Pepsi 2006 Annual Report Download - page 8

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6
Q: How are you addressing rising
input costs in your businesses?
A: Structural inflation is a reality we
believe will persist over the next few years.
Agricultural commodities, energy and certain
metals are in a period of protracted inflation
that’s unlikely to moderate until supply
catches up.
Fortunately, over the years we’ve demon-
strated the resilience of the PepsiCo portfolio
to navigate through these headwinds
successfully. And we are confident we will
find innovative solutions to cover rising input
costs. It will mean pulling all available levers
to address inflation, as we’ve always done,
such as finding new productivity, strategically
hedging our input costs, and executing
prudent and judicious pricing.
Q: How are you addressing the
carbonated soft drink (CSD) category
decline in North America?
A: Rejuvenating the CSD category requires
us to deliver new products, new packaging
and new benefits to re-engage consumers.
2007 has one of the strongest line-ups of
CSD innovation we’ve had in many years. In
essence, we plan to build a new category for
us of “sparkling” beverages.
Whether it’s through Izze sparkling bever-
ages, our new Jazz line, increased distribution
of Pepsi Max throughout our system, new
“choreography” packaging for Pepsi, or
other new product and packaging news for
Diet Pepsi, Mountain Dew and Sierra Mist,
we believe we’ve got an impressive lineup
ready for the marketplace. And we’re
supporting our new products as we continue
to support our established core brands.
Looking ahead, we have increased our
investment in truly breakthrough innovations
to come, like new sweeteners that we
believe hold the power to restoring CSD
category growth.
Q: You have had good success
promoting senior executives from within
the company. What are you doing to
ensure you maintain a strong bench and
good succession planning?
A: We announced a number of senior exec-
utive changes this year, ranging from CEO
to senior executive talent of our operating
divisions. Because of the deep bench strength,
we were able to provide opportunities to
current PepsiCo executives — ensuring
smooth transitions and tapping into literally
hundreds of years’ worth of experience
within the company.
If anything, this series of moves underscores
the importance of continuously building
bench strength in our management group.
We continue to place a high priority on
sustaining our pool of executive talent, and
we clearly understand that in the global
competition for talent our people planning
processes must be world class.
Q: How will Indra Nooyi’s appointment
to CEO change PepsiCo’s strategic focus
or priorities?
A: Our transition of the CEO role is as
seamless a transition as any PepsiCo has
ever done, largely reflecting the fact that we
have co-authored the strategies the company
is pursuing.
There are no major new strategies that
have been put into place since the transition
took effect in October of 2006, and we
continue to aggressively pursue those
strategies that have been driving the
company’s growth.
Q: How will PepsiCo’s work with
diversity and inclusion, and its work
with corporate social responsibility
and corporate governance evolve under
new leadership?
A: Our commitment to diversity and inclu-
sion as a means to drive our growth remains
steadfast. We continue to see the impact of
our efforts in our business results, as consumer
product offerings, promotions and customer
programming benefit from the diverse
and inclusive workforce and environment
we’re building.
Our focus on corporate responsibility has
always been strong and will even be stronger
as we contribute to societal growth and help
address societal problems. Some would say
we have a moral and social obligation.
Others would say it’s simply good business.
Either way, we have a major role to play.
Similarly for corporate governance, we
continue to find ways to strengthen our
approach, our tools and our reporting in the
name of transparency for our shareholders
and the range of constituents who track our
business. For example, in 2006, PepsiCo
participated in a pilot program at the SEC
to test a new electronic filing system.
These kinds of priorities, which tie directly
to our commitment to responsible corporate
citizenship, will remain front and center.
U.S. Category Leaders
#1
Multigrain
Snack
#1
Potato
Chips
#1
Tortilla
Chips
#1
Corn Chips
#2
Pretzels
#1
Extruded
Snack
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