Published on March 11, 2014
Winning in North America Brian Cornell Chief Executive Officer, PepsiCo Americas Foods February 20, 2014
2 Safe Harbor Statement • Statements in this communication that are “forward-looking statements,” including our 2014 guidance, are based on currently available information, operating plans and projections about future events and trends. Terminology such “aim,” “anticipate,” “believe,” “drive,” “estimate,” “expect,” “expressed confidence,” “forecast,” “future,” “goals,” “guidance,” “intend,” “may,” “plan,” “position,” “potential,” “project,” “ seek,” “should,” “strategy,” “target,” “will” or similar statements or variations of such terms are intended to identify forward- looking statements, although not all forward-looking statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo’s products, as a result of changes in consumer preferences or otherwise; changes in the legal and regulatory environment; imposition of new taxes, disagreements with tax authorities or additional tax liabilities; PepsiCo’s ability to compete effectively; PepsiCo’s ability to grow its business in emerging and developing markets or unstable political conditions, civil unrest or other developments and risks in the markets where PepsiCo’s products are sold; unfavorable economic conditions in the countries in which PepsiCo operates; increased costs, disruption of supply or shortages of raw materials and other supplies; failure to realize anticipated benefits from PepsiCo’s productivity initiatives or global operating model; disruption of PepsiCo’s supply chain; damage to PepsiCo’s reputation; failure to successfully complete or integrate acquisitions and joint ventures into PepsiCo’s existing operations or to complete or manage divestitures or refranchisings; PepsiCo’s ability to hire or retain key employees or a highly skilled and diverse workforce; trade consolidation or the loss of any key customer; any downgrade or potential downgrade of PepsiCo’s credit ratings; PepsiCo’s ability to protect its information systems against a cybersecurity incident; PepsiCo’s ability to build and sustain proper information technology infrastructure, successfully implement its ongoing business transformation initiative or outsource certain functions effectively; fluctuations in exchange rates; climate change, or legal, regulatory or market measures to address climate change; failure to successfully negotiate collective bargaining agreements or strikes or work stoppages; any infringement of or challenge to PepsiCo’s intellectual property rights; potential liabilities and costs from litigation or legal proceedings; and other factors that may adversely affect the price of PepsiCo’s common stock and financial performance. • For additional information on these and other factors that could cause PepsiCo’s actual results to materially differ from those set forth herein, please see PepsiCo’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP Information • Please refer to the “Investors” section of PepsiCo’s web site at www.pepsico.com under the heading “Events & Presentations” to find disclosure and a reconciliation of any non-GAAP financial measures contained herein. Glossary • Please refer to the glossary and attachments to our February 13, 2014 earnings release for the definitions of core, constant currency, organic, and certain other terms used herein. Safe Harbor Statement of Terms & Non-GAAP Information
3 Our presenters represent experiences across snacks and beverages Tom Greco Current President, Frito-Lay North America 2009 – 2011 Chief Commercial Officer, PepsiCo Americas Beverages 2006 – 2009 President Global Sales, PepsiCo 2002 – 2006 SVP Sales, Frito-Lay North America 1999 – 2001 President, Frito-Lay Canada Current CEO, PepsiCo Americas Foods 2009 – 2012 CEO, Sam’s Club 2007 – 2009 CEO, Michaels 2004 – 2007 EVP, Merchandising & Marketing, Safeway 2003 – 2004 President, PepsiCo Foodservices 2001-2003 President, PepsiCo Beverages Europe 1999-2001 President, Tropicana International Brian Cornell
4 North America is a critical driver of PepsiCo revenue, with significant scale advantage US Contribution to PepsiCo Net Revenues Significant Scale Advantage (Retail Sales Indexed to PepsiCo) Rest of World 49% U.S. 51% 100 51 50 47 38 37 27 25 21 20 PepsiCo Kraft Foods Nestle Coca Cola Anheuser Busch Inbev General Mills Kellogg ConAgra Foods Mars Dr Pepper Snapple Source: IRI MULOC US 2013Based on PEP 2013 Net Revenue
5 Consumers Customers The industry is seeing significant changes in the consumer and retail landscape • Changing demographics • Shifting needs • Shifting channels • Growing new formats
6 Our playbook in this environment balances focus with scale + Focus Go deep on key category priorities Scale Leverage Procurement IT / Back Office Customer Teams R&D Drive growth and margins from scale
7 Playbook anchored on 4 key priorities Innovation ExecutionProductivity Brand Building
8 19 $1 Billion Dollar Global Brands Sold in the US Retailers value PepsiCo’s outstanding brand portfolio across snacks and beverages *PepsiCo’s 22 billion dollar brands globally include Walker’s, Mirinda and 7-UP outside the U.S. Lipton and Starbucks are sold through partnerships with Unilever and Starbucks respectively
9 Total US Snacks, Breakfast & Beverages Retail Sales Demand spaces insights highlights significant brand interactions between snacks and beverages 35% 65% Different Needs Common / Complementary Needs Source: Company research
10 Common & Adjacent Demand Spaces Common demand space insights highlight opportunities across our portfolio Connect Fun Times Together Reform Young & Hungry Perform Office / School Break Prepare Jump Start
11 Example: Successful insights-driven gaming promotion Mountain Dew Game Fuel • Electrifying Berry • Citrus Cherry Doritos Gamer Pack • Limited Edition
12 Nine PepsiCo F&B innovations in top 50 Recent food & beverage win in foodservice Insights driving innovation across snacks and beverages Source: IRI US MULOC based on estimated launch year sales for innovations launched through June 2013
13 At the customer’s headquarters In each and every store We execute both at the customer’s headquarters and in each and every store JointCustomerTeams
14 VIDEO Walmart Game Time
15 Our strong brand activation was highly visible at the Super Bowl From Insights to Media to Shelf Ad Week January 26, 2014
16 Global Transportation Management System Common ToolsCommon Engines We leverage common engines, tools and a global transportation system to deliver productivity
17 We’ve rewired the company to gain global scale leverage Procurement Information Systems Customer Teams R&D Innovation Talent Management Global Procurement Function Integrated Systems and Handhelds Collaborative Account Management Approach Global Innovation Approach Cross-Sector Experiences and Capabilities
18 In sum, our focus going forward is executing this playbook Innovation ExecutionProductivity Brand Building
Winning in North America Tom Greco President, Frito-Lay North America February 20, 2014
20 2013 FLNA % Growth FLNA delivering balanced growth 3 4 6 Volume Net Revenue Profit Held Value Share and Grew Volume Share
21 Our long term growth model Innovation ExecutionProductivity Brand Building
22 Frito-Lay has significant headroom for growth Source: TNS Itrac, FY Ending 2013 Monthly Snack Occasions 67 Total Snack Occasions Per Month 21 Unpackaged Snacks 46 Macro Snacks 46 Macro Snacks 8 FL Snacks
23 We’ve defined a consumer framework focused on demand spaces
24 Lay’s “Do Us a Flavor”
25 VIDEO Lay’s Yummy
26 Doritos Crash the Super Bowl #2 Cowboy Kid #4 Time Machine Source: USA Today Ad Meter
27 VIDEO Doritos Time Machine
28 VIDEO Doritos Cowboy Kid
29 2013 Innovation
30 Building on Foodservice partnerships through innovation
31 We won’t stop innovating
32 Lay’s execution
33 Winning with Hispanic consumers Fiestas Patrias Día De Los Muertos Las Posadas Juntos Disfrutamos Mas
34 GES driving benefits where launched • Lower Inventory • Faster Growth • Lower Costs • More SKUs • Improved Freshness Perry GA Topeka KS Rosenberg TXDenver CO
35 Sustainable growth Innovation ExecutionProductivity Brand Building • Attractive Category • Runway to Grow • Competitive Advantage • Strength of PepsiCo
1. Winning in North America Brian Cornell Chief Executive Officer, Pepsico Americas Foods February 20, 2014 2. 2 Safe Harbor Statement ...
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