PepsiCo North · PDF fileSVP Sales, Frito-Lay North America 1999 ... Sales, Pepsi-Cola North...
Transcript of PepsiCo North · PDF fileSVP Sales, Frito-Lay North America 1999 ... Sales, Pepsi-Cola North...
PepsiCo North America Barclays Back-to-School Consumer Conference
September 3, 2014
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Our Presenters Represent Experiences Across Snacks and Beverages
Tom Greco
Current President,
Frito-Lay North America
2009 – 2011 Chief Commercial Officer,
PepsiCo Americas Beverages
2006 – 2009 President, PepsiCo Sales
2002 – 2006 SVP Sales,
Frito-Lay North America
1999 – 2001 President, Frito-Lay Canada
1996 – 1999 RVP, Midwest,
Frito-Lay North America
Al Carey
Current CEO,
PepsiCo Americas Beverages
2006 – 2011 President & CEO,
Frito-Lay North America
2004 – 2006 President, PepsiCo Sales
2002 – 2004 Chief Operating Officer,
PepsiCo Beverages and Foods
1998 – 2001 SVP, Sales, Pepsi-Cola North
America
1994 – 1998 Chief Operating Officer,
Frito-Lay
28 years at PepsiCo 33 years at PepsiCo
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Safe Harbor Statement of Terms & Non-GAAP Information
Note: This presentation should be viewed in conjunction with PepsiCo’s webcast presentation at the Barclays Back-to-School Consumer
Conference on September 3, 2014 and PepsiCo’s Form 8-K filed with the Securities and Exchange Commission on September 2, 2014.
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. Terminology such as “aim,” “anticipate,” “believe,” “drive,” “estimate,” “expect,” “expressed confidence,”
“forecast,” “future,” “goals,” “guidance,” “intend,” “may,” “objectives,” “outlook,” “plan,” “position,” “potential,” “project,” “seek,” “should,” “strategy,”
“target,” “will” or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking
statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ
materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in demand
for PepsiCo’s products, as a result of changes in consumer preferences or otherwise; changes in the legal and regulatory environment; imposition
of new taxes, disagreements with tax authorities or additional tax liabilities; PepsiCo’s ability to compete effectively; PepsiCo’s ability to grow its
business in developing and emerging markets or unstable political conditions, civil unrest or other developments and risks in the markets where
PepsiCo’s products are sold; unfavorable economic conditions in the countries in which PepsiCo operates; increased costs, disruption of supply or
shortages of raw materials and other supplies; failure to realize anticipated benefits from PepsiCo’s productivity initiatives or global operating model;
disruption of PepsiCo’s supply chain; damage to PepsiCo’s reputation; failure to successfully complete or integrate acquisitions and joint ventures
into PepsiCo’s existing operations or to complete or manage divestitures or refranchisings; PepsiCo’s ability to hire or retain key employees or a
highly skilled and diverse workforce; trade consolidation or the loss of any key customer; any downgrade or potential downgrade of PepsiCo’s credit
ratings; PepsiCo’s ability to protect its information systems against a cybersecurity incident; PepsiCo’s ability to build and sustain proper information
technology infrastructure, successfully implement its ongoing business transformation initiative or share services for certain functions effectively;
fluctuations or other changes in foreign exchange rates; climate change, or legal, regulatory or market measures to address climate change; failure
to successfully negotiate collective bargaining agreements or strikes or work stoppages; any infringement of or challenge to PepsiCo’s intellectual
property rights; potential liabilities and costs from litigation or legal proceedings; and other factors that may adversely affect the price of PepsiCo’s
common stock and financial performance.
• For additional information on these and other factors that could cause PepsiCo’s actual results to materially differ from those set forth herein, please
see PepsiCo’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent reports
on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the
date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future
events or otherwise.
Non-GAAP Information
• Please refer to the “Investors” section of PepsiCo’s web site at www.pepsico.com under the heading “Investor Presentations” to find disclosure and
a reconciliation of any non-GAAP financial measures contained herein.
Glossary
• Please refer to the Glossary and attachments to PepsiCo’s Form 8-K filed with the Securities and Exchange Commission on September 2, 2014
available at www.pepsico.com for the definitions of core, constant currency, organic and certain other terms used herein.
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Agenda
• PepsiCo North America
• Frito-Lay North America
• North America Beverages
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Significant Scale Advantage (Retail Sales Indexed to PepsiCo)
100
51
50
47
38
37
27
25
21
20
PepsiCo
Company A
Company B
Company C
Company D
Company E
Company F
Company G
Company H
Company I
NAB and FLNA are Critical Drivers of PepsiCo Revenue with Scale Advantage
NAB/FLNA Contribution to
PepsiCo Net Revenues
Rest of
PEP
48%
NAB/FLNA
52%
Source: IRI MULOC US 2013; Food and Beverage Peers Based on PEP 2013 Net Revenue; North America includes United
States and Canada
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PepsiCo’s Portfolio Includes Nine of the Top 50 Packaged Goods Trademarks
Source: IRI Total Store Advantage ILD – Point of Sale Data for 52 Weeks Ending December 31, 2013 for Total US – MULOC; Excludes tobacco trademarks; Lipton is RTD only
Note: Sales calculated as sum of major brands within each trademark as defined by IRI.
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Multiple Benefits of One Globally Integrated Portfolio
Ben
efi
ts
$1 billion of ongoing cost synergies globally
• Shared structures within markets
• Single corporate functions
• Long-term R&D
• Procurement scale
• Financing and tax benefits
Joint promotions and merchandising
Emerging markets… snacks benefit from beverages
Consumer and shopping insights
Increased relevance with retailers
Talent attraction and development
Cost
Revenue
Strategic
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Complementary Portfolio
21%
43%
54%
Jelly Peanut Butter
Milk Cereals
LRB Salty Snacks
Incidence of co-purchase1
1. 54% of consumers who buy salty snacks buy LRB in the same basket
Source: IRI, multi-Outlet, 52 weeks ending December 31, 2013; United States
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Deep Category Insights
Winning Formula for Success
Beloved Brands
Exciting Innovation Outstanding Execution
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PepsiCo is #1 F&B Contributor to US Retail Sales Growth
Source: Year to date July 13, 2014; IRI Total Store Advantage ILD; IRI Custom Database; IRI MULOC - Contribution to sales growth for top 30 F&B companies excluding tobacco companies
2014 YTD Contributors to Growth ($ millions)
423
221
162
123
105
103
-113
-128
-139
-157
-216
-263
Company B
Company C
Company D
Company E
Company F
Company U
Company V
Company W
Company X
Company Y
Company Z
....
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Scale
PepsiCo…a Balance of Focus and Scale
Focus
+
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Our Brands Work Well Together Across Consumer Demand Spaces
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Doritos and Dew…Millennial Focus
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Fully Leverage NFL Partnership at Retail
World Class NFL Partnership
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Volume Lift by Display Type Inventory on Display by Display Type
Regular Display Joint Display
Source: IRI Custom Study 44 weeks ending November 3, 2013
Regular Display Joint Display
145
Index
To Pepsi CSD
390
Index
145
Index
To Frito-Lay Salty
To Pepsi CSD
Regular Display Joint Display
Regular Display Joint Display
+53%
+28%
To Frito-Lay Salty
Joint Displays Drive Inventory and Volume Lift
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NFL Partnership in Food Service
Heinz Field MetLife Stadium
Levi’s Stadium AT&T Stadium
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Messi Video
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Priorities Cut Across Various Initiatives
Seasonal Customers
Local Multicultural
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Agenda
• PepsiCo North America
• Frito-Lay North America
• North America Beverages
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Consistent Performance
Note: Core is a non-GAAP financial measure that adjusts for certain items. Please refer to the “Reconciliation of GAAP and non-GAAP information” attachment posted
on September 3, 2014 under the “Investors-Events and Presentations” section at www.pepsico.com to find disclosure and reconciliation of the above non-GAAP
financial measures.
FLNA Core Operating Profit FLNA Net Revenue
2008 2013 2008 2013
+3.8% 5 Yr CAGR
+6.0% 5 Yr CAGR
+2.7pts
core margin expansion
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Sustainable Growth Model
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Building Lay's Equity
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DUAF Video
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Macro Snacks
Innovation Across Snacks
Mainstream Salty
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World Class Execution
Change
image?
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Automation Supply Chain
Productivity for Growth
• More SKUs
• Fewer Facilities
• Lower Inventory
• Enables Growth
• Packaging
• Picking Cases
• Forklift Transport
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Agenda
• PepsiCo North America
• Frito-Lay North America
• North America Beverages
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Progress Being Made
Serving Customers
Execution
PepsiCo Focus:
Retail &
Foodservice
2 Consumer Focus
Innovation
Brand Health
Share Stabilized
1
Improving Returns
Productivity
Revenue Management / Price Realization
Leaner, Simpler Operating Model
3
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PepsiCo is #1 F&B Contributor to US Retail Sales Growth
Source: Year to date July 13, 2014; IRI Total Store Advantage ILD; IRI Custom Database; IRI MULOC - Contribution to sales growth for top 30 F&B companies excluding tobacco companies
2014 YTD Contributors to Growth ($ millions)
423
221
162
123
105
103
-113
-128
-139
-157
-216
-263
Company B
Company C
Company D
Company E
Company F
Company U
Company V
Company W
Company X
Company Y
Company Z
....
NAB #3 In Dollar Growth
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NAB Has 6 of Top 12 Beverage Growth Brands
Source: IRI MULOC through June 15, 2014; Lipton is RTD only
1
#2
#5
#11
#4
#9
#12
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Glass Mtn Dew Kickstart
Pepsi Wild Cherry Real Sugar 7.5oz Mini-Cans
CSDs Showing Some Improvement
Source: IRI MULOC through August 17, 2014
1
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RTD Coffee Premium Juices Water
Advantaged Portfolio with Significant Product News
1
Flavored CSDs Sports RTD Tea #1
Brand #1
Sports Drinks
#1
#1
#1
Source: IRI MULOC 2013; IRI; Rankings for FY 2013 MULOC value share
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Packaging and Equipment Focus Sustainable Innovation
Source: Represents IRI value and volume data through May 18, 2014
Double-Digit Growth in Year Two
1 Innovation on Product, Packaging and Equipment
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Progress: Brand Health Improving 1
DIE
T D
EW
DALE CALL ROCKETS
KIC
KS
TA
RT
LIG
HT
NIN
G
BO
LT
HA
RD
WO
RK
Note: Pepsi, Mountain Dew and Pure Leaf - gains in brand preference and distinction in all CSD/RTD tea drinks; Gatorade - gains in key brand health/equity drives in male competitive athletes
Source: Millward Brown Rolling 52 Weeks through Q2 2014
35
Joint Displays Pure Plays
Solid Progress on Execution
100,000 Units Placed
2
Game Time
36
Developing Foodservice Together 2
Taco Bell 7-Eleven Buffalo Wild Wings
37
Equipment Innovation: A New Look and Focus at Fountain
2
Spire Equipment
Innovation
Fountain Variety to Match
Customer Needs
38
Restructuring Network Automation
Restructuring GTM Productivity
24% of plants closed since 2010 Forklift Transport began this spring
Other tests
underway
Significant
productivity in
2014 contributing
to $1B PEP
productivity target
3 Significant Productivity
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3
Industry Promoted CSD Packs
as % LRB Value
Industry Promoted CSD Packs
as % CSD Value
Old Industry Paradigm of Growth Through CSD Pack Promotion No Longer Holds
CAGR
2010
Rest
of LRB
Promoted
Packs
2013
+4.2%
(3.0%)
+2.5%
Rest of
Portfolio
Promoted
Packs
2010 2013
CAGR
(3.0%)
Source: IRI MULOC FY 2010 and FY 2013; reflects IRI definition of promoted vs. non-promoted price
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Takeaways
Focus
Brand Health
Innovation
Execution
FLNA Consistency
NAB Strengthening
Scale
Billion Dollar Brands
F&B Supplier at Retail
Driver of Growth
Macrosnacks
LRB in Retail
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#1
#1
Source: IRI MULOC through August 17, 2014
Note: PepsiCo’s 22 billion dollar brands globally include Walker’s, Mirinda, and 7-Up outside the U.S. Lipton and Starbucks are sold through partnerships with Unilever
and Starbucks, respectively.