Pepsi 2008 Annual Report Download - page 46

44 PepsiCo, Inc. 2008 Annual Report
Management’s Discussion and Analysis
Latin America Foods
LAF manufactures, markets and sells a number of leading salty
and sweet snack brands including Gamesa, Doritos, Cheetos,
Rufes, Sabritas and Lay’s. Further, LAF manufactures or uses
contract manufacturers, markets and sells many Quaker brand
cereals and snacks. These branded products are sold to indepen-
dent distributors and retailers.
PepsiCo Americas Beverages
PAB manufactures or uses contract manufacturers, markets and
sells beverage concentrates, fountain syrups and nished goods,
under various beverage brands including Pepsi, Mountain Dew,
Gatorade, 7UP (outside the U.S.), Tropicana Pure Premium, Sierra
Mist, Mirinda, Tropicana juice drinks, Propel, Dole, Amp Energy,
SoBe Lifewater, Naked juice and Izze. PAB also manufactures or
uses contract manufacturers, markets and sells ready-to-drink tea,
coffee and water products through joint ventures with Unilever
(under the Lipton brand name) and Starbucks. In addition, PAB
licenses the Aquana water brand to its bottlers and markets this
brand. PAB sells concentrate and nished goods for some of
these brands to authorized bottlers, and some of these branded
nished goods are sold directly by us to independent distributors
and retailers. The bottlers sell our brands as nished goods to
independent distributors and retailers. PAB’s volume reects sales
to its independent distributors and retailers, as well as the sales
of beverages bearing our trademarks that bottlers have reported
as sold to independent distributors and retailers. Bottler case
sales (BCS) and concentrate shipments and equivalents (CSE) are
not necessarily equal during any given period due to seasonality,
timing of product launches, product mix, bottler inventory prac-
tices and other factors. While our revenues are not based on BCS
volume, we believe that BCS is a valuable measure as it quanti-
es the sell-through of our products at the consumer level.
United Kingdom & Europe
UKEU manufactures, markets and sells through consolidated
businesses as well as through noncontrolled afliates, a number
of leading salty and sweet snack brands including Lay’s, Walkers,
Doritos, Cheetos and Rufes. Further, UKEU manufactures or
uses contract manufacturers, markets and sells many Quaker
brand cereals and snacks. UKEU also manufactures, markets and
sells beverage concentrates, fountain syrups and nished goods,
under various beverage brands including Pepsi, 7UP and Tropicana.
In addition, through our acquisition of Lebedyansky, we acquired
Russia’s leading juice brands. These brands are sold to authorized
bottlers, independent distributors and retailers. However, in
certain markets, UKEU operates its own bottling plants and
distribution facilities. In addition, UKEU licenses the Aquana
water brand to certain of its authorized bottlers. UKEU also
manufactures or uses contract manufacturers, markets and
sells ready-to-drink tea products through an international joint
venture with Unilever (under the Lipton brand name).
UKEU reports two measures of volume. Snack volume is
reported on a system-wide basis, which includes our own
sales and the sales by our noncontrolled afliates of snacks
bearing Company-owned or licensed trademarks. Beverage
volume reects Company-owned or authorized bottler sales
of beverages bearing Company-owned or licensed trademarks
to independent distributors and retailers (see PepsiCo Americas
Beverages above).
Middle East, Africa & Asia
MEAA manufactures, markets and sells through consolidated
businesses as well as through noncontrolled afliates, a number
of leading salty and sweet snack brands including Lay’s, Doritos,
Cheetos, Smith’s and Rufes. Further, MEAA manufactures or
uses contract manufacturers, markets and sells many Quaker
brand cereals and snacks. MEAA also manufactures, markets and
sells beverage concentrates, fountain syrups and nished goods,
under various beverage brands including Pepsi, Mirinda, 7UP and
Mountain Dew. These brands are sold to authorized bottlers, inde-
pendent distributors and retailers. However, in certain markets,
MEAA operates its own bottling plants and distribution facilities.
In addition, MEAA licenses the Aquana water brand to certain of
its authorized bottlers. MEAA also manufactures or uses contract
manufacturers, markets and sells ready-to-drink tea products
through an international joint venture with Unilever. MEAA reports
two measures of volume (see United Kingdom & Europe above).
New Organizational Structure
Beginning in the rst quarter of 2009, we realigned certain
countries within PI to be consistent with changes in geographic
responsibility. As a result, our businesses in Turkey and certain
Central Asia markets will become part of UKEU, which was
renamed the Europe division. These countries were formerly
part of MEAA, which was renamed the Asia, Middle East & Africa
division. The changes did not impact the other existing reportable
segments. Our historical segment reporting will be restated in
2009 to reect the new structure. The division amounts and
discussions reected in this Annual Report reect the manage-
ment reporting that existed through 2008.