Cash Flow Productivity at PepsiCo: Communicating

Value to Retailers

Analysis by-

Akash PATIL

Bhumit KOTHARI

Case Blazer II

Contents

Case Synopsis

Problem Definition

Case Inferences

Case Recommendations

Conclusion

Synopsis of a Case

PepsiCo: Largest F & B business in US

World’s largest snack company

Second largest soft drink company

Employed over 2,00,000 worldwide

2009 sales: $43.2 Billion

Owns 19 Brands

Synopsis of a Case

Competitive edge- Product differentiation & Innovation

Goal- Single largest driver of Cash flow for retailers

Strength- Large, sophisticated and flexible distribution & merchandising system

Distribution logistics, Cross Docking

Direct Store Delivery (DSD)

Synopsis of a Case

Retailer Relationship Management- Team

Leaders

Merchandising decisions

Cash Flow productivity

Convincing Mercatco

Contents

Case Synopsis

Problem Definition

Case Inferences

Case Recommendations

Conclusion

Problems in a Case

Convince MercatCo and other retail

customers to use Cash flow productivity &

ROIC to make merchandising decisions

Prepare for a meeting next month with

MercatCo- create effective plan.

Contents

Case Synopsis

Problem Definition

Case Inferences

Case Recommendations

Conclusion

Change Change

2009 2008 2007 2009 2008

Total net revenue $43232 $43251 $39474 -% 10%

Operating Profit

FLNA- Frito lay $3258 $2959 $2845 10% 4%

QFNA- Quaker foods

America

628 582 568 8% 2.5%

LAF- Latin American

food904 897 714 1% 26%

PAB- Pepsi American

beverages

2172 2026 2487 7% (19%)

EUROPE 932 910 855 2% 6%

AMEA- Asia middle east

and Africa

716 592 466 21% 27%

Net impact on mark to

market

274 (346) 19 - -

PBG/PAS merger cost (49) - - - -

Restructuring - (10) - - -

other (791) (651) (772) 21% (16%)

Total Operating Profit $8044 $6959 $7182 16% (3%)

Total operating profit

margin

18.6% 16.1% 18.2% 2.5 (2.1)

2009

Total operating profit increased by 16% and margin by 2.5 points.

Foreign currency reduced operating growth

By 6%. Other corporate unallocated expenses increased by 21%

reflecting to losses, compared to previous year.

2008

Total operating profit decreased by 3% and margin

decreased by 2.1 points. Other corporate unallocated

expenses decreased by 16%

48%

23%

16%

13%

Net Revenue 2009

PespiCoamerican foods PespiCOamerican Beverage

PepsiCo International Europe PepsiCo international AMEA

36%

38%

16%

10%

Revenue % by segment 2009

PespiCo Americas foods PespiCo Americas Beverages

PepsiCo International Europe PespiCo nternational AMEA

Contents

Case Synopsis

Problem Definition

Case Inferences

Case Recommendations

Conclusion

Case Recommendations

PepsiCo showing slight decrease in current

liabilities. PepsiCo needs to increase the

revenue. The total debt of PepsiCo is also

decreasing which is very good signal for the

company. Financially PepsiCo is doing

good.

Case Recommendations

It will help you to obtain funding if you need it.

It will set out clearly the money that you need to put together to start the business and then to run it for a period.

It will help prevent you from going into a business that will not be successful.

It will highlight periods where your business may need extra financial help.

Contents

Case Synopsis

Problem Definition

Case Inferences

Case Recommendations

Conclusion

Conclusion

Company is doing good, decreasing in

trend for revenue is mainly due to the

current global economic crises which has

affected the profit margin. PepsiCo will

continue to generate solid value for our

shareholders.

Thank you!