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2006
Bottler case sales (BCS) volume grew
4%. The volume increase was driven by
a 14% increase in non-carbonated bev-
erages, partially offset by a 2% decline
in CSDs. The non-carbonated portfolio
performance was driven by double-digit
growth in trademark Aquafina,
Gatorade, Lipton ready-to-drink teas,
Tropicana juice drinks and Propel.
Tropicana Pure Premium experienced a
low-single-digit decline in volume. The
decline in CSDs reflects a low-single-
digit decline in trademark Pepsi,
partially offset by a mid-single-digit
increase in trademark Sierra Mist and a
low-single-digit increase in trademark
Mountain Dew. Across the brands, reg-
ular CSDs experienced a low-single-digit
decline and diet CSDs declined slightly.
The additional week in 2005 had no sig-
nificant impact on volume growth as
bottler volume is reported based on a
calendar month.
Net revenue grew 5%. Positive mix
contributed to the revenue growth,
reflecting the strength of non-carbon-
ated beverages. Price increases taken in
2006, primarily on concentrate,
Tropicana Pure Premium and fountain,
were offset by overall higher trade
spending. The absence of the prior
year’s additional week reduced net rev-
enue growth by 1 percentage point.
Operating profit increased 1% pri-
marily reflecting the net revenue
growth and lower advertising and mar-
keting expenses. Higher raw material
costs, primarily oranges, increased sup-
ply chain costs in Gatorade and higher
energy costs substantially offset the
operating profit increase. Total market-
place spending for the year increased,
reflecting a shift from advertising and
marketing spending to trade spending.
Additionally, the impact of more-favor-
able settlements of trade spending
accruals in 2005 was mostly offset by a
favorable insurance settlement of
$29 million in 2006. The absence of the
prior year’s additional week, which
reduced operating profit growth by
1 percentage point, was fully offset by
the impact of charges taken in the
fourth quarter of 2005 to reduce costs
in our operations, principally through
headcount reductions.
Smart Spot eligible products repre-
sented over 70% of net revenue. These
products experienced high-single-digit
revenue growth, while the balance of
the portfolio declined in the low-single-
digit range.
2005
Net revenue grew 10% and BCS volume
grew 4%. The volume increase was
driven by a 16% increase in non-carbon-
ated beverages, partially offset by a 1%
decline in CSDs. Within non-carbonated
beverages, Gatorade, trademark
Aquafina, Tropicana juice drinks, Propel
and SoBe all experienced double-digit
growth. Above average
summer temperatures
across the country, as well
as the launch of new prod-
ucts such as Aquafina
FlavorSplash and Gatorade
Lemonade earlier in the
year, drove Gatorade and
trademark Aquafina growth. Tropicana
Pure Premium experienced a low-single-
digit decline resulting from price
increases taken in the first quarter. The
decline in CSDs reflects low-single-digit
declines in trademark Pepsi and trade-
mark Mountain Dew, slightly offset by
low-single-digit growth in Sierra Mist.
Across the brands, a low-single-digit
decline in regular CSDs was partially
offset by low-single-digit growth in diet
CSDs. The additional week in 2005 had
no significant impact on volume growth
as bottler volume is reported based on
a calendar month.
Net revenue also benefited from
5 percentage points of favorable
effective net pricing, reflecting the con-
tinued migration from CSDs to
non-carbonated beverages and price
increases taken in the first quarter,
primarily on concentrate and Tropicana
Pure Premium, partially offset by
increased trade spending in 2005. The
additional week in 2005 contributed
1 percentage point to net revenue
growth.
Operating profit increased nearly
7%, primarily reflecting net revenue
growth. This increase was partially off-
set by higher raw material, energy and
transportation costs, as well as
increased advertising and marketing
expenses. The additional week in 2005
contributed 1 percentage point to oper-
ating profit growth and was fully offset
by a 1-percentage-point decline related
to charges taken in 2005 to reduce costs
in our operations, principally through
headcount reductions.
Smart Spot eligible products repre-
sented almost 70% of net revenue.
These products experienced double-
digit revenue growth, while the
balance of the portfolio grew in the low-
single-digit range.
PepsiCo Beverages North America
% Change
2006 2005 2004 2006 2005
Net revenue $9,565 $9,146 $8,313 510
Operating profit $2,055 $2,037 $1,911 17
49
In 2006, Smart Spot eligible
products grew to over 70% of
PBNA’s total net revenue.
Aquafina, Gatorade, Tropicana juice drinks
and Propel all experienced double-digit
volume growth in both 2006 and 2005.
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