Pepsi 2012 Annual Report Download - page 6

4 2012 PEPSICO ANNUAL REPORT
company for long-term growth and
protability in this volatile and chal-
lenging environment.
1. We Reinforced Our Existing
Value Drivers
We refocused our eorts on our
key global brands and categories
in our most important developed
markets to drive protable growth.
We are the #1 macrosnack player
in many developed markets in the
world. Our highly protable snacks
business has a strong stable of
much-loved megabrands—Lay’s,
Doritos, Cheetos and SunChips—and
a structurally advantaged go-to-mar-
ket system in many major markets
such as the U.S., Canada, the U.K. and
Australia, among others. We have
been concentrating our insights,
marketing and innovation resources
behind our powerhouse brands and
key markets to successfully grow
demand and our share.
As a result of our consistent invest-
ments over the years, Lay’s is the #1
snack food brand in the world; Lay’s,
Doritos and Cheetos are lovemarks
in many countries in which they op-
erate, and a brand such as Tostitos
in the U.S. makes party time come
alive. We also have taken crowd-
sourcing of ideas to a new and
exciting place: Our Lay’s “Do Us A
Flavor” campaign engages consum-
ers directly through social media
to co-create new exciting avors.
Launched in the U.K., this campaign
has been extended to 17 markets,
including the U.S. in 2012. To date,
we have received 19 million avor
ideas from around the world!
We also have leveraged social me-
dia in our consistently strong Dori-
tos “Crash the Super Bowl” cam-
paign, which puts fan-developed
ads on air during the big game.
In 2012, Doritos fan-created ads
placed rst on the traditional and
online Ad Meter ranking. In 2013,
a “Crash the Super Bowl” Doritos
fan-created ad ranked #1 as “most
liked” and “most memorable” in the
Nielsen ratings.
Most importantly, our goal is to
make the best savory snacks in
the market. We eliminated the use
of partially hydrogenated cooking
oils used to make savory snacks in
North America, dramatically reduc-
ing trans fats. Additionally, we have
reduced saturated fat levels and
are reducing the sodium content of
our savory snacks, and we are dial-
ing up baked oerings.
Our developed market beverage
business remains large and prot-
able. Across our major beverage
markets, we revamped our invest-
ment to strengthen our key global
beverage brands, which include
Pepsi, Mountain Dew, Sierra Mist,
7UP (outside the U.S.), Starbucks
and Lipton. We bought back
bottlers in North America and
Europe to unlock large, underex-
ploited system synergies in these
mature carbonated soft drink
(CSD) markets. We also have taken
the right measures to step up the
performance of our North America
beverage business, where we are
the #1 liquid refreshment beverage
(LRB) player in measured chan-
nels. We have made major changes
to our team, operating model
and marketing approach to bet-
ter adapt to a new consumer and
competitive environment. We are
dialing up our support on zero-calo-
rie products and oering reduced-
calorie CSDs, like Pepsi NEXT,
food and beverage industry. The
growth outlook in some developed
markets and categories has slowed
signicantly, while emerging and
developing markets require new
skills for success. Traditional ap-
proaches and legacy capabilities are
no longer sucient to compete in
these spaces.
But these changes also have given
rise to unparalleled opportunities for
PepsiCo. For one, the convenience
trend is accelerating around the world,
driving the growth of our catego-
ries. The strong outlook in emerging
and developing markets for all our
products and the demand for Good-
for-You products and categories in
key markets also present major
growth opportunities. Other potential
new areas of expansion for us are
premium-priced products, products
for aging populations and value oer-
ings for those with lower incomes.
As a global company with positions
in every key market in the world,
PepsiCo’s sheer scale as well as
product and geographic diversity
give us the ability to power through
country-specic trends and still
deliver superior returns. Our iconic
brands are trusted in every country
to deliver a quality product that
meets the highest global safety
standards. Our track record of ethi-
cal performance and quality prod-
ucts provides comfort to consumers
and governments the world over.
Our Transformation
Back in 2007, we recognized the
rapidly changing environment and
realized we needed new capabilities
to compete. We made the required
investments to preemptively
transform ourselves to capitalize on
these opportunities and position the