Pepsi 2015 Annual Report Download - page 38

Table of Contents
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If we are unable to recruit, hire or retain key employees or a highly skilled and diverse workforce, it could
have a negative impact on our business, financial condition or results of operations.
Our continued growth requires us to recruit, hire, retain and develop our leadership bench and a highly skilled
and diverse workforce. We compete to recruit and hire new employees and then must train them and develop
their skills and competencies. Our employees are highly sought after by our competitors and other companies
and our continued ability to compete effectively depends on our ability to retain, develop and motivate highly
skilled personnel for all areas of our organization. Any unplanned turnover or our failure to develop an
adequate succession plan to backfill current leadership positions, including the Chief Executive Officer, or
to hire and retain a diverse workforce could deplete our institutional knowledge base and erode our competitive
advantage or result in increased costs due to increased competition for employees, higher employee turnover
or increased employee benefit costs. Any of the foregoing could have a negative impact on our business,
financial condition or results of operations.
The loss of any key customer or changes to the retail landscape could adversely affect our business,
financial condition or results of operations.
Our customers include wholesale and other distributors, foodservice customers, grocery stores, drug stores,
convenience stores, discount/dollar stores, mass merchandisers, membership stores, e-commerce retailers
and authorized independent bottlers, among others. We must maintain mutually beneficial relationships with
our key customers, including Wal-Mart, to compete effectively. The loss of any of our key customers could
adversely affect our business, financial condition or results of operations. In addition, our industry has been
affected by changes to the retail landscape, including increased consolidation of retail ownership, particularly
in North America and Europe, resulting in large retailers with increased purchasing power, which may impact
our ability to compete in these areas. Such retailers may demand improved efficiency, lower pricing and
increased promotional programs. Further, should larger retailers increase utilization of their own distribution
networks, other distribution channels such as e-commerce, or private label brands, or if we are unable to
develop successful relationships with existing and new e-commerce retailers, the competitive advantages we
derive from our go-to-market systems and brand equity may be eroded. Failure to appropriately respond to
any such actions, to offer effective sales incentives and marketing programs to our customers or to adapt to
the rapidly changing retail and e-commerce landscapes could reduce our ability to secure adequate shelf
space and product availability at our retailers, adversely affect our ability to maintain or grow our share of
sales or volume, and adversely affect our business, financial condition or results of operations. In addition,
if we are unable to resolve a dispute with any of our key customers, or if there is a change in the business
condition (financial or otherwise) of any of our key customers, even if unrelated to us, our business, financial
condition or results of operations may be adversely affected.
Our borrowing costs and access to capital and credit markets may be adversely affected by a downgrade
or potential downgrade of our credit ratings.
We expect to maintain Tier 1 commercial paper access, which we believe will facilitate appropriate financial
flexibility and ready access to global credit markets at favorable interest rates. Any downgrade of our credit
ratings by a credit rating agency, especially any downgrade to below investment grade, whether as a result
of our actions or factors which are beyond our control, could increase our future borrowing costs and impair
our ability to access capital and credit markets on terms commercially acceptable to us, or at all. Further, any
downgrade of our current short-term credit ratings could impair our ability to access the commercial paper
market with the same flexibility that we have experienced historically, and therefore require us to rely more
heavily on more expensive types of debt financing. Our borrowing costs and access to the commercial paper
market could also be adversely affected if a credit rating agency announces that our ratings are under review
for a potential downgrade. An increase in our borrowing costs, limitations on our ability to access the global