Pepsi 2005 Annual Report Download - page 14

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Our goal is to have our products in arm’s reach whenever and wherever consumers want
them. And we’re delivering — literally. For example, our brands include seven of the 13
largest food and beverage brands sold in U.S. supermarkets. Whether they’re new or brand-
loyal consumers, each consumer must be able to find our products in order to buy them.
That’s why the strength of our selling, distribution and internal systems is so critical.
From stocking shelves and creating displays in supermarkets, to making sure the small
corner deli has our products, our front-line teams go the distance. They are supported by
an infrastructure dedicated to streamlining our processes and enhancing our growth
through efficiency. For example, we are consolidating global purchasing to ensure we
leverage our spending, and we are revamping our business processes to give our customers
what they need.
Our Distribution Systems
Most of our sales are delivered through direct-store-delivery (DSD) distribution systems,
where a dedicated team delivers the product to the stores and places our products on the
shelves. This gives us the opportunity to merchandise our products and make sure they are
always available. It gives the route salesperson the ability to meet the specific needs of
any retailer. Our system reached hundreds of thousands of retail outlets this way, from tiny
convenience stores to the largest supermarkets, helping us distribute new product
offerings in record time. In 2005, we started to add 475 new distribution routes at
Frito-Lay in the United States — our largest addition in nearly a decade. Internationally,
our sales force of almost 35,000 reaches nearly every corner of the globe.
Our Gatorade and shelf-stable Tropicana juices, as well as many of our Quaker and
other less perishable products, are delivered through one of the largest warehouse delivery
systems in the world. Tropicana Pure Premium comes fresh through a refrigerated ware-
house or chilled direct-store-delivery system.
Our distribution systems are designed to meet the needs of our customers. For
example, Frito-Lay sells its Gamesa cookies and crackers through warehouse, third-party
distributors, direct shipment and DSD. When taken together, over the past three years,
PepsiCo products delivered through all these methods contributed more to the growth in
U.S. supermarkets than any other company.
An equally robust system is dedicated to delivering our products to foodservice and
vending customers. New beverage partners include Taco John’s and Arby’s — high-traffic
restaurants. Taco John’s operates and franchises more than 400 quick-serve restaurants in
27 states. Arby’s consists of nearly 3,500 restaurants worldwide, including more than
1,000 in the United States. Pepsi-Cola expanded its partnership with Metromedia
Restaurant Group (MRG), which has more than 800 restaurants. The new partnership adds
Bennigan’s and Steak & Ale restaurants to the existing relationship with Ponderosa and
Bonanza Steakhouses.
Our distribution
systems
Direct-store-delivery
Broker-warehouse
Foodservice and vending
Supermarket/
Grocery 39%
Other 8%
Foodservice/
Vending 9%
Mass Merchandiser/
Warehouse/Club 25%
Convenience 11%
Canada 8%
U.S. Frito-Lay North America
Distribution Channels
% Volume
Frito-Lay North America distributes to
some 430,000 retail outlets each week.
Grocery 35%
Mass
Merchandiser/
Supercenters/
Club/Drug/Other
21%
Convenience/
Gas/Chilled DSD/
Other Small Format
17%
Restaurant/
Foodservice/
Vending
27%
U.S. PepsiCo Beverage
Distribution Channels
% Volume
PepsiCo beverages are distributed by a
powerful go-to-market system which
includes company-owned operations,
independently-owned franchised bottlers
and warehouse delivery systems.