Pepsi 2014 Annual Report Download - page 6

4 PEPSICO
In 2014, we continued
to expand our portfolio
of nutritious beverages
and foods.
2. Based on Euromonitor International data.
Trend 1: The Growth of the Middle Class
The past few decades saw the rise of the
middle class and the growth of women in the
workforce across the globe. Concurrently, as
consumers worldwide shifted more of their
spending to higher-quality products, they
favored companies that could deliver these
products through strong, trusted brands.
PepsiCo acted decisively to capitalize on
this trend. We globalized our footprint to
meet consumers’ quest for convenience
around the world, as most of our products can
go from package to consumption in seconds.
And we established our trusted brands in
each of our major markets. Our portfolio of
22 power brands that each generate more
than $1billion in estimated annual retail sales,
and more than 10 brands that each generate
between $500million and $1billion in esti-
mated annual retail sales, is synonymous with
quality, great taste and affordability.
Globalizing the company and connecting
our brands with consumers around the
world has, without question, helped drive
significant growth for PepsiCo during our
first half-century.
Trend 2: The Evolution of the Retail
Environment The global retail environment
changed dramatically over the past decades.
Around the world, we witnessed the emer-
gence of organized, efficient, modern trade
in many countries, followed by increasing
consolidation and sophistication of retailers
in each market.
Throughout this transformation, we
understood the paramount importance of
remaining a key partner to our large retail
customers, while continuing to provide the
best service to smaller stores. When Pepsi-
Cola and Frito-Lay joined forces, it brought
together two high-velocity categories
under one umbrella and allowed PepsiCo to
match retailers’ growing scale with our own.
Additionally, we have constantly retooled our
direct store delivery (DSD) selling system to
provide excellent service to large and small
retailers alike.
Thanks in large part to our company’s
focus on the transforming retail environment,
in 2014 PepsiCo was the number one food
and beverage business in the U.S., Canada,
Russia, India, Saudi Arabia and Egypt, and
among the top three in the U.K., Mexico
andTurkey, to name a few.
Trend 3: The Acceleration of Consumer
Focus on Health and Wellness The emer-
gence and acceleration of consumers’
focus on health and wellness (more
recently also a focal point of government
regulations) has increasingly challenged
companies with Fun-For-You portfolios to
adapt their products. At the same time, this
trend has also created significant growth
opportunities in the Better-For-You and
Good-For-You categories.
PepsiCo anticipated this shift early on, and
we took steps to future-proof our portfolio.
We invested in research and development
toimprove the nutritional value and increase
the appeal of our Fun-For-You products by
eliminating trans fats and reducing salt, fat
and added sugar content in key brands. We
preemptively acquired major brands across
the Good-For-You space, including Quaker
Oats, Gatorade for athletes, Tropicana,
Naked Juice and the Wimm-Bill-Dann line
ofdairy and juice products in Russia. We also
created a nutrition group to grow our Good-
For-You portfolio.
In 2014, our nutrition businesses accounted
for approximately 20% of PepsiCo’s net
revenue. We are one of the top companies
in the world in the growing everyday nutri-
tion space.