Pepsi 2013 Annual Report Download - page 35

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to liability or government action, which could result in payment of damages or fines. A product recall or a
product liability issue could cause certain of our products to be unavailable for a period of time, which could
reduce consumer demand and brand equity. We could also be adversely affected if consumers lose confidence
in product quality, safety and integrity generally. In addition, we operate globally, which requires us to
comply with numerous local regulations, including, without limitation, anti-corruption laws, competition
laws and the tax laws and regulations of the jurisdictions in which our products are sold. In the event that
our employees engage in improper activities abroad, we may be subject to enforcement actions, litigation,
loss of sales or other consequences which may cause us to suffer damage to our reputation in the United
States and abroad. Our reputation could also be adversely impacted by any of the following, or by adverse
publicity (whether or not valid) relating thereto: the failure to maintain high ethical, social and environmental
practices for all of our operations and activities; the failure to achieve our goal of continuing to refine our
food and beverage choices to meet changing consumer demands by reducing sodium, added sugars and
saturated fat and developing a broader portfolio of product choices; health concerns (whether or not valid)
about our products or particular ingredients in our products, including whether certain of our products
contribute to obesity; the imposition or proposed imposition of new or increased taxes or other limitations
on the sale or advertising of our products; our research and development efforts; our environmental impact,
including use of agricultural materials, packaging, water, energy use and waste management; the practices
of our employees, agents, customers, distributors, suppliers, bottlers, joint venture partners or other third
parties with respect to any of the foregoing; any failure to comply, or perception of a failure to comply, with
our policies and statements, including those regarding advertising to children; consumer perception of our
advertising campaigns or marketing programs; consumer perception of our use of social media; or our
responses to any of the foregoing or negative publicity as a result of any of the foregoing. The rising popularity
of social media and other consumer-oriented technologies has increased the speed and accessibility of
information dissemination, and, as a result, negative or inaccurate posts or comments about us, our products
or advertising campaigns and marketing programs, and consumer perception of posts or other information
disseminated by us or our employees, agents, customers, suppliers, bottlers, distributors, joint venture partners
or other third parties, may also generate adverse publicity that could damage our reputation. In addition,
water is a limited resource in many parts of the world and demand for water continues to increase. Our
reputation could be damaged if we or others in our industry do not act, or are perceived not to act, responsibly
with respect to water use. Failure to comply with local laws and regulations, to maintain an effective system
of internal controls or to provide accurate and timely financial information could also hurt our reputation.
Damage to our reputation or loss of consumer confidence in our products for any of these or other reasons
could result in decreased demand for our products and could have a material adverse effect on our business,
financial condition and results of operations, as well as require additional resources to rebuild our reputation.
See also “Demand for our products may be adversely affected by changes in consumer preferences or any
inability on our part to innovate or market our products effectively.”, “Changes in the legal and regulatory
environment could limit our business activities, increase our operating costs, reduce demand for our products
or result in litigation.” and “Imposition of new taxes, disagreements with tax authorities or additional tax
liabilities could adversely affect our financial performance.”
Failure to successfully complete or integrate acquisitions and joint ventures into our existing operations,
or to complete or manage divestitures or refranchisings, could have an adverse impact on our business,
financial condition and results of operations.
We regularly evaluate potential acquisitions, joint ventures, divestitures and refranchisings. Potential issues
associated with these activities could include, among other things: our ability to realize the full extent of the
benefits or cost savings that we expect to realize as a result of the completion of an acquisition, divestiture
or refranchising, or the formation of a joint venture, within the anticipated time frame, or at all; receipt of
necessary consents, clearances and approvals in connection with an acquisition, joint venture, divestiture or
refranchising; and diversion of management’s attention from day-to-day operations. With respect to