Subhajyoti Majumder

PRESENTATION ON PEPSI CO

GROUP MEMBERS  Subhajyoti

Majumder  Swarup Saha  Subhosmit Mandal  Nilotpal Pramalik  Ratnendu Das

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PepsiCo.Inc operates three major businesses: Snack Foods, Bevarages, and Quaker oats. The company's snack-food products include Fritos, Doritos, and Tostitos corn chips; Lay's and Ruffles potato chips; Cheetos cheese-flavored snacks; Rold Gold pretzels; and Cracker Jack candy-coated popcorn.PepsiCo’s success is the result of superior products, high standards of performance, distinctive competitive strategies and the high integrity of there people. PepsiCo’s main competitor is Coca Cola. We feel that PepsiCo has a better growth potential then Coca Cola. We also like the fact that PepsiCo is also in the Snack Foods Business; this adds diversity to the companies’ product range.

• The Company’s Beverage Business makes soft drinks, including Pepsi-Cola, Diet Pepsi, Pepsi One, Mountain Dew, Slice, and Mug, which it distributes to independent and company-owned bottlers. PepsiCo acquired Quaker Oats in 2001. Quaker Oats makes the Gatorade sports drink, Breakfast Cereals, Oatmeals, grits, pancakes, rice, and pasta. • Many of PepsiCo's brand names are over 100-yearsold, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001.

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MANAGEMENT Officers Steven S. Reinemund is the Chairman of the Board and Chief Executive Officer of PepsiCo, Inc. He is 54 years old with 18 years of service with the company, and has been the CEO since 2001. His total annual compensation, including salary and bonuses, is $4,305,885. He has exercised 334,172 options of his stock options in the company. Indra K. Nooyi is the President and Chief Financial Officer of PepsiCo. She is 47 years old, with nine years of service with the company. Her total annual compensation, including salary and bonuses, is $2,057,064. She has exercised 56,769 options of her stock options in the company.

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PepsiCo's principal divisions and officers are: Frito-Lay North America - Abelardo E. Bru is the Chairman and Chief Executive Officer. He is 54 years old, and has been with the company for 26 years. PepsiCo Beverages & Foods North America - Gary M. Rodkin is the Chairman and Chief Executive Officer. He is 50 years old, and has been with the company for 6 years. PepsiCo International - Michael D. White is the Chairman and Chief Executive Officer. He is 51 years old, and has been with the company for 13 years. Frito-Lay International - Rogelio M. Rebolledo is the President and Chief Executive Officer. He is 58 years old, and has been with the company for 26 years. PepsiCo Beverages International - Peter M. Thompson is the President and Chief Executive Officer. He is 56 years old, and has been with the company for 12 years.

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Management Strategies In 2002, management put forth a number of programs and strategies to improve the work environment and atmosphere at all PepsiCo work locations. Three of these programs and strategies are: Multi-Year Education Program - PepsiCo is dedicated to promoting diversity in both its product promotion and its employees. This program was launched in 2002 to increase the awareness of cultural diversity amongst its employees. It is a day-and-a11 half diversity/inclusion training session for all their salaried employees in the United States. Internal Controls - Management maintains a system of internal controls designed to provide reasonable assurance as to the reliability of their financial statements, as well as to safeguard assets from unauthorized use or disposition. The system is supported by formal policies and procedures, including an active Code of Conduct program intended to ensure employees adhere to the highest standards of personal and professional integrity. Open Communication - To promote high ethical standards across a global organization, the company tries to ensure that employees have clear lines of communication to inform senior management of potential issues. The company has telephone "hotlines" for this purpose, which are accessible at no charge to employees.

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Flexible Distribution System Management has five large-scale distribution systems, enabling PepsiCo to cost effectively distribute a wide range of products. These five distribution systems make up PepsiCo's flexible distribution system. The five distribution systems are: Direct-Store-Delivery - Direct-Store-Delivery systems at Frito-Lay and through Pepsi-Cola bottlers are ideal for products that move through stores quickly, require delicate handling, or benefit from careful merchandising. These systems reach more than 2 million retail customers each week, from the largest club stores to the smallest "mom-and-pop" outlets. Broker-Warehouse - A large Broker-Warehouse distribution system moves Quaker, Gatorade, and Tropicana products to large retail outlets at a lower cost. It also allows PepsiCo to test new products that are too small for economic distribution via DirectStore-Delivery. National Distribution - a National Distribution system focused on foodservice and vending accounts, gives Frito-Lay, Quaker, Gatorade, and Tropicana access to a growing channel that few competitors can serve efficiently. "Chilled" Direct-Store-Delivery - a small but growing "Chilled" Direct-StoreDelivery system distributes products requiring refrigeration. Created for Tropicana juices, it could carry many other products as well. Hybrid - Hybrid systems, using elements of the other distribution systems, enables PepsiCo to reach large numbers of retailers in emerging markets like India and China.

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PepsiCo signed some big contracts with Burger King and Applebee's, this will help PepsiCo gain market share over Coca-Cola. Although PepsiCo is involved in three major businesses we feel that this business fit in with each other and together give PepsiCo a competitive advantage especially since they use similar distribution channel through out there businesses. This could give them bargaining power in the future once there brand name products become necessities in most stores.

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Business Summary

PepsiCo, Inc., incorporated in 1919, manufactures, markets and sells soft drinks and concentrates, and snack foods. PepsiCo and its divisions and subsidiaries operate in three business segments: Worldwide Snacks, Worldwide Beverages and Quaker Foods North America (QFNA). The Company's snack food business is comprised of two business units: FritoLay North America (FLNA) and Frito-Lay International (FLI). The Company's beverage business is comprised of three business units: PepsiCola North America (PCNA), Gatorade/Tropicana North America (GTNA) and PepsiCo Beverages International (PBI). On August 2, 2001, the Company completed a merger transaction with The Quaker Oats Company (Quaker) whereby Quaker became a wholly owned subsidiary of PepsiCo.

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FLNA manufactures, markets, sells and distributes a varied line of salty, sweet and grain-based snack foods throughout the United States and Canada, including Lay's potato chips, Doritos and Tostitos tortilla chips, Cheetos cheese flavored snacks, Ruffles potato chips, Fritos corn chips, a variety of dips and salsas, Quaker Chewy granola bars, Rold Gold pretzels, Sunchips multigrain snacks, WOW! brand low fat and no fat versions of potato and tortilla chips, Funyons onion flavored rings, Grandma's cookies, Quaker Fruit and Oatmeal bars, Cracker Jack candy-coated popcorn and Quaker Quakes rice cakes. FLNA also sells and distributes Oh Boy! Oberto brand meat snacks under an agreement with the Oberto Sausage Company.

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FLI's products are available in approximately 120 countries outside the United States and Canada through Company-owned businesses and affiliated companies. On most of the European continent, the Company's snack food business is conducted through Snack Ventures Europe, a joint venture between PepsiCo and General Mills, Inc., in which PepsiCo owns a 60% interest. In ten Latin America countries, the Company's snack food business is conducted through joint ventures with Libracor, Ltd., a part of Venezuela's Empresas Polar Group. The Company has a 50% interest in these ventures, except in one country where it owns a 70% interest.

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FLI sells a variety of salty and sweet snack food products that appeal to local tastes including Sabritas snack foods, Alegro and Gamesa sweet snacks in Mexico, Walkers snack foods in the United Kingdom and Smith's snack foods in Australia. In addition, many of the Company's U.S. brands, such as Lay's, Doritos, Tostitos, Cheetos, Ruffles and Fritos brand salty snack foods, have been introduced internationally. FLI's products also include various Quaker food and snack products. Principal international markets include Mexico, the United Kingdom, Brazil, Spain, the Netherlands, Australia and South Africa.

Worldwide Beverages 

PCNA manufactures concentrates for Pepsi, Diet Pepsi, Wild Cherry Pepsi, Pepsi One, Pepsi Twist, Mountain Dew, Mountain Dew Code Red, Mug, Sierra Mist, Slice and FruitWorks. PCNA also manufactures and sells Dole single-serve juices and juice drinks, SoBe juice drinks and teas, and AMP energy drinks. These concentrates and beverages are sold to bottlers in the United States and Canada. PCNA's bottlers are licensed, within defined territories, to manufacture, market, sell and distribute Pepsi beverages and syrups. PCNA also licenses its bottlers to process and distribute Aquafina bottled water. PepsiCo has a minority interest in six of these bottlers, including its three anchor bottlers, The Pepsi Bottling Group, PepsiAmericas and Pepsi Bottling Ventures, which distribute approximately three-quarters of the Company's North American volume.

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The Pepsi/Lipton Tea Partnership, a joint venture of PepsiCo and Unilever N.V., sells tea concentrate to Pepsi bottlers, and develops and markets ready-to-drink tea products under the Lipton trademark, including Lipton Brisk and Lipton's Iced Tea. PepsiCo's partnership with the Starbucks Corporation develops ready-to-drink coffee products, which are sold under the Starbucks Frappuccino trademark and are distributed by PCNA's bottlers. GTNA produces, markets, sells and distributes Gatorade sports drinks, Tropicana Pure Premium, Tropicana Season's Best, Tropicana Twister, Dole and Tropicana Pure Tropics juices and juice beverages, and Propel fitness water.

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PBI manufactures concentrates for Pepsi, Pepsi Light, Pepsi Max, Wild Cherry Pepsi, 7UP, Diet 7UP, Mirinda, KAS, Mountain Dew and other brands for sale to bottlers outside of the United States and Canada. PBI's bottlers are licensed, within defined territories, to manufacture, market, sell and distribute Pepsi beverages and syrups. The Company has a minority interest in approximately 40 of these bottlers. In certain countries PBI owns and operates the bottling businesses that manufacture, sell and distribute Pepsi beverages. PBI also produces and sells Gatorade sports drinks and Tropicana juices and juice beverages outside of the Untied States and Canada through Company-owned and independently owned bottlers and distributors. PBI beverages are sold in approximately 170 countries. Principal international markets include Mexico, China, Saudi Arabia, India, Argentina, Brazil, Thailand, the United Kingdom, Spain and The Philippines.

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Quaker Foods North America

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QFNA manufactures, markets and sells hot and readyto-eat cereals, flavored rice and pasta products, mixes and syrups, hominy grits and cornmeal in the United States and Canada. QFNA products include Quaker oatmeal, Cap'n Crunch and Life ready-to-eat cereals, Rice-A-Roni rice, Aunt Jemima mixes and syrups, Quaker grits, Pasta Roni pasta and Near East rice. QFNA utilizes both its own and broker sales forces, which sell to a variety of wholesale and retail accounts.

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Financial Data

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For the 36 weeks ended 9/7/09, net sales increased 7% to $17.66 billion. Net income increased 26% to $2.51 billion. Revenues benefited from volume gains across all divisions and increased prices. Net income also reflects a higher operating profit margin due to efficiencies. According to Multex, analysts expect the Company to report fourth quarter earnings per share of $0.50 and full year 2009 earnings per share of $1.95.

CHART

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We looked into the firm’s financial statements to assess any unexplained changes in accounting policies. There has been a steady increase in accounts receivable and accounts payable that most likely has been caused by the steady increases in sales. There was also a large decrease in cash and cash equivalents, but this could have resulted from the increase in short-term investments. Also, they have been very consistent with valuing the amortization of there intangible assets. Although, there was one fourthquarter adjustment during 2003, this was due to a computational error and was corrected immediately. There isn’t much cause of alarm since there hasn’t been a history of errors in the past five years for this company. Another item that might be concerning is the fact that PepsiCo has certain accounts on their financial statements missing. This hindered us from calculating certain screening ratios in the following section. Although this may be alarming, we still feel comfortable in PepsiCo’s accounting methods. After careful review, we also believe that these numbers are accurate and reflect the truest economic value possible.

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Industry Overview The U.S. food and nonalcoholic beverage industry comprises establishments that process or manufacture foods and beverages for human consumption, plus related products like chewing gum and vegetable and animal fats and oils. According to estimates by the U.S. Department of Agriculture (USDA), total food and beverage expenditures rose 3.8% to $844.2 billion in 2001, from $813.4 billion in 2000. Total expenditures include products for consumption at home ($443.9 billion in 2001) and away from home ($400.3 billion). Figure 2 displays the world’s leading food and beverage companies according to sales in 2002. PepsiCo is ranked fourth behind Nestle, Kraft Foods, and Unilever.

K N A TH U O Y