Pepsi 2012 Annual Report Download - page 7

2012 PEPSICO ANNUAL REPORT 5
which became a $100 million brand
at retail in less than 12 months. In
2012, we continued this transfor-
mation by simplifying the business
and reinvesting heavily behind our
key brands while unlocking new
sources of productivity.
2. We Migrated Our
Portfolio Towards Attractive,
High-Growth Spaces
Very early, we recognized the
growth prospects in the Good-
for-You space. We invested to
expand it across multiple markets
globally, increasing our presence
in the growing tasty nutrition space.
We are building from our positions
of strength with four of the most
important platforms and globally
admired and loved brands in nutri-
tion—Quaker (grains), Tropicana
(fruits and vegetables), Gatorade
(sports nutrition for athletes) and
Naked Juice (super-premium juices
and protein smoothies). We also are
working to unlock growth oppor-
tunities in new product categories,
such as dairy with our business in
Russia, our joint venture with Alma-
rai in parts of the Middle East and
our Müller Quaker Dairy joint ven-
ture in the U.S.; hummus and other
fresh dips with Sabra and Obela;
and baked grains with Stacy’s.
We established a Global Nutrition
Group to drive innovation and brand
development, and are concentrating
our investments in high-potential
return markets and categories. We
had great success in 2012, with
more to come. We launched Quaker
Real Medleys in the U.S., pairing
oatmeal with other whole grains,
fruits and nuts in a portable cup and
portion-controlled serving, which
drove our growth in hot cereal retail
sales. Quaker Real Medleys recently
won breakfast Product of the Year,
the largest consumer-voted award
recognizing outstanding innovation.
Trop 50 reduced-calorie orange
juice continues its terric retail
growth momentum in measured
channels. We also introduced Tropi-
cana Farmstand, enabling U.S. con-
sumers to get a serving of both fruit
and vegetables in an eight-ounce
glass. And Gatorade delivered inno-
vation, with Gatorade Prime Energy
Chews fueling athletic performance
as well as Gatorade retail sales.
Importantly, our eorts to capitalize
on the growing consumer demand
for convenient nutrition are global.
The growth of our Quaker busi-
ness is a case in point: Last year,
we increased Quaker retail sales in
the U.K. with the success of Oats
so Simple, grew Quaker volume in
China and India with breakfast foods
customized for local tastes, and
leveraged Quaker’s expertise in Rus-
sia by launching oats under our local
Chudo brand.
From 2002 to 2012, our nutrition
business revenue has grown sub-
stantially and in 2012 represented
20 percent of our company.
Emerging and developing markets
represent another very attractive
high-growth opportunity for
PepsiCo. Economic growth is
lifting consumers’ income levels
and driving urban lifestyles. More
women are entering the workforce.
This, in turn, is increasing the
demand for convenient foods
and beverages, providing tailwinds
to our categories. Over the past
six years, we have invested aggres-
sively to bolster our presence in
these markets. Our investments
included:
Important acquisitions, such as
Lebedyansky and the Wimm-Bill-
Dann juice and dairy business in
Russia, Mabel cookies and Lucky
snacks in Brazil, and Dilexis cookies
in Argentina, to name a few.
Strategic partnerships to improve
scale and performance, such as
Tingyi in China, which makes us part
of the leading beverage system in
the largest growth market; the con-
solidation of our bottling system in
Mexico under a new joint venture to
increase our scale and step up our
capabilities; the strategic partner-
ship for dairy and juice with Almarai,
Saudi Arabia’s largest food producer;
and the fortied water joint venture
with Tata in India to serve the value
consumer.
Organic investments to sustain
and improve share, through
stepped-up marketplace spend-
ing on media, racks, or routes in
countries such as Mexico, Brazil,
Russia and China. In addition, we
established the Global Value Innova-
tion Center in India to signicantly
reduce the cost of our marketplace
equipment (e.g., coolers and foun-
tain dispensers) to enable us to in-
crease our investments in emerging
markets in an aordable way. The
early results are very promising.
Our targeted investments have
helped us build advantaged positions
in these markets: We are the #1 food
and beverage business in Russia, #1
in India and #1 in the Middle East,
plus #2 in Mexico and in the top 5
in Brazil, Turkey and many smaller
emerging markets, such as Vietnam,
the Philippines and Thailand.
Looking back to 2006, emerging
and developing markets accounted