Pepsi 2009 Annual Report Download - page 45

33PepsiCo, Inc. 2009 Annual Report
OUR BUSINESS
Our discussion and analysis is an integral part of understanding our
financial results. Definitions of key terms can be found in the glossary
on page 93. Tabular dollars are presented in millions, except per share
amounts. All per share amounts reflect common per share amounts,
assume dilution unless noted, and are based on unrounded amounts.
Percentage changes are based on unrounded amounts.
EXECUTIVE OVERVIEW
We are a leading global food, snack and beverage company.
Our brands—which include Quaker Oats, Tropicana, Gatorade,
Frito-Lay and Pepsi—are household names that stand for quality
throughout the world. As a global company, we also have strong
regional brands such as Walkers, Gamesa and Sabritas. Either
independently or through contract manufacturers, we make,
market and sell a variety of convenient, enjoyable and wholesome
foods and beverages. Our portfolio includes oat, rice and grain-
based snacks, as well as carbonated and non-carbonated bever-
ages, in over 200 countries. Our largest operations are in North
America (United States and Canada), Mexico and the United
Kingdom. Additional information concerning our divisions and
geographic areas is presented in Note 1.
We are united by our unique commitment to Performance with
Purpose, which means delivering sustainable growth by investing
in a healthier future for people and our planet. Our goal is to continue
to build a balanced portfolio of enjoyable and wholesome foods
and beverages, find innovative ways to reduce the use of energy,
water and packaging and provide a great workplace for our
employees. Additionally, we will respect, support and invest in
the local communities where we operate by hiring local people,
creating products designed for local tastes and partnering with
local farmers, governments and community groups. We make
this commitment because we are a responsible company and
a healthier future for all people and our planet means a more
successful future for PepsiCo.
And in recognition of our continuing sustainability efforts, we
were again included on the Dow Jones Sustainability North America
Index and the Dow Jones Sustainability World Index in September
2009. These indices are compiled annually.
Our management monitors a variety of key indicators to
evaluate our business results and financial conditions. These
indicators include market share, volume, net revenue, operating
profit, management operating cash flow, earnings per share and
return on invested capital.
Key Challenges and Strategies for Driving Growth
We remain focused on growing our business with the objectives
of improving our financial results and increasing returns for our
shareholders. We continue to focus on delivering top-quartile
financial performance in both the near term and the long term,
while making global investments in key regions and targeted
product categories to drive sustainable growth. We have identified
the following key challenges and related competitive strategies
for driving growth that we believe will enable us to achieve
our objectives:
1. Expand the Global Leadership Position of our Snacks Business
Expanding our snacks businesses in developing and emerging
markets is important to our growth. In 2009, we were the global
snacks leader, with the #1 savory category share position in virtually
every key region across the globe. We had advantaged positions
across the entire value chain in more than 40 developed and
developing regions in which we operate and were able to
capitalize on local manufacturing and optimize go-to-market
capabilities in each region, as well as introduce locally relevant
products using global capabilities. And we have significant growth
opportunities as we work to expand our current snacks businesses
in these regions, extend our reach into new geographies and enter
adjacent categories. We also intend to continue to make our core
snacks healthier through innovations in heart-healthy oil, sodium
reduction and the addition of whole grains, nuts and seeds.
2. Ensure Sustainable, Profitable Growth in Global Beverages
The U.S. liquid refreshment beverage category and challenging
economic conditions facing consumers continue to place pressure
on our global beverage business. In the face of this pressure, we
are taking action to ensure sustainable, profitable growth in our
global beverage business. We expect that the mergers with PBG
and PAS will create a lean, agile organization in North America
with an optimized supply chain, a flexible go-to-market system and
enhanced innovation capabilities. When combined with the actions
we are taking to refresh our brands across the entire beverage
category, we believe this game-changing transaction will enable us
to accelerate our top-line growth and also improve our profitability.
There continue to be significant areas of global beverage growth,
particularly in developing markets and in evolving categories. We will
invest in those attractive opportunities, concentrating in geographies
and categories in which we are the leader or a close second, or where
the competitive game remains wide open. Additionally, we intend to
use our research and development capabilities to develop low- and
zero-calorie beverages that taste great and add positive nutrition
such as fiber, vitamins and calcium.
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