pepsico is good competitor in softdrinks and snaks

2. • PepsiCo, Inc. is a global food, snack and beverage company
founded in 1919.
• The Company's brands include Quaker Oats, Tropicana,
Gatorade, Lay's, Pepsi, Walkers, Gamesa and Sabritas.
• Market capitalisation: $100.68bn
• Approximately around 294,000 employees worldwide.
• December 5th
2011 closing price: $64.40
• 52-week range: $58.50-$71.89
Introduction

3. Macroeconomic Analysis
Consumer spending:
• IBIS World estimates 2.6% compound growth in
consumer spending from 2011 to 2016
http://clients.ibisworld.com/bed/default.aspx?bedid=363 Image: http://clients.ibisworld.com/charts/bed/1_1_363_BEDScores.png

4. 2010 Revenue Breakdown
Source: Annual Report, Dec 2010

5. Global Markets Exposure
• About $20 billion or 31% of Revenue from emerging markets in 2010
• Focus on growth in Central Asia and Eastern Europe
• 70% growth of sales in Russia over last 2 years
• Robust economic indicators, low debt ratios, good foreign exchange
reserves
• Wimm-Bill-Dann acquisition
 66% at $3.8 B total ownership to 77%
 15 Aug 2011, ‘squeeze-out demand’ for other 23%
 3,883.70 Russian rubles per share
Source: Q3 Earnings Release, Oct 2011

6. Savory Snacks
 Frito Lay’s World’s largest Food Brand $9.4bn
 Doritos $4 B, Cheetos $3.1 B, Ruffles $2.6bn,
Tositos $1.7bn, Fritos $1.3bn
• Transnational expansion strategy
through balance between:
 Localization
 Maintaining consistent quality standards and
cooking processes
• 5-year CAGR:
 3% Volume
 8% Revenue
 8% NOPBT
Source: Q3 Earnings Release, Oct 2011

7. Beverages
Source: Barclays “BTS” Consumer Conference, Sep 2011
http://www.pepsico.com/Download/Barclays_BTS_Presentation.pdf

8. Carbonated Soft Drinks
• Sustain powerhouse brands
Sierra Mist, +7% in volume
Mountain Dew, +2.5% in volume
Pepsi Max, +93% in volume
• Focused advertising & marketing campaigns
Pepsi Max
Diet Pepsi
Pepsi
Social media exposure
• Continue innovating products
Pepsi Next
• Develop Occasion-based marketing
On-the-Go Refreshment
Special Occasion and Celebrations
Meal-time and Snacking
Source: Q3 Earnings Release, Oct 2011

9. Nutrition
• Top 3 globally in Nutrition, aiming to be $30B business by 2020
• Huge growth potential, 5-year double-digit revenue CAGR
• Strong demographic and consumer interest in health and wellness
• Aging population seeking healthy and tasty foods
• On-the-Go consumers and their demand for convenience
Source: Q3 Earnings Release, Oct 2011
Barclays “BTS” Consumer Conference, Sep 2011
http://www.pepsico.com/Download/Barclays_BTS_Presentation.pdf

10. Recent Challenges and Concerns
• 2012 Pricing Strategy
• Commodity inflation and Demand elasticity
• Margins & Cost cutting measures
• Currency exposure
• Investors appealing for a split of Snacks and Beverages
• Strong growth in snacks business
• Strong growth with Tropicana and Gatorade
• Weak CSD strategy and culture has impacted PepsiCo’s overall stock
performance
• While Coke has increased by about 50%
• Over-spending in marketing and advertising
• Kraft and Sara Lee example
Source: “Don’t Rule Out a Pepsi Breakup Yet”, Barron’s, 11/19/2011
Q3 Earnings Release, Oct 2011