4 Leach Obesity

Slide 1: Confronting the Obesity Epidemic: The Power of Unlikely Partnerships Brock H. Leach Member, PepsiCo Blue Ribbon Advisory Board on Health Chief Innovation Officer (Ret) PepsiCo, Inc. October 30, 2007

Slide 2: What Role Should Food Companies Play in Addressing the Obesity Epidemic? 1. Healthier Product Choices: Reformulation, Innovation and Marketing 2) Wellness is Already the Single Largest Growth Driver in Food. 3) Consumers Increasingly Understand it’s About Inherently Healthy Ingredients. 4) They Desperately Want Healthier Eating to be Easier and More Rewarding. 5) The Companies that get There First Will Win. 2 06PP001_BL01 09-08-06

Slide 3: What Role Should Food Companies Play in Addressing the Obesity Epidemic? 1. Healthier Product 2. Healthier Lifestyle Choices: Habits: Reformulation, Innovation Creative, Collaborative and Marketing Partnerships 2) Requires Comprehensive Environment 2) Wellness is Already the Single Largest Change. Growth Driver in Food. 3) Requires Individual Lifestyle Education. 3) Consumers Increasingly Understand it’s About Inherently Healthy Ingredients. 4) Requires the Support of a Whole Social Movement. 4) They Desperately Want Healthier Eating to be Easier and More 5) All of those Require Vision, Positive Rewarding. Energy and Multi-Sector Collaboration. 5) The Companies that get There First Will Win. 3 06PP001_BL01 09-08-06

Slide 4: PepsiCo Strategy: Concerted Action We’re Focusing Our Efforts at the Intersection of Business Interest and Public Interest . . .  Healthier Business Public Interest: Product Choices Interest: + Capture Growth Promote Real  Healthier Lifestyle Opportunity Solutions Habits Making it Easier and More Enjoyable for Mainstream Consumers 4 06PP001_BL01 09-08-06

Slide 5: PepsiCo Progress Report Choices Habits 1 2 3 4 Accelerate Improve Make it Easier Promote Improve Healthier Healthfulness to Choose Healthier Healthfulness Product of Existing of Existing Healthier Lifestyles Development Products Products  Better Nutrition Labeling  Major New Product  Trans Fat  School Alliances Launches in Every Elimination for to Promote — Front of Pack Info Market that meet savory snacks. Health (e.g. — Nutrition Panel H&W Criteria Clinton/AHA) Improvements  New Oils Programs — Canada, Europe,  Healthier Product  Kids Energy Australia and US  Highlight on Pack, Nutrition Standards Balance Changes in Nutritional Established World- Education and  More Portion- Profiles Wide Activation Controlled — Reduction in fat, around the  Healthier Product Offerings saturated fat, sugar world (e.g. Vive Innovation & calories  Set “Human Saludable) Objectives set for Sustainability”  Kids Marketing Pledges all Managers– e.g. Objectives for  Family Being Strengthened 50%+ Europe. Reduction in Activation (e.g. around the Globe calories, sat fat, America On The — US, Canada, sugar, sodium per Move ™) Australia, EU, UK serving. 5 06PP001_BL01 09-08-06

Slide 6: Recent New Product Highlights Reducing Sugar Reducing Fat Adding Positives 6 06PP001_BL01 09-08-06

Slide 7: Frito-Lay and Good-For-You Snack Food 7 06PP001_BL01 09-08-06

Slide 8: Flat Earth Snacks: “Impossibly Good” Whole Fruit & Fruit & Veggie Fruit & Veggie Chips Whole Veggie Servings 8 06PP001_BL01 09-08-06

Slide 9: Red Tomato Ranch Fruit and Veggies in Each Serving Tangy Tomato Ranch Wild Berry Patch 9 06PP001_BL01 09-08-06

Slide 10: Consumer Communication: PepsiCo Smart Spot™ & Kraft Sensible Solution™ ™ 10 06PP001_BL01 09-08-06

Slide 11: Smart Spot™ Makes It Easier to Identify Healthier Choices PepsiCo Nutritional Varieties GFY FFY Health Indulgent Products Demonstrable Diet-Specific Perception with Health Nutrition Offerings Benefits Improvements Benefits Good- Better- 0 Trans Natural Low-Carb For-You For-You Fats/Low Sat & Organic Fat Quaker Oats Baked Lays Tropicana PP Diet Pepsi Aquafina Pepsi Max Propel Gatorade Smart Spot™ Qualified Products 11 06PP001_BL01 09-08-06

Slide 12: We Launched with National Advertising and Retail Events 12 06PP001_BL01 09-08-06

Slide 13: Smart Spot™ Products are Driving Revenue Growth North American Net Sales* 2010 Sales Mix Goal Q3 2007 Sales Mix Fun-For- You 56% Smart Spot™: 19% 25% 50% Smart Spot™ / Smart Spot™ / Better-For-You Good-For-You (Reduced) 44% of Net Sales* +6 Points from 2003 * Net sales includes all Smart Spot™ eligible products. 13 06PP001_BL01 09-08-06

Slide 14: Smart Spot™ “Good-for-You” Growth Continues at Double Digits GFY N.A. Net Sales Growth vs. YA +13% +12% +11% +9% +9% +5% 2002 2003 2004 2005 2007 2006 Q2 YTD 14 06PP001_BL01 09-08-06

Slide 15: We Started Looking Outside-In Early Forming Critical Partnerships . . . . . . And Broadening Our Understanding Blue Ribbon Advisory Board Dr. Kenneth Cooper on Health & Wellness Gro Brundlandt, M.D. Former Director General, WHO Antonia Demas, Ph.D. Director, Food Studies Institute Dr. Jim Hill David Heber, M.D., Ph.D. Professor of Medicine & Public Health, UCLA James Hill, Ph.D. Professor of Pediatrics & Medicine, Univ. of CO Gov. James B. Hunt, Jr. Former Governor of North Carolina Dr. Dean Ornish David Kessler, M.D., J.D. Dean, School of Medicine, Univ. of CA-- SF Brock Leach, MBA Former Chief Innovation Officer, PepsiCo Dean Ornish, M.D. Founder, Preventive Medicine Research Institute Janet Taylor, M.D. Pediatric Psychiatry, Harlem Hospital YMCA Kristy Woods, M.D. MPH Wake Forest University School of Medicine 15 06PP001_BL01 09-08-06

Slide 16: Marketing Practices Partnerships– U.S. Examples Co-Regulation Self-Regulation Multi-Sector Front-of-Pack Schools: Kids Marketing: Labeling: Clinton Foundation PepsiCo Pledge - American Heart Keystone Project Kids Under 8: Alliance No Advertising or Goal: Uniform Front-of- Marketing Targeting Pack Labeling: Icon or Elementary & Middle Children Under 8 GDA with common Schools: nutrition standards. Kids 8 to12: Water, milk, 100% juice Participants: Retailers, with portion caps Advertising on Smart Food Companies, Spot™ products only. High Schools: NGO’s, Universities, No advertising or Federal Agencies. Water, low or no calorie marketing in schools. beverages, 100% juices, Learning To-Date: Label light juices, milks, No product placement guidance systems work. sports beverages on kids media. Targeted Portion caps 3 party licensed Completion:Mid-2008 rd characters, interactive 50% water or low/no games with Smart Spot calorie beverages products only. 16 06PP001_BL01 09-08-06

Slide 17: Multi-Sector Example: Oxford Health Alliance PepsiCo Foundation Funding 4 Community-Based Interventions: China, England, India, Mexico  Scientific Intervention Study Building on Learning that Comprehensive Community-Based Intervention can Work. — French EPOD, Australian Multinational Study, Tufts, Arkansas,  Directly Affecting 2 Million People.  Focused on Nutrition, Physical Activity and Reduction in Tobacco Use.  Employing Coalition-Building and Education in Schools, Workplaces, Health Centers and Community Centers.  Include Healthy Food Choices and Promotion.  PepsiCo Foundation Provided $5.2 Million Grant for Implementation and Evaluation. 17 06PP001_BL01 09-08-06

Slide 18: For What Should Food Companies be “Held to Account”? 1. Healthier Product 2. Healthier Lifestyle Choices: Habits: Reformulation, Innovation Creative, Collaborative and Marketing Partnerships Leading Food and Beverage Companies are Prepared to be Held to Account for Being Constructive Partners in the Solution 18 06PP001_BL01 09-08-06

Slide 19: Confronting the Obesity Epidemic: The Power of Unlikely Partnerships Brock H. Leach Member, PepsiCo Blue Ribbon Advisory Board on Health Chief Innovation Officer (Ret) PepsiCo, Inc. October 30, 2007 19 06PP001_BL01 09-08-06