Pepsico, Inc. · NASDAQ:PEP
Pepsico — Barclays Back-to-School Consumer Conference 2011
51 slides from Pepsico's conference presentation, September 2011
Slide 1: The PepsiCo Advantage
The PepsiCo Advantage Hugh Johnston Chief Financial Officer, PepsiCo John Compton CEO, PepsiCo Americas Foods
Slide 2: Safe Harbor Statement of Terms and Non-GAAP Information
Safe Harbor Statement of Terms and Non-GAAP Information Safe Harbor Statement Statements in this communication that are "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncerta
Slide 3: We have a highly focused portfolio well-positioned in attractive growth categories
We have a highly focused portfolio well-positioned in attractive growth categories Social Beverages Savory Snacks Global Global Position Position #2 Clear #1 Global Nutrition Position Among Top #3 3 Source: Euromonitor; pro forma Wimm-Bill-Dann
Slide 4: With great mix…
With great mix… 2000: Revenue $20B 2010: Revenue $62B* Beverages Snacks Snacks 44% 36% Beverages 63% 26% 43% Good-For-You Good-For-You 11% 21% 69% 31% Good-For-You 11% 21% 4 * 2010 includes pro forma bottlers and Wimm-Bill-Dann
Slide 5: And an expanding global footprint with high exposure to fast-growing emerging markets
And an expanding global footprint with high exposure to fast-growing emerging markets Emerging Markets Net Revenue Mix (%) • About $20B emerging market business in 2010 31 • 24% 5-year CAGR 21 • Double-digit operating margins • High margin 2005 2010* expansion potential 5 * 2010 includes the impact
Slide 6: Delivering strong financial performance
Delivering strong financial performance 5-Year Performance CAGR* 2005 – 2010 13% 12% 10% 9% 8% Total 5-Year Cash Returned to Shareholders $29B Core Core Core Management Dividend/ Net Operating EPS Operating Share Revenue Profit Cash Flow 6 * The above, except for dividends per share, are Non-GAAP fi
Slide 7: Focused against five imperatives we refer to as our framework for growth
Focused against five imperatives we refer to as our framework for growth 1 Build and extend our macrosnacks portfolio 2 Sustainably and profitably grow our beverage business worldwide 3 Unleash the power of Power of One 4 Build and expand our nutrition businesses 5 Ensure prudent, responsible financ
Slide 8: A Global Snacks Powerhouse built on consumer preferred brands…
A Global Snacks Powerhouse built on consumer preferred brands… 2010 Global Retail Sales World’s largest ($B) Food Brand $9.4 B 9.4 5 additional billion dollar brands 4.0 3.1 2.6 New platforms 1.7 successfully rolled 1.3 8 Note: Lay’s includes Walkers and Smiths brands
Slide 9: …built on multiple layers of advantage…
…built on multiple layers of advantage… Quality Advantage by Design Locally Relevant • Proprietary agro through seed varieties, contract farming, and storage • Advantaged cooking processes and seasoning development • 20 years of consistently applied quality standards globally 9
Slide 10: …and competitively advantaged manufacturing and distribution
…and competitively advantaged manufacturing and distribution Make Move Sell Proprietary Fully optimized DSD Millions of points manufacturing and warehouse of distribution processes capabilities 10
Slide 11: Resulting in leading market share positions in virtually every market in which we compete
Resulting in leading market share positions in virtually every market in which we compete PepsiCo Value Share 0 30 60 90% ARGENTINA CHILE TURKEY MEXICO SOUTH AFRICA AUSTRALIA 10x relative UNITED STATES category CANADA share BRAZIL EGYPT SAUDI ARABIA UNITED KINGDOM 11 Salty snack category value share
Slide 12: These advantages have delivered consistently strong operating performance
These advantages have delivered consistently strong operating performance Volume growth Revenue growth NOPBT growth 2006 - 2010 2006 - 2010 2006 -2010 CAGR (’06-’10) CAGR (’06-’10) CAGR (’06-’10) 3% 8% 8% 2006 2010 2006 2010 2006 2010 12 Note: Global Snacks excluding UK Quaker and QFNA
Slide 13: Outlook for growth is strong…
Outlook for growth is strong… • Per capita growth runway across developed, developing, and emerging markets • Transition from unpackaged to packaged snacks driven by global growth in middle-class with more disposable income • Increased snack consumption with ever accelerating shift to on-the-go life
Slide 14: Per capita consumption levels low outside a few markets
Per capita consumption levels low outside a few markets Per Capita Consumption (kgs)* 8.5 5.0 13% Revenue CAGR from 2005 – 2010 2.6 1.5 1.4 0.5 0.3 US UK Western Latin Eastern Asia ME Europe America Europe Pacific Africa 14 2010 Core Savory per capita consumption, est. Source: Euromonitor, Company a
Slide 15: Transition from unpackaged to packaged snacks through rise of the middle-class
Transition from unpackaged to packaged snacks through rise of the middle-class ~300MM new middle-class households by 2015 HHs crossing $10K 2010 - 2015 # (MM) Developed 15 Developing 35 Emerging 250 Total 300MM 15 Source: Nielsen, company analysis
Slide 16: Increased snack consumption behind shift to on-the-go lifestyles
Increased snack consumption behind shift to on-the-go lifestyles 74 69 63 % respondents 53 agreeing with 49 importance of using products and services that offer the greatest convenience going forward China India Brazil Mexico Russia 16 Source: The Futures Company. Global Monitor 2010
Slide 17: Resulting in the world's leading macrosnack company
Resulting in the world’s leading macrosnack company 17
Slide 18: Our framework for growth
Our framework for growth 1 Build and extend our macrosnacks portfolio 2 Sustainably and profitably grow our beverage business worldwide 3 Unleash the power of Power of One 4 Build and expand our nutrition businesses 5 Ensure prudent, responsible financial management 18
Slide 19: Beverages is a huge market globally
Beverages is a huge market globally Total Volume (in B Cases) CAGR ~460 ~610 3% Non-LRB 69% 63% 2% LRB 31% 37% 5% 2010 2020E 19 Source: Company Estimates
Slide 20: U.S. is more established, but still room to grow
U.S. is more established, but still room to grow Total U.S. Volume (in B Cases) ~38 ~40 Non-LRB 45% 43% LRB 55% 57% 2010 2020E 20 Source: Company Estimates
Slide 21: While the category slowed during the recession
While the category slowed during the recession Annual U.S. LRB Volume Growth (vs. Prior Yr) 5% 3% >1% 1-2% Distribution Category and Recession Slow recovery expansion and beverage to population price wars innovation growth+ ’90s Early ’00s Late ’00s 1st Half ’10s 21 Source: Company Data
Slide 22: We held our relative market share throughout
We held our relative market share throughout PepsiCo has …and CSD RMS maintained LRB RMS… over past 10 years US LRB US CSD Relative Volume Share (%) Relative Volume Share (%) 0.77 0.81 0.71 0.71 2000 2010 2000 2010 22 Source: Beverage Digest (for all channels and vs. primary competition)
Slide 23: A strong and diversified portfolio
A strong and diversified portfolio PepsiCo North America Beverages #1 Brand in Flavors Enjoyment #1 52% #2 TM in Colas #2 TM in RTD Tea Hydration #1 26% #1 in Sports #1 in Chilled NFC OJ Nourishment #2 15% #1 Super Premium Juice Transformation #3 7% #1 in RTD Coffee YTD GDMxC Sales 23 Source: Compan
Slide 24: Driving CSD growth
Driving CSD growth 1 2 3 4 Nurture Dial Up Deliver Develop Powerhouse A&M Innovation Occasion- Brands Investment Stream Based Marketing 24 Note: A&M stands for Advertising and Marketing
Slide 25: Nurture powerhouse brands
Nurture powerhouse brands A Powerful Portfolio (YTD Growth) Lemon-lime Flavor Cola Mist: +7% Dew: +2.5% Max: +93% Volume Volume Volume 25 Source: IRI YTD 2011 thru’ 8.7.11 GDMxC
Slide 26: Dial up A&M investment
Dial up A&M investment 26
Slide 27: Leverage social media
Leverage social media 1.4 MILLION Top trended views in just brand for 5 36 hours straight weeks Over 130 MILLION exposures 27 Source: AdAge, FourSquare, Blue Fin Technologies, OMD, Company Data
Slide 28: Innovate to address “wants and desires”
Innovate to address “wants and desires” 28
Slide 29: Develop occasion-based marketing
Develop occasion-based marketing Right occasion, channel, brand, message and pack On-the-Go Special Occasion/ Meal-Time/ Refreshment Celebration Snacking C&G Specialty Grocery 16oz 12 oz 20 1.5 Liter 7.5oz @ $0.99 Pack @ $0.99 8 Pack 29
Slide 30: Driving CSD growth
Driving CSD growth 1 2 3 4 Powerhouse A&M Innovation Occasion- Brands Investment Stream Based Marketing 30
Slide 31: Gatorade success story continues
Gatorade success story continues Growing $ Very High $ Share +11% 77.3% Dollar Sales Sports Drink Share Growing Equity Gap to PA* Brand for Me +33 pts Scientifically Advantaged +31 pts Enhances Performance +25 pts Innovative +41 pts 31 Source: IRI YTD 2011 thru’ 8.7.11 GDMxC; Millward Brown Brand He
Slide 32: Innovation to expand athletic occasions
Innovation to expand athletic occasions 01 Energy: Before 02 Hydration: During 03 Recover: After G Series G Series Pro G Series FIT 32
Slide 33: G Series FIT is expanding the market to fitness athletes
G Series FIT is expanding the market to fitness athletes • Expands line-up • Fitness athletes • Innovating for unique needs and functional demands 33
Slide 34: Similarly, Tropicana initiatives are working
Similarly, Tropicana initiatives are working $150 MM+ Sales TTM ~50% growth 34 Source: Company data trailing 12 months ending Q2’11
Slide 35: North America restage well on its way
North America restage well on its way A Winning Portfolio Grow in NCBs Grow in Bubbles 35
Slide 36: Our framework for growth
Our framework for growth 1 Build and extend our macrosnacks portfolio 2 Sustainably and profitably grow our beverage business worldwide 3 Unleash the power of Power of One 4 Build and expand our nutrition businesses 5 Ensure prudent, responsible financial management 36
Slide 37: We lead two powerful businesses
We lead two powerful businesses ~$31B ~$31B 37 Above figures are 2010 Net Revenue including pro forma bottlers and Wimm-Bill-Dann
Slide 38: … with many similarities
… with many similarities Planned Together Bought Together Consumed Together 38
Slide 39: Similarities lead to scale and advantage
Similarities lead to scale and advantage Consumer Channel Demographics Income Insights - Natural - C-Store Shopper - Hispanic - Broad Price Points Innovation $2 99¢ In Store Fastest High Common Growing Highly Tailored Household Merchandising CPG Company Assortment Penetration 39
Slide 40: We are further optimizing Po1 to extend our competitive advantage in 2012+
We are further optimizing Po1 to extend our competitive advantage in 2012+ Consumer Customer Capabilities Moments to Save Prime-Time USA Field Merchandising Structure 40
Slide 41: Kicking off 2012 in a BIG WAY
Kicking off 2012 in a BIG WAY New 10 Year Deal 41
Slide 42: #1 Food and Beverage Business in North America
#1 Food and Beverage Business in North America #1 #1 Share Share LRB* Salty Snacks* 42 * US measured channels
Slide 43: Unleashing the power of Power of One
Unleashing the power of Power of One Accelerates our growth Enhances our selling and service advantage Makes us more efficient operators Power of One is truly unique to PepsiCo 43
Slide 44: Our framework for growth
Our framework for growth 1 Build and extend our macrosnacks portfolio 2 Sustainably and profitably grow our beverage business worldwide 3 Unleash the power of Power of One 4 Build and expand our nutrition businesses 5 Ensure prudent, responsible financial management 44
Slide 45: Nutrition offers huge growth opportunity fueled by strong demographic and consumer trends
Nutrition offers huge growth opportunity fueled by strong demographic and consumer trends • Large, rapidly-growing categories with attractive margins • Rising consumer and government interest in health and wellness • Aging populations seeking great tasting, healthy foods • Consumers globally want to
Slide 46: With scale businesses in every nutrition sub-segment
With scale businesses in every nutrition sub-segment Fruits and Whole Sports Vegetables Grains Dairy Nutrition 46
Slide 47: Remarkable international growth for our key nutrition brands
Remarkable international growth for our key nutrition brands • Combined 2010 retail sales of about $3B outside North America • Combined retail sales grew by about $300MM in 2010 • 5-year double-digit revenue CAGR 47 Source: Company Data
Slide 48: Our framework for growth
Our framework for growth 1 Build and extend our macrosnacks portfolio 2 Sustainably and profitably grow our beverage business worldwide 3 Unleash the power of Power of One 4 Build and expand our nutrition businesses 5 Ensure prudent, responsible financial management 48
Slide 49: “Must-do's” in a challenging environment
“Must-do’s” in a challenging environment • Sharply defined and well communicated brands • Clearly differentiated innovation • Product pricing that balances input cost pressure with consumer realities • Significant step-up in productivity • Manage cash flow tightly 49
Slide 50: Strong financial profile
Strong financial profile • Our portfolio is where we want it to be • Balanced, focused portfolio of businesses – Growth – Consistency – Diversified input exposure – Attractive, growing margins – High returns on capital – High cash returns 50
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