Pepsi 2011 Annual Report Download - page 26

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Our discussion and analysis is an integral part of our consolidated
nancial statements and is provided as an addition to, and should
be read in connection with, our consolidated nancial statements
and the accompanying notes. Denitions of key terms can be found
in the glossary on page 87. Tabular dollars are presented in millions,
except per share amounts. All per share amounts reect common
per share amounts, assume dilution unless otherwise noted, and are
based on unrounded amounts. Percentage changes are based on
unrounded amounts.
Our Business
Executive Overview
We are a leading global food and beverage company with
hundreds of brands that are respected household names
throughout the world. Either independently or through contract
manufacturers or authorized bottlers, we make, market, sell and
distribute a variety of convenient and enjoyable foods and bever-
ages in more than 200countries and territories.
We continue to be guided by Performance with Purpose — our
belief that what is good for business can and should be good for
society. Our commitment to deliver sustainable growth by investing
in a healthier future for people and our planet is as much of a nan-
cial decision as it is an ethical one. In 2011, PepsiCo earned a place
on the prestigious Dow Jones Sustainability World Index for the fth
consecutive year, the North America Index for the sixth consecutive
year and was ranked as the number one company in the index’s
Food and Beverage Supersector.
Our management monitors a variety of key indicators to evalu-
ate our business results and nancial condition. These indicators
include market share, volume, net revenue, operating prot, man-
agement operating cash ow, earnings per share and return on
invested capital.
Strategies to Drive Our Growth into the Future
We made important strides in 2011. In 2012, our journey continues.
We are pursuing specic strategic investment and productivity ini-
tiatives to build a stronger, more successful company. This includes
an increased investment in our iconic, global brands, bringing
innovation to market and increasing our advertising and marketing
spending by approximately $500–$600million in 2012, the majority
in North America. In addition, we have begun to implement a multi-
year productivity program that we believe will further strengthen
our complementary food and beverage businesses. These initiatives
support our ve strategic imperatives on which we continue to
be focused.
Our first imperative is to build and extend our macrosnacks
portfolio globally.
PepsiCo is the undisputed leader in macrosnacks around the world.
We will work to grow our core salty snack brands — Lay’s, Doritos,
Cheetos and SunChips — while continuing to expand into adja-
cent categories like whole grain-based snacks. We will continue
to create new avors in tune with local tastes and leverage our
go-to-market expertise to ensure our products are easily accessible
in consumers’ lives.
Our second imperative is to sustainably and profitably grow our
beverage business worldwide.
Our beverage business remains large and highly protable, account-
ing for approximately 52percent of our net revenues in 2011. Our
goal is to grow our developed market beverage business while
building on promising gains in emerging and developing markets.
We intend to continue to invest in and strengthen our most power-
ful and iconic beverage brands — Pepsi, Mountain Dew, Sierra Mist,
7UP (outside of the U.S.), Gatorade, Tropicana, Mirinda and Lipton
(through our joint venture with Unilever).
Our third imperative is to build and expand our nutrition business.
Today, PepsiCo has three of the top brands in the category —
Quaker, Tropicana and Gatorade — in a global market for health and
wellness in consumer packaged goods that exceeds $500billion,
driven by strong demographic and consumer trends. Building from
our core brands, we believe that we are well-positioned to grow our
global nutrition portfolio.
Our fourth imperative is to increase and capitalize on the already
highcoincidence of snack and beverage consumption.
Snacks and beverages are complementary categories. When people
reach for a salty snack, about 30percent of the time, they reach for
a carbonated beverage. Our ability to use that combined power
goes beyond marketing — to innovation, production, distribution
and brand management. We intend to increasingly capitalize on
our cross-category presence to grow our positions in both snacks
and beverages.
Our fifth imperative is to ensure prudent and responsible
financial management.
Prudent nancial management has always been a hallmark of
PepsiCo. In 2012, we are bringing renewed focus to value creation in
everything we do. We intend to continue to deliver attractive cash
returns for shareholders by scrutinizing every capital expenditure,
expense and working capital investment.
Management’s Discussion and Analysis
PepsiCo, Inc.  Annual Report
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