Pepsi 2014 Annual Report Download - page 57

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37
As we look to 2015 and beyond, we remain focused on positioning our Company for long-term sustainable
growth while continuing to deliver strong financial results. Our business strategies are designed to address
key challenges facing our Company, including: uncertain macroeconomic conditions, including geopolitical,
economic and social instability; evolving consumer tastes and preferences, including continued consumer
focus on nutritious products and changes in customer channels, including the growth of e-commerce; and
resource scarcity. See also “Item 1A. Risk Factors” for additional information about risks and uncertainties
that the Company faces. We believe that many of these challenges create new growth opportunities for our
Company. For example, we believe that continued consumer focus on health and wellness and changes in
consumer and distribution channels will provide us with new opportunities to expand our product offerings
and interact with our customers and consumers. In order to address these challenges and capitalize on these
opportunities, we intend to do the following:
Strengthen our presence around the world.
Continued global expansion will be critical to our continued growth. The global middle class is growing
rapidly. With three billion people projected to join the middle class in growth markets in the next 20 years,
we believe we have the opportunity to continue to expand our business around the world. Although this
presents growth opportunities in the long-term, the global economic landscape remains volatile, with many
of the markets in which our products are sold continuing to experience unstable economic, political and
social conditions. To address these challenges, we plan to continue building a portfolio that is balanced across
geographies and categories to help navigate short-term volatility and uncertainty in these markets.
Continue to broaden the range of our product portfolio, including expanding our offerings of more
nutritious products.
We anticipate that the consumer demand for convenient, functional nutrition, fruits, vegetables, protein and
value-added dairy, local and natural ingredients, and better-for-you snacking and beverage options will
continue to grow as consumer tastes and preferences continue to evolve. To meet this growing demand, we
plan to continue to grow our portfolio of more nutritious products as well as to reduce added sugar, sodium
and saturated fat in certain key brands, while continuing to focus on the great taste consumers expect from
our beverages, foods and snacks. At the end of 2014, approximately 20% of our net revenue came from our
nutrition businesses. We expect that our increased investments in global research and development will enable
us to continue to meet the growing demand for convenient, nutritious products and a broad variety of snack
and beverage options.
Continue to adapt to changing customer channels.
Digital technology continues to change the retail landscape and the way in which we interact with retailers,
shoppers and consumers. As part of this shift, e-commerce is emerging as a significant factor. To help retailers
navigate this changing landscape, and to build relationships with consumers through emerging channels, we
plan on increasing our e-commerce presence, developing tailored customer strategies and utilizing the size
and scale of our distribution system.
Continue to focus on productivity.
We also intend to focus on productivity and lowering the cost base of the Company over the long term and,
by utilizing our global scale, eliminating duplication, deploying new technologies and capitalizing on
everyday opportunities to lower our cost base. We achieved our targeted productivity savings of $1 billion
for 2014 and have successfully completed the three-year, $3 billion productivity program we launched in
2012. We are focused on our five-year, $5 billion productivity program, which we expect will extend annual
savings of $1 billion from 2015 through 2019. This next generation of productivity initiatives will focus on
the following areas: increasing automation in our operations to reduce costs and increase capacity; expanding
shared services, restructuring our manufacturing operations to optimize our assets and capabilities globally;