Pepsi 2014 Annual Report Download - page 26

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Kickstart, Mug, Munchies, Naked, Near East, O.N.E., Paso de los Toros, Pasta Roni, Pepsi, Pepsi Max, Pepsi
Next, Propel, Quaker, Quaker Chewy, Rice-A-Roni, Rold Gold, Rosquinhas Mabel, Ruffles, Sabritas, Sakata,
Saladitas, Sandora, Santitas, 7UP (outside the United States) and 7UP Free (outside the United States), Sierra
Mist, Simba, Smartfood, Smith’s, Snack a Jacks, SoBe, SoBe Lifewater, SoBe V Water, Sonric’s, Stacy’s,
Sting, SunChips, Tonus, Tostitos, Trop 50, Tropicana, Tropicana Farmstand, Tropicana Pure Premium,
Tropicana Twister, Vesely Molochnik, Walkers and Ya. We also hold long-term licenses to use valuable
trademarks in connection with our products in certain markets, including Dole and Ocean Spray. We also
distribute Rockstar Energy drinks, Muscle Milk protein shakes and certain DPSG brands, including Dr Pepper,
Crush and Schweppes, in certain markets. Joint ventures in which we have an ownership interest either own
or have the right to use certain trademarks, such as Lipton, Müller, Sabra and Starbucks. Trademarks remain
valid so long as they are used properly for identification purposes, and we emphasize correct use of our
trademarks. We have authorized, through licensing arrangements, the use of many of our trademarks in such
contexts as snack food joint ventures and beverage bottling appointments. In addition, we license the use of
our trademarks on merchandise that is sold at retail, which enhances brand awareness.
We either own or have licenses to use a number of patents which relate to certain of our products, their
packaging, the processes for their production and the design and operation of various equipment used in our
businesses. Some of these patents are licensed to others. See also “Item 1A. Risk Factors – Our intellectual
property rights could be infringed or challenged and reduce the value of our products and brands and have
an adverse impact on our business, financial condition or results of operations.”
Seasonality
Our businesses are affected by seasonal variations. For instance, our beverage sales are higher during the
warmer months and certain food and dairy sales are higher in the cooler months. Weekly beverage and snack
sales are generally highest in the third quarter due to seasonal and holiday-related patterns, and generally
lowest in the first quarter. However, taken as a whole, seasonality does not have a material impact on our
consolidated financial results.
Our Customers
Our primary customers include wholesale and other distributors, foodservice customers, grocery stores, drug
stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores and authorized
independent bottlers. We normally grant our independent bottlers exclusive contracts to sell and manufacture
certain beverage products bearing our trademarks within a specific geographic area. These arrangements
provide us with the right to charge our independent bottlers for concentrate, finished goods and Aquafina
royalties and specify the manufacturing process required for product quality. We also grant distribution rights
to our independent bottlers for certain beverage products bearing our trademarks for specified geographic
areas.
Since we do not sell directly to the consumer, we rely on and provide financial incentives to our customers
to assist in the distribution and promotion of our products. For our independent distributors and retailers,
these incentives include volume-based rebates, product placement fees, promotions and displays. For our
independent bottlers, these incentives are referred to as bottler funding and are negotiated annually with each
bottler to support a variety of trade and consumer programs, such as consumer incentives, advertising support,
new product support, and vending and cooler equipment placement. Consumer incentives include coupons,
pricing discounts and promotions, and other promotional offers. Advertising support is directed at advertising
programs and supporting independent bottler media. New product support includes targeted consumer and
retailer incentives and direct marketplace support, such as point-of-purchase materials, product placement
fees, media and advertising. Vending and cooler equipment placement programs support the acquisition and
placement of vending machines and cooler equipment. The nature and type of programs vary annually.
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