiCo Beverages Americas Since: 2010 Age: 55 Mr. d'Amore has been the Chief Executive Officer, PepsiCo Beverages Americas at PepsiCo since 2010. He was Chief Executive Officer of PepsiCo Americas Beverages from 2007 to 2010 and was Executive Vice President, Commercial for PepsiCo International from 2005 to 2007. Prior to that, Mr. d'Amore served as President, Latin America Region for PepsiCo Beverages International from 2002 until 2005 and as PepsiCo's Senior Vice President of Corporate Strategy and Development from 2000 until 2002. He began his career with the company in 1995 as Vice President, Marketing for Pepsi-Cola International and was promoted to Senior Vice President and Chief Marketing Officer of Pepsi-Cola International in 1998. Before joining PepsiCo, Mr. d'Amore was with Procter & Gamble for 15 years in various international operations, marketing and general management positions.

Eric J. Foss
Board: Senior Management Job Title: Chief Executive Officer, Pepsi Beverages Company Since: 2010 Age: 52 Mr. Foss has been the Chief Executive Officer, Pepsi Beverages Company (PBC) at PepsiCo since 2010. He was Chief Executive Officer of The Pepsi Bottling Group (PBG) from 2006 until 2010. Mr. Foss served as PBG's Chief Operating Officer from 2005 to 2006. He joined Pepsi-Cola Company in 1982 and held a variety of positions with increasing responsibility in the areas of sales, marketing and general management in the field and at headquarters.

Zein Abdalla

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Key Employee Biographies

Board: Senior Management Job Title: Chief Executive Officer, PepsiCo Europe Since: 2009 Age: 52 Mr. Abdalla has been the Chief Executive Officer, PepsiCo Europe at PepsiCo since 2009. He joined PepsiCo in 1995 and has held a variety of senior positions. Mr. Abdalla has served as General Manager of Tropicana Europe and Franchise Vice President for Pakistan and the Gulf region. Prior to joining PepsiCo, he worked for Mars Incorporated.

Saad Abdul-Latif
Board: Senior Management Job Title: Chief Executive Officer, PepsiCo Asia, Middle East, Africa Since: 2009 Age: 57 Mr. Abdul-Latif has been the Chief Executive Officer, PepsiCo Asia, Middle East, Africa at PepsiCo since 2009. He began his career with PepsiCo in 1982 where he held a wide range of international roles in PepsiCo's food and beverage businesses.

Albert P. Carey
Board: Senior Management Job Title: President and Chief Executive Officer, Frito-Lay North America Since: 2009 Age: 56 Mr. Carey has been the President and Chief Executive Officer, Frito-Lay North America at PepsiCo since 2006. He began his career with Frito-Lay in 1981 where he spent 20 years in a variety of roles. Mr. Carey served as President, PepsiCo Sales from 2003 until 2006. Prior to that, he served as Chief Operating Officer, PepsiCo Beverages and Foods North America from 2002 to 2003 and as PepsiCo's Senior Vice President, Sales and Retailer Strategies from 1998 to 2002.

Richard Goodman
Board: Senior Management Job Title: Executive Vice President, PepsiCo Global Operations Since: 2010 Age: 62 Mr. Goodman has been the Executive Vice President, PepsiCo's Global Operations at PepsiCo since 2010. He served as Chief Financial Officer at PepsiCo from 2006 to 2010. From 2003 until October 2006, Mr. Goodman was Senior Vice President and Chief Financial Officer at PepsiCo

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Key Employee Biographies

International. Prior to that, he served as Senior Vice President and Chief Financial Officer at PepsiCo Beverages International from 2001 to 2003.

Hugh F. Johnston
Board: Senior Management Job Title: Chief Financial Officer Since: 2010 Age: 49 Mr. Johnston has been the Chief Financial Officer at PepsiCo since 2010. He previously held the position of Executive Vice President, Global Operations since 2009 and President of Pepsi-Cola North America since 2007. Mr. Johnston joined PepsiCo in 1987 as a Business Planner and held various finance positions until 1999 when he left to join Merck as Vice President, Retail, a position which he held until he rejoined PepsiCo in 2002. Prior to joining PepsiCo in 1987, he was with General Electric Company in a variety of finance positions.

Mehmood Khan
Board: Senior Management Job Title: Chief Scientific Officer and Chief Executive Officer, Global Nutrition Group Since: 2010 Age: 52 Dr. Khan has been the Chief Scientific Officer and Chief Executive Officer, Global Nutrition Group at PepsiCo since 2010. Prior to joining PepsiCo, he served for five years at Takeda Pharmaceuticals in various leadership roles including President of Research and Development and Chief Medical Officer. Dr. Khan also served at the Mayo Clinic until 2003 as the Director of the Diabetes, Endocrinology and Nutrition Clinical Unit and as Consultant Physician in Endocrinology.

Cynthia M. Trudell
Board: Senior Management Job Title: Chief Personnel Officer and Executive Vice President, Human Resources Since: 2007 Age: 57 Ms. Trudell has been the Chief Personnel Officer and Executive Vice President, Human Resources at PepsiCo since 2007. She served as a Director of PepsiCo from 2000 until her appointment to her current position. Ms. Trudell was formerly Vice President of Brunswick Corporation and President of Sea Ray Group from 2001 until 2006.

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Major Products and Services

MAJOR PRODUCTS AND SERVICES

PepsiCo (or the company) manufactures, markets, and sells a variety of salty, sweet and grain-based snacks, as well as carbonated and non-carbonated beverages. The company's products include the following: Products: Snacks: Corn chips Potato chips Pretzels Tortilla chips Beverages: Bottled water Carbonated soft drinks Chilled juices and juice drinks Powder drinks Ready-to-drink tea Sports drinks Foods: Breakfast cereals Granola/oatmeal bars Ready-to-eat side dishes Mixes and syrups Brands: Alegro Amp Energy Aquafina Aunt Jemima Cheetos Cracker Jack Pepsi Doritos Duyvis Frito-Lay Fritos

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Major Products and Services

Fruktovy Sad Frustyle Gamesa Gatorade Izze Lay's Life Mirinda Mountain Dew Mug Near East Pasta Roni Propel Quaker Rice-A-Roni Rold Gold Ruffles Sabritas Sakata Sierra Mist Simba Smith's Snack a Jacks SoBe Sonric's Stacy's SunChips Tonus Tostitos Tropicana V Water Walkers Ya

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Revenue Analysis

REVENUE ANALYSIS
The company recorded revenues of $57,838 million during the financial year ended December 2010 (FY2010), an increase of 33.8% over 2009. For FY2010, US, the company's largest geographic market, accounted for 52.9% of the total revenues. PepsiCo generates revenues through six business divisions: PepsiCo Americas Beverages (PAB) (35.3% of the total revenues during fiscal year 2010), Frito-Lay North America (FLNA) (23.2%), Europe (16%), Asia, Middle East and Africa (AMEA) (11.5%), Latin America Foods (LAF) (10.9%), and Quaker Foods North America (QFNA) (3.2%). Revenues by Division In FY2010, the PAB division recorded revenues of $20,401 million in FY2010, compared to $10,116 million in 2009. The FLNA division recorded revenues of $13,397 million, an increase of 1.3% over 2009. The Europe division recorded revenues of $9,254 million in FY2010, an increase of 37.6% over 2009. The AMEA division recorded revenues of $6,639 million in FY2010, an increase of 19% over 2009. The LAF division recorded revenues of $6,315 million in FY2010, an increase of 10.7% over 2009. The QFNA division recorded revenues of $1,832 million in FY2010, a decrease of 2.8% over 2009. Revenues by Geography* US, PepsiCo's largest geographical market, accounted for 52.9% of the total revenues in FY2010. Revenues from US reached $30,618 million (in 2010, an increase of 36.4% over 2009. Mexico accounted for 7.8% of the total revenues in FY2010. Revenues from Mexico reached $4,531 million in 2010, an increase of 41.2% over 2009. Canada accounted for 5.3% of the total revenues in FY2010. Revenues from Canada reached $3,081 million in 2010, an increase of 54.4% over 2009. Russia accounted for 3.3% of the total revenues in FY2010. Revenues from Russia reached $1,890 million in 2010, an increase of 87.9% over 2009.

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Revenue Analysis

UK accounted for 3.3% of the total revenues in FY2010. Revenues from the UK reached $1,888 million in 2010, an increase of 3.4% over 2009. All other countries accounted for 27.4% of the total revenues in FY2010. Revenues from all other countries reached $15,830 million in 2010, an increase of 24.2% over 2009. *Percentages are rounded-off.

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SWOT Analysis

SWOT ANALYSIS
PepsiCo (or the company) is one of the largest food and beverage companies in the world. The company manufactures, markets, and sells a range of salty, convenient, sweet and grain-based snacks, and carbonated and non-carbonated beverages. PepsiCo holds a significant market share in the snack and beverage industry worldwide with brands such as Pepsi, 7UP, Lays, Doritos, Gatorade, and Tropicana. The complementary combination of snack and beverage business imparts unique competitive advantages to PepsiCo. However, the carbonated drinks market in the US has witnessed a slow but steady switching trend into low sugar and sodium products, thereby signaling a negative growth trend of carbonated soft drinks product. This factor could have an adverse affect on the company's financials. Strengths Combination of world renowned brands in snacks and beverages render unique competitive edge Diversified product base and distribution channel Diversified geographical footprint Opportunities Broadening portfolio of products likely to help penetrate new markets International expansion likely to provide long term growth opportunities for snacks and beverages products Growing per capita consumption in emerging markets offer further opportunities for revenue growth and margin expansion Weaknesses Product recalls damage brand image

Threats Slow growth of carbonated soft drinks in the US Stiff competition from The Coca-Cola Company Government regulations could affect sales and profitability

Strengths

Combination of world renowned brands in snacks and beverages render unique competitive edge PepsiCo holds a significant market share in the snack and beverage industry worldwide with brands such as Pepsi, 7UP, Lays, Doritos, Gatorade, and Tropicana. In salty snacks segment, the company is one the leading players with nearly 64% value share in the US, 75% in Mexico, 58% in Brazil, 46% in the UK, and 37% in India. Also, the segment has shown strong top line growth in emerging countries. The snacks segment reported sales increase by more than 27% in Russia and more than

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SWOT Analysis

20% in China. In addition, the companys Pepsi, 7UP, and Mountain Dew are worlds popular carbonated beverage brands.The companys Pepsi brand of cola alone generates more than $20,000 million of annual sales. The companys beverage portfolio also includes market leading brands such as Tropicana in juice; Gatorade in sports drink, and Aquafina in bottled water. The complementary combination of snack and beverage business imparts unique competitive advantages to PepsiCo. It allows pairing of food with beverages in promotions, such as Pepsi with Tostitos. The combination also allows PepsiCo to leverage its existing distribution system for beverages to sell its snack products, and vice versa. Moreover, the size of its infrastructure provides a barrier to entry for new entrants and competitors since such a model is costly for companies to replicate. In addition, the company has also utilized the snacks and beverage platform to diversify into adjacent categories, such as oatmeal and juices. Over the years, PepsiCos strength in both beverage and snacks has enabled it to successfully launch product extensions. This has resulted in additional revenue streams and growth avenues for the company. On the back of these strengths, PepsiCo has successfully transitioned as food and beverage major rather than just a beverage company. Diversified product base and distribution channel PepsiCo markets its wide range of products through diversified business channel. The company's product offerings includes bottled water, carbonated soft drinks, chilled juices and juice drinks, powder drinks, ready-to-drink coffee, ready-to-drink teas, sports drinks, breakfast cereals, cakes and cake mixes, chocolate powder, oat flour, pancake mixes, pastas, ready-to-eat side dishes, and syrups. PepsiCo uses mainly three delivery channels namely direct-store-delivery (DSD), customer warehouse, and foodservice and vending distribution networks. Through DSD systems, PepsiCo delivers snacks and beverages directly to retail stores where the products are merchandised by its employees. The company reaches bigger retail and wholesalers through customer warehouse channel by delivering its products directly from manufacturing plants and warehouses to customer warehouses and retail stores. PepsiCo uses the third channel namely foodservice and vending distribution networks to distribute snacks, foods and beverages to third-party foodservice and vending distributors and operators. The company's diversified product base and multi-channel distribution system protect it from a downturn specific to a market or business line or distribution network, and thus reduce its business volatility. Diversified geographical footprint PepsiCo operates in more than 200 countries across the globe. The company has an established presence in developed markets of North America and Europe and is also rapidly expanding into emerging economies of Asia which provide a huge potential market compared to the developed regions. The companys revenue mix has balanced mix of international and domestic market. For FY2010, the company generated 52.9% from the US while 47.1% was contributed by international

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SWOT Analysis

market. Large international presence enables the company to expand its markets to high growth economies, derive the related synergies of expanded operations and also reduces the business risk.

Weaknesses

Product recalls damage brand image PepsiCo has recalled couple of its products recently due to varied reasons. For instance, in March 2010, the company recalled about 275,000 packages of Quaker Snack Mix Baked Cheddar in the US because the product contained hydrolyzed vegetable protein. In March 2008, PepsiCo's Quaker Oats unit has had to recall some Aunt Jemima pancake and waffle mix products due to potential salmonella contamination. Incidence like these could have a material adverse effect on the value of its brands and results of operations. In March 2007, the company's Diet Pepsi cans were pulled off the shelves in Abu Dhabi after the linings of some cans were found to be disintegrating. Abu Dhabi's Food Control Authority (FCA) announced that they discovered the manufacturing defect after running tests on Diet Pepsi cans that were reported to be peeling by a customer. Significant product recalls like these negatively affects the consumer confidence in the company's food products and also dilutes the brand image of the company.

Opportunities

Broadening portfolio of products likely to help penetrate new markets PepsiCo is constantly working on widening its product offering to consumers to satisfy their diverse lifestyles and desires. Recently, the company has taken several routes including acquisition and extension of partnership agreements for offering consumers a broad range of choices for its snacks and beverages product offerings. For example, in 2011, the company acquired Wimm-Bill-Dann Foods, a Russia-based manufacturer of dairy and fruit juice products. The acquisition marks the companys entry in dairy segment, which makes up 70% of Wimm-Bill-Dann Foods portfolio. It would also make PepsiCo the largest food and drink business in Russia, and increase its presence in other eastern European markets and Central Asia. Earlier, in 2009, the company broadened its snack products portfolio by acquiring Karinto, a Peru based manufacturer of corn chips and nuts and seeds. Furthermore, the company expanded its beverages product offering by acquiring Amacoco Nordeste and Amacoco Sudeste (Amacoco), Brazil's largest coconut water company. In FY2008, the company broadened its beverage portfolio by partnering with the Pepsi Bottling Group (PBG) to acquire Lebedyansky, Russia's leading juice company, by acquiring V Water in the UK and by expanding its Lipton Tea partnership with Unilever. Additionally, it expanded into adjacent snack categories by introducing TrueNorth nut snacks and formed a joint venture that offers Sabra refrigerated dips.

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SWOT Analysis

Acquisitions like these not only broaden the companys product portfolio but also strengthen its geographical reach. Similar strategic acquisitions are likely to strengthen PepsiCo's presence across various categories and in turn will enhance its top-line and bottom-line growth. International expansion likely to provide long term growth opportunities for snacks and beverages products PepsiCo is aggressively pursuing an international expansion strategy to penetrate emerging market. In January 2010, PepsiCo announced that it would invest $200 million in the India to enhance its manufacturing, products and agricultural activities. In 2009, PepsiCo announced that it would invest $1,000 million in the Russian market over the next three years to expand its manufacturing and distribution capacity. Further, in the same year, PepsiCo announced that it would invest $100 million in Egypt by 2010. The company also announced significant capital investments in Brazil, India, Mexico and China, during FY2008. For instance, PepsiCo announced that it would invest $1,000 million in China over the next four years to tap the potential of this growing market. Additionally, during the same period, PepsiCo announced an investment of $500 million in Indian market over the next three years to further strengthen its position in the country. Towards the end of 2008, PepsiCo made official that it would invest up to $3,000 million in Mexico over the next few years to grow its Sabritas and Gamesa foods business and its beverage brands. Considering the fact that the relative economic growths in mature markets like US, Japan, and European countries are projected to remain slow as compared to emerging markets like India and China; the companys investments in emerging markets would thus enable it to build support structure like distribution and manufacturing networks. PepsiCo could capitalize on these investments to pursue aggressive growth opportunities. Growing per capita consumption in emerging markets offer further opportunities for revenue growth and margin expansion The strong growth in food market is being driven primarily by the expansion of packaged consumption in large emerging markets such as China, India, Russia and Brazil. Although, the company has started making significant investment in manufacturing facilities and distribution infrastructure in markets such as China and India, these markets offer further potential to fuel PepsiCo's growth with cost optimization and growth prospects. According to Datamonitor estimates, the soft drinks market in Asia-Pacific grew by 4.1% in 2010 to reach a value of $111,023.6 million. In 2015, the Asia-Pacific soft drinks market is forecast to have a value of $143,597.2 million, an increase of 29.3% since 2010. The growth in these markets provides huge potential for PepsiCo to further strengthen its market base in these economies and achieve higher revenue and volume growth. Hence, PepsiCo can benefit from growing buying power and shifting consumer preferences in emerging economies.

Threats

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SWOT Analysis

Slow growth of carbonated soft drinks in the US The US carbonated soft drinks market is registering a negative growth trend. According to Datamonitor reports, its market shrank by 0.8% in 2010 to reach a value of $124.7 billion. The performance of the market is forecast to decelerate, with an anticipated CAGR of 0.4% for the five-year period 2010-2015, which is expected to lead the market to a value of $127 billion by the end of 2015. Comparatively, the European and Asia-Pacific markets will grow with CAGRs of 2.4% and 5.3% respectively, over the same period, to reach respective values of $201.5 billion and $143.6 billion in 2015. Although PepsiCo has a diversified product portfolio, it relies heavily on sale of carbonated soft drinks to generate its revenue. PepsiCo offers a variety of carbonated soft drinks products in this market and is the second biggest player in the US. Thus, declining growth trend of carbonated soft drinks consumption in the US is likely to have a negative impact on its financial performance. Stiff competition from The Coca-Cola Company PepsiCo faces stiff competition in the carbonated beverage category from The Coca-Cola Company (Coca-Cola), which is the established leader in this segment with strong brands and global presence. Coca-Cola has strong brand recognition across the globe with its key brands including Coca-Cola, Diet Coke, Sprite and Fanta. Both these companies have a long history of rivalry with either of them remaining number one or two players. During 1970s and 80s PepsiCo emerged as the largest player in the US beverage market and gained market share from Coca-Cola. However, Coca-Cola emerged ahead of PepsiCo during 1990s based on popularity and wide geographical reach of its brands. According to Datamonitor estimates, Coca-Cola had 42.5% of market share in carbonated drinks category compared with PepsiCos 20%. One of the contributing factors for PepsiCos decline in beverage industry post 90s has been its late entry in international markets where Coca-Cola already had established distributor and consumer space. As of 2010, Coca-Colas 500 brands in 200 countries enabled it to generated 69.7% of sales from international markets. Comparatively, PepsiCo generated 47.1% of sales from international markets. The skewed revenue distribution towards stagnating domestic US market hence positions PepsiCo unfavorably against its biggest competitor. Moreover, PepsiCo has lagged behind Coca-Cola in low or no-sugar based beverages, one of the potential growth markets. In 2010, Diet Coke overtook Pepsi as number two carbonated beverage in the US, behind Coca-Cola. Since growth in beverages in the next decade will come from emerging markets, Coca-Colas higher market share in these regions gives it an edge over PepsiCo. As a result, PepsiCo had to increasingly enhance its advertising and promotional outlay to expand its brand recognition. Thus, intense competition from strong Coca-Cola brands would make it difficult for PepsiCo to grow its revenue distribution internationally. Government regulations could affect sales and profitability The company's operations are subject to and affected by various environmental, health and safety laws and regulations by federal, state and local authorities in the US and regulatory authorities with

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SWOT Analysis

jurisdiction over the company's foreign operations.These are regarding the manufacturing, marketing, and distribution of food products. Further, governmental entities or agencies in jurisdictions where PepsiCo operates may impose new labeling, product or production requirements, or other restrictions. For example, studies are underway by various regulatory authorities and others to assess the effect on humans due to acrylamide in the diet. It is believed that acrylamide may cause cancer in laboratory animals when consumed in significant amounts. If consumer concerns about acrylamide increase as a result of these studies, demand for PepsiCo's products could decline. In addition, the company's operations are also subject to Proposition 65 in California, a law which requires that a specific warning appear on any product sold in California that contains a substance listed by that State as having been found to cause cancer or birth defects. If the company has to comply with this regulation and add warning labels to any of its products or place warnings in certain locations where its products are sold, the sales of these products would be negatively impacted. These laws, rules and regulations may affect the way the company conducts its operations and failure to comply with these regulations could lead to fines and other penalties.

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Top Competitors

TOP COMPETITORS

The following companies are the major competitors of PepsiCo, Inc.

General Mills, Inc. Groupe Danone Nestle S.A. Kraft Foods, Inc. Kellogg Company ConAgra Foods, Inc. The Coca-Cola Company Sara Lee Corporation

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Company View

COMPANY VIEW
A statement by Indra K. Nooyi, Chief Executive Officer and Chairman of PepsiCo is given below. The statement has been taken from the company's 2010 annual report. 2010 was a good year for PepsiCo. I am delighted with the success we have achieved, and I am sure you are too. Amid the continuing challenge of the most difficult global macroeconomic environment in decades, we delivered strong operating performance that puts us in the top tier in our industry while we generated significant operating cash flow. Net revenue grew 33 percent on a constant currency basis. Core division operating profit rose 23 percent on a constant currency basis. Core EPS grew 12 percent on a constant currency basis. Management operating cash flow, excluding certain items, reached $6.9 billion, up 23 percent. $8 billion was returned to our shareholders through share repurchases and dividends. We raised the annual dividend by 7 percent. We can confidently say that PepsiCo continues to operate from a position of balance and strength. We are the second-largest food and beverage business in the world, and the largest food and beverage business in North America. We are increasingly global. More than 45 percent of our revenue comes from outside the United States, with approximately 30 percent coming from emerging and developing markets, where we have tremendous growth opportunities. Globally, PepsiCo operates more than 100,000 routes, serves approximately 10 million outlets almost every week and generates more than $300 million in retail sales every day. We are performing today to deliver top-tier financial performance, while investing to ensure that our performance levels can be sustained in the long term. For example, in 2010 we stepped up our investments in brand building, R&D, emerging markets infrastructure and our people. PepsiCo has 19 brands that generate more than $1 billion of retail sales each - up from just 11 in 2000. Brands are our lifeblood - we invest to sustain and improve brand equity in existing global

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Company View

brands while judiciously focusing on our local and regional brands. In 2010, all of our $1 billion brands grew revenues, thanks in part to our brand-building activities. Differentiated products help us drive sales and pricing. In 2010, we again increased our R&D investments in sweetener technologies, next-generation processing and packaging and nutrition products. For example, SoBe Lifewater Zero Calorie, a product made with an all-natural, zero-calorie sweetener, was a direct result of that investment - the SoBe Lifewater brand grew volume 46 percent in 2010 alone. Similarly, our technology investments allowed us to reduce sodium levels in some of our salty snacks without compromising taste and to use 100 percent recycled PET in our Naked Juice bottles. We increased our investment in emerging markets selling and delivery systems by putting more coolers in the market and adding route and distribution capacity ahead of growth in India, China, Russia and other countries. In 2010, we also increased our emphasis on our people - from leadership development to rotational assignments to experiential learning programs. Our people set us apart and attracting, retaining, retraining and developing them remain our biggest advantages and continuing challenges. In addition to sustainable financial performance, we made major strides in our Performance with Purpose journey. Four years ago, we recognized that the environment was changing: increasingly, focus was shifting from corporate capabilities to include corporate character. A new understanding took shape: that ethics and growth are not just linked, but inseparable; a belief long treasured by PepsiCo. Performance with Purpose means delivering sustainable growth by investing in a healthier future for people and our planet. Performance has always been the lifeblood of PepsiCo, and we remain committed to delivering top-tier financial returns. But we went a step further. We laid out additional short- and long-term goals for ourselves that included metrics related to our performance in the eyes of our retail partners, our consumers and, of course, our investors. Importantly, this is not at the cost of creating value for shareholders. It is the source of that value. Its all about bringing our company performance and our social and environmental commitments together. We set a series of long-term targets, but ensured that they also supported our short-term needs. Our business and our ethics are intertwined, and that is an enormous source of pride for everyone at PepsiCo. So let me explain the three Purpose planks that lead to outstanding performance: Human, Environmental, and Talent sustainability. Human Sustainability

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Company View

Human sustainability is our promise to encourage people to live balanced and healthy lives. Its about offering balance in our portfolio for consumers to have a range of enjoyable and wholesome foods and beverages. Its about providing people with choices, attractive options to manage their portions, better nutrition education and compelling programs to encourage physical activity. But the key is choice. By expanding our portfolio, we are making sure our consumers can treat themselves when they want enjoyable products, but are able to buy a range of appetizing and healthier snacks when they are being health-conscious. We are a founding member of the Healthy Weight Commitment Foundation, which is a first-of-its kind coalition dedicated to helping Americans achieve healthy weight through energy balance calories in and calories out. We also support programs across the world to help people lead healthier lives, from Vive Saludable Escuelas in Latin America, to our Get Active program in India, to our partnership with the United Kingdoms Department of Health on its Change4Life obesity campaign, to our work with the YMCA - Americas largest provider of fitness programs - on its Activate America initiative. Environmental Sustainability Environmental sustainability is our promise to protect the Earths natural resources. We are investing in a healthier planet by reducing water usage, increasing recycling levels and minimizing our carbon footprint. We are engaging in sustainable farming and helping communities in which we operate in the areas of water conservation, efficient agricultural methods and increasing access to safe water. In doing so, we are ensuring PepsiCo can continue long into the future. But in the here and now, we are reducing our energy and waste costs, and gaining real credibility with consumers and policymakers alike as we prove ourselves to be a company which takes its responsibilities seriously. In 2010, we advanced our land and packaging commitments by launching the Dream Machine recycling partnership with Waste Management, Greenopolis and Keep America Beautiful, with a goal of increasing the U.S. beverage container recycling rate from 38 percent in 2009 to 50 percent by 2018. We made progress on our commitment to reduce our carbon footprint, opening LEED-certified plants in China in both 2009 and 2010, while managing the largest private-delivery fleet of electric vehicles in North America. Meanwhile, we strengthened our community pledge to be responsible in our use of natural resources, achieving positive water balance in India in 2009 and creating a new Agricultural Development Center in Peru in 2010. Talent Sustainability Talent sustainability is our promise to invest in our associates. Our goal is to help them succeed and develop the skills needed to drive the companys growth, while also contributing to the local communities where we live. Its about creating an environment where associates feel they can bring their whole selves to work. Its about building a diverse workforce where our associate base reflects our consumer base. In 2010, our efforts focused on making training and development a priority, as we introduced new PepsiCo University leadership programs. Our ongoing efforts to create a culture

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Company View

where associates can bring their whole selves to work was affirmed with numerous best employer awards, from Turkey to India to Spain to Brazil. 2011 and Beyond There is little debate that the pace of change in the world today can be challenging. It means that there is never a chance to rest on your laurels. No company can afford to stop awhile to congratulate itself on its success. You can be assured that our vigilance remains undimmed. To that end, we have identified six business imperatives on which we will focus. Our first imperative is to build and extend our macro snack portfolio. PepsiCo is the largest player in this category, and we still have tremendous room for growth. Our goal is to grow the core salty snack brands that are loved and respected around the world, while expanding into adjacent categories. We will continue to grow top products in our portfolio such as Lays, Doritos, Fritos and Cheetos, while also adding products that are baked, that incorporate whole grains or contain fruits and vegetables. We also will strive to create new flavors in tune with local tastes, which reflect local culture and traditions. In doing so, we will position ourselves to gain share, while continuing to grow the top and bottom line in our macro snack business. Our second imperative is to sustainably and profitably grow our beverage business worldwide. Our beverage business is a large, highly profitable one, accounting for 51 percent of the companys revenues. We are a full-line liquid refreshment beverage company with a portfolio of much-loved brands, from the iconic Pepsi to Diet Pepsi, Pepsi Max, Mountain Dew, 7Up (International), Sierra Mist and Mirinda in carbonated beverages; Gatorade, Lipton Iced Tea, SoBe, Tropicana, Frappuccino and Naked Juice in the non-carbonated space. In this highly competitive category, our goal is to grow our developed market beverage business profitably while continuing to aggressively invest in fast-growing emerging and developing markets. In 2010, we revitalized both the Gatorade brand and the no-calorie carbonated category by putting a lot of weight behind Pepsi Max. In 2011, we have a laser-like focus on taking our profitable North America beverage business and growing it sustainably for the future. We are continuing, at the same time, to invest in emerging and developing markets - including, of course, the vital China and India markets. Our third imperative is to unleash the power of the Power of One. Studies show that, 85 percent of the time, when a person eats a snack, he or she also reaches for a beverage. No company on earth is better positioned to fulfill both sides of that equation. To truly unleash the power of the Power of One, in 2010, we successfully completed the acquisitions of our anchor bottlers, which enabled us to better service our customers. As an integrated operating company across snacks and beverages, we now can provide incredible benefits to our retail partners and consumers. For example, we can respond to retailer needs with increased speed and agility; we can incubate new products in our distribution systems for a longer time; we can offer integrated in-store displays tuned to occasions and day parts; we can leverage our in-store merchandising better and we can truly bring the power of PepsiCo to all our retail partners. The opportunities to grow our top and bottom line through the Power of One are exciting indeed.

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Company View

Our fourth imperative is to build and expand our nutrition business to rapidly grow our Good-for-You portfolio of products. With the acquisition of Wimm-Bill-Dann, PepsiCos annual revenues from nutritious and functional foods have risen from $10 billion to nearly $13 billion. With the Global Nutrition Group, we will be able to harness the best of PepsiCo by retaining the operating capability within each sector while centralizing the innovation and development of these increasingly in-demand healthier, wholesome and tasty products. The fifth imperative is to cherish our PepsiCo associates. We are fortunate to employ, worldwide, a truly remarkable set of associates. The market becomes more competitive every day. It is people who hold the key to great performance. To be a good employer is one of the most important strategic decisions a company has to make. In this regard, Performance with Purpose is an absolutely central part of our recruitment and retention processes. Many of our new associates come to us precisely because we are a company that respects them and respects the causes that they care passionately about. The sixth and final imperative is the sum total of the other five. It is vital, in the end, that everything we do adds up to excellent financial performance. When we widen our horizons we are not, at the same time, losing our focus on performance. I can make this commitment - that we have a laser-like attention on being the best possible company, financially, that we can be. Conclusion I am sure you will agree that we have delivered strong and consistent performance. Any student of the numbers could be forgiven for thinking that we sailed along the calm waters with little to concern the crew. And, in one sense, that would be right. The crew of PepsiCo is a remarkably consistent and dedicated group. I want to pay tribute to every one of the associates who have done, as they always do, a magnificent job during trying circumstances. We all owe every one of them a debt of gratitude! That is especially the case when you consider that business is conducted against the backdrop of a constantly shifting scene. It can be disconcerting. It can be challenging. But it can also be exciting, and the sense of commitment and desire that I feel from the associates in this company is the thing that keeps our company fresh and the thing that keeps our company successful. Let me close by saying that this has been another year of excellent performance. We returned $8 billion to you, our shareholders - of that we are proud. Now that Performance with Purpose is no longer new, we can see that the evidence is mounting - what is good for society and what is good for our business are the same thing. We are making progress on all fronts. It is hugely encouraging and, though the backdrop can be difficult, we have the resources, the ingenuity and the desire to keep moving forward successfully. Of that, I am certain.

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Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES

Head Office
PepsiCo, Inc. PepsiCo, Inc. 700 Anderson Hill Road Purchase New York 10577 USA P:1 914 253 2000 http://www.pepsico.com

Other Locations and Subsidiaries

Frito-Lay North America 7701 Legacy Drive Plano Texas 75024 USA PepsiCo International Emaar Square Sheikh Zayed Road Emaar Building 2 Level 3 Dubai ARE Pepsi Foods Private Limited 3B DLF Corporate Park 'S' Block Qutab Enclave Phase-III Gurgaon - 122002 Haryana IND Frito-Lay Canada Cambridge Ontario N1R 5S9 CAN PepsiCo Chicago 555 West Monroe Street Chicago Illinois 60661 USA Walkers Snack Foods Peterlee Plant 2 Stephenson Road Peterlee County Durham SR8 5AY GBR PBI PepsiCo Beverages Italia SRL Via Tiziano 32 Milano 20145 ITA

PepsiCo Deutschland GmbH Frankfurter Strasse 190A 63263 Neu-Isenburg DEU

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