Pepsi 2015 Annual Report Download - page 24

Table of Contents
7
Our Competition
Our beverage, food and snack products are in highly competitive categories and markets and compete against
products of international beverage, food and snack companies that, like us, operate in multiple geographies,
as well as regional, local and private label manufacturers and other competitors. In many countries in which
our products are sold, including the United States, The Coca-Cola Company is our primary beverage
competitor. Other beverage, food and snack competitors include, but are not limited to, DPSG, Kellogg
Company, The Kraft Heinz Company, International, Inc., Monster Beverage Corporation, Nestlé
S.A., Red Bull GmbH and Snyder’s-Lance, Inc.
Many of our food and snack products hold significant leadership positions in the food and snack industry in
the United States and worldwide. In 2015, we and The Coca-Cola Company represented approximately 24%
and 20%, respectively, of the U.S. liquid refreshment beverage category by estimated retail sales in measured
channels, according to Information Resources, Inc. However, The Coca-Cola Company has significant
carbonated soft drink (CSD) share advantage in many markets outside the United States.
Our beverage, food and snack products compete primarily on the basis of brand recognition, taste, price,
quality, product variety, innovation, distribution, advertising, marketing and promotional activity, packaging,
convenience, service and the ability to anticipate and effectively respond to consumer preferences and trends,
including increased consumer focus on health and wellness. Success in this competitive environment is
dependent on effective promotion of existing products, effective introduction of new products and the
effectiveness of our advertising campaigns, marketing programs, product packaging, pricing, increased
efficiency in production techniques, new vending and dispensing equipment and brand and trademark
development and protection. We believe that the strength of our brands, innovation and marketing, coupled
with the quality of our products and flexibility of our distribution network, allows us to compete effectively.
Research and Development
We engage in a variety of research and development activities and continue to invest to accelerate growth
and to drive innovation globally. These activities principally involve: development of new ingredients and
products; reformulation and improvement in the quality and appeal of existing products; improvement and
modernization of manufacturing processes; improvements in product quality, safety and integrity;
development of, and improvements in, dispensing equipment, packaging technology, package design and
portion sizes; and efforts focused on identifying opportunities to transform, grow and broaden our product
portfolio, including by developing products with improved nutrition profiles that reduce sodium, saturated
fat or added sugars, including through the use of sweetener alternatives and flavor modifiers and innovation
in existing sweeteners, and by offering more options with whole grains, fruits and vegetables. Our research
centers are located around the world, including in Brazil, China, Germany, India, Mexico, Russia, the United
Arab Emirates, the United Kingdom and the United States, and leverage nutrition science, food science,
engineering and consumer insights to meet our strategy to continue to develop nutritious, convenient
beverages, foods and snacks.
In 2015, we continued to refine our beverage, food and snack portfolio to meet changing consumer demands
by developing a broader portfolio of product choices, including: launching beverage options that contain no
high fructose corn syrup and are made with natural flavors; building on our important nutrition platforms
and brands – Quaker (grains), Tropicana (fruits and vegetables), Gatorade (sports nutrition for athletes) and
Naked Juice (juices and smoothies); expanding our whole grain products globally; and expanding our portfolio
of nutritious products in growing categories, such as dairy, hummus and other refrigerated dips, and baked
grain snacks. We also continued to develop and implement new technologies to enhance the quality and value
of our current and future products. In addition, we continued to make investments to reduce our impact on
the environment, including: efforts to conserve raw materials and energy, such as by working to achieve
reductions in greenhouse gas emissions across our global businesses, by helping to protect and conserve
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