Pepsi 2015 Annual Report Download - page 32

Table of Contents
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existing products or introduce new products, if our advertising or marketing campaigns are not effective or
if we are otherwise unable to compete effectively, we may be unable to grow or maintain sales, gross margins
or category share in the global market or in various local markets or we may need to increase capital, marketing
or other expenditures, which may adversely affect our business, financial condition or results of operations.
Our business, financial condition or results of operations could be adversely affected if we are unable to
grow our business in developing and emerging markets or as a result of unstable political conditions, civil
unrest or other developments and risks in the markets where our products are made, manufactured,
distributed or sold.
Our operations outside of the United States, particularly in Mexico, Russia, Canada, the United Kingdom
and Brazil, contribute significantly to our revenue and profitability, and we believe that these countries and
other developing and emerging markets, including China and India, present important future growth
opportunities for us. However, there can be no assurance that our existing products, variants of our existing
products or new products that we make, manufacture, distribute or sell will be accepted or be successful in
any particular developing or emerging market, due to local or global competition, product price, cultural
differences, consumer preferences or otherwise. The following factors could reduce demand for our products
in such developing and emerging markets: unstable economic, political or social conditions, acts of war,
terrorist acts, and civil unrest in certain of these markets where our products are made, manufactured,
distributed or sold, including Russia, Ukraine, Brazil and the Middle East; increased competition; volatility
in the economic growth of certain of these markets and the related impact on developed countries who export
to these markets; our inability to acquire businesses, form strategic business alliances or to make necessary
infrastructure investments; our inability to complete divestitures or refranchisings; imposition of new or
increased labeling, product or production requirements, or other restrictions; imposition of new or increased
sanctions against, or other regulations restricting contact with, certain countries in these markets in which
our products are made, manufactured, distributed or sold, such as Russia, or imposition of new or increased
sanctions against U.S. multinational corporations operating in these markets; foreign ownership restrictions;
nationalization of our assets or the assets of our suppliers, bottlers, distributors, joint venture partners or other
third parties; government-mandated closure, or threatened closure, of our operations or the operations of our
suppliers, bottlers, distributors, joint venture partners or other third parties; restrictions on the import or export
of our products or ingredients or substances used in our products; regulations on the repatriation of funds
currently held in foreign jurisdictions to the United States; highly inflationary currency, devaluation or
fluctuation, such as the devaluation of the Russian ruble, Venezuelan bolivar, Mexican peso, euro, Brazilian
real and the Canadian dollar; regulations on the transfer of funds to and from foreign countries, currency
controls or other currency exchange restrictions, which result in significant cash balances in foreign countries,
from time to time, or could significantly affect our ability to effectively manage our operations in certain of
these markets and could result in the deconsolidation of such businesses, such as the deconsolidation of our
Venezuelan businesses effective as of the end of the third quarter of 2015; the lack of well-established or
reliable legal systems; increased costs of doing business due to compliance with complex foreign and United
States laws and regulations that apply to our international operations, including the Foreign Corrupt Practices
Act, the U.K. Bribery Act and the Trade Sanctions Reform and Export Enhancement Act; and adverse
consequences, such as the assessment of fines or penalties, for any failure to comply with these laws and
regulations. If we are unable to expand our businesses in developing and emerging markets, effectively
operate, or manage the risks associated with operating, in these markets, or achieve the return on capital we
expect from our investments in these markets, our business, financial condition or results of operations could
be adversely affected.