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A

DISSERTATION PROJECT REPORT

ON

MARKET ANALYSIS OF PEPSICORPORATION

A proposal for dissertation submitted in partial fulfillment of therequirements for the degree of Bachelor of Business Administration

Submitted ByRITESH K VARMA

PRN no:- 07108004078

Study Center

Ramdhar Maheshwari Lions Business School.

SV ROAD, Sunder Nagar, Malad (W), Mumbai:-400064.

Guided byProf Swati Dixit

Faculty (Marketing)

SUBMITTED TO

Tilak Maharashtra Vidyapeeth

Gultekadi,pune:-37

Phone no:24403000/24264644

Year

2010-2011


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A

DISSERTATION PROJECT REPORT

ON

MARKET ANALYSIS OF PEPSI CORPORATION

Guided byProf Swati

Faculty (Marketing)

Submitted By

Ritesh K Varma

PRN no:-07108004078


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ACKNOWLEDGEMENT

It is indeed of great moment to pleasure to express my senses of per found gratitude

& indebtness to all the people who have been instrumental in making my tanning a

rich experience. I got the opportunity to do a challenging project on Pepsi

Corporation. The project is the important part of our study and gives us a real

practical exposure to the corporate world and it is almost impossible to do the same

without the guidance of peoples in and around us. Similarly while doing the topic

MarketSurvey on Pepsi Corporation as a dissertation trainee I took many my

projects in help.

It gives me immense pleasure to acknowledge Pepsi

Corporation, which has been nice enough to give me a chance to do my dissertation

project providing me wonderful support throughout my training period and

afterward.


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DECLARATION

I will take pleasure in declaring that the dissertation project work that

is undertaken by me is an original and authentic work done by me.

This dissertation project is being submitted by me for the partial

fulfillment for award of Bachelor of Business Administration from

Tilak Maharashtra Vidyapeeth, Pune

Ritesh K Varma

PRN no:07108004078


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Executive Summary

PepsiCo.Inc operates three major businesses: Snack Foods, Bevarages, and Quaker oats. The

company's snack-food products include Fritos, Doritos, and Tostitos corn chips; Lay's and

Ruffles potato chips; Cheetos cheese-flavored snacks; Rold Gold pretzels; and Cracker Jack

candy-coated popcorn. Fifty four percent of 2001 sales and Fifty Six percent of operating profits

for PepsiCo came from its Snack Food business. The Companys Beverage Business makes soft

drinks, including Pepsi-Cola, Diet Pepsi, Pepsi One, Mountain Dew, Slice, and Mug, which it

distributes to independent and company-owned bottlers. PepsiCo also produces Tropicana juice

products and Aquafina bottled water products. Its Beverage Business in 2001 brought in 39%

of PepsiCos sales, and 35% of operating profits. PepsiCo acquired Quaker Oats in 2001.Quaker Oats makes the Gatorade sports drink, Breakfast Cereals, Oatmeals, grits, pancakes, rice,

and pasta. Quaker Oats brought in 7% of PepsiCo total sales and 9% of operating profit.

PepsiCo international business is 29% of sales. Many of PepsiCo's brand names are over 100-

years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the

merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with

The Quaker Oats Company, including Gatorade, in 2001. PepsiCos success is the result of

superior products, high standards of performance, distinctive competitive strategies and the high

integrity of there people.

PepsiCos main competitor is Coca Cola. We feel that PepsiCo has a better growth potential

then Coca Coal. We also like the fact that PepsiCo is also in the Snack Foods Business; this adds

diversity to the companies product range. PepsiCo recently sign some big contracts with Burger

King and Applebee's, this will help PepsiCo gain market share over Coca-Cola. Although

PepsiCo is involved in three major businesses we feel that this business fit in with each other and

together give PepsiCo a competitive advantage especially since they use similar distribution

channel through out there businesses. This could give them bargaining power in the future once

there brand name products become necessities in most stores.


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OBJECTIVE OF THE PROJECT

The Objective was to find out that how far the exhibitions are helpful in branding,

The project aims at studying and analyzing the advertisement, which creates consumer

attentiveness towards Pepsi products.

The main aim of the project is to understand that how much consumer is aware to the

Pepsi product with the help of advertisements.

This also includes the positive and negative points of advertising which creates the

impact on consumer minds towards the Pepsi products.

While purchasing the consumer durables which parameter is most important for the

consumer?

Do the consumers prefer the financial facility for buying consumer durable?

How frequently consumers change the consumer durable?

To enhances the knowledge of consumer durable market.

To find out the major competitor of pepsico company.

To find out the changes needs to be brought in Pepsico.

Reasons and the need for this change.

Brand logo is known by how many consumers.

To enhances the knowledge about the marketing and branding activity.


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SCOPE OF PROJECT

ANALYSIS OF MARKETING DYNAMICS OF PEPSI COLA DRINKS WHICH CREATES

CONSUMER ATTENTIVENESS

This project gives me great exposure to the consumer durable market because it includes product

knowledge and the filed job in which I have visited the unit Malad Area. During this project I also

took part in the exhibition of PEPSICO which held for the purpose branding and awareness of

PEPSICO product. This project helps me to know the market practically. My job was during this

project to see the market share and also the display share of the PEPSICO product in the store. The

tagline of PEPSICO is self explanatory and defines the company PERFORMANCE WITH PURPOSE.


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INTRODUCTION

Pepsi Corporation

PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500, American global corporationheadquartered in Purchase, Harrison, New York, with interests in the manufacturing, marketingand distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed

in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has sinceexpanded from its namesake product Pepsi to a broader range of food and beverage brands, thelargest of which include an acquisition of Tropicana in 1998 and a merger with Quaker Oats in

2001 - which added the Gatorade brand to its portfolio as well.

As of 2009, 19 of PepsiCo's product lines generated retail sales of more than $1 billion each, andthe companys products were distributed across more than 200 countries, resulting in annual net

revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food & beveragebusiness in the world. Within North America, PepsiCo is ranked (by net revenue) as the largest

food and beverage business.

Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006, and thecompany employed approximately 285,000 people worldwide as of 2010. The companys

beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers incertain regions. PepsiCo is a SIC 2080 (beverage) company.


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SWOT Analysis PepsiCo

Strengths

Branding - One of PepsiCos top brands is of course Pepsi, one of the most

recognized brands of the world, ranked according to Interbrand. As of 2008 it ranked

26th amongst top 100 global brands. Pepsi generates more than $15,000 million of annual

sales. Pepsi is joined in broad recognition by such PepsiCo brands as Diet Pepsi,

Gatorade Mountain Dew, Thirst Quencher, Lays Potato Chips, Lipton Teas

(PepsiCo/Unilever Partnership), Tropicana Beverages, Fritos Corn, Tostitos Tortilla

Chips, Doritos Tortilla Chips, Aquafina Bottled Water, Cheetos Cheese Flavored Snacks,

Quaker Foods and Snacks, Ruffles Potato Chips, Mirinda, Tostitos Tortilla Chips, and

Sierra Mist.

The strength of these brands is evident in PepsiCos presence in over 200 countries. The

company has the largest market share in the US beverage at 39%, and snack food market

at 25%. Such brand dominance insures loyalty and repetitive sales which contributes to

over $15 million in annual sales for the company

Diversification- PepsiCos diversification is obvious in that the fact that each of its

top 18 brands generates annual sales of over $1,000 million. PepsiCos arsenal also

includes ready-to-drink teas, juice drinks, bottled water, as well as breakfast cereals,

cakes and cake mixes. This broad product base plus a multi-channel distribution system

serve to help insulate PepsiCo from shifting business climates.

Distribution - The Company delivers its products directly from manufacturing

plants and warehouses to customer warehouses and retail stores. This is part of a three

pronged approach which also includes employees making direct store deliveries of snacks

and beverages and the use of third party distribution services.


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Weaknesses

Overdependence on Wal-Mart - Sales to Wal-Mart represent

approximately 12% of PepsiCos total net revenue. Wal-Mart is PepsiCos largest

customer. As a result PepsiCos fortunes are influenced by the business strategy of Wal-

Mart specifically its emphasis on private-label sales which produce a higher profit margin

than national brands. Wal-Marts low price themes put pressure on PepsiCo to hold down

prices.

Overdependence on US Markets- Despite its international presence, 52%

of its revenues originate in the US. This concentration does leave PepsiCo somewhat

vulnerable to the impact of changing economic conditions, and labor strikes. Large US

customers could exploit PepsiCos lack of bargaining power and negatively impact its

revenues

Low Productivity- In 2008 PepsiCo had approximately 198,000 employees. Its

revenue per employee was $219,439, which was lower that its competitors. This may

indicate comparatively low productivity on the part of PepsiCo employees.

Image Damage Due to Product Recall - Recently (2008) salmonella

contamination forced PepsiCo to pull Aunt Jemima pancake and waffle mix from retail

shelves. This followed incidents of exploding Diet Pepsi cans in 2007. Such occurrences

damage company image and reduce consumer confidence in PepsiCo products.

Opportunities

Broadening of Product Base - PepsiCo is seeking to address one of its

potential weaknesses; dependency on US markets by acquiring Russias leading Juice

Company, Lebedyansky, and V Wwater in the United Kingdom. It continues to broaden

its product base by introducing TrueNorth Nut Snacks and increasing its Lipton Tea

venture with Unilever. These recent initiatives will enable PepsiCo to adjust to thechanging lifestyles of its consumers.

International Expansion - PepsiCo is in the midst of making a $1, 000 million

investment in China, and a $500 million investment in India. Both initiatives are part of


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its expansion into international markets and a lessening of its dependence on US sales. In

addition the company plans on major capital initiatives in Brazil and Mexico.

Growing Savory Snack and Bottled Water market in US -

PepsiCo is positioned well to capitalize on the growing bottle water market which is

projected to be worth over $24 million by 2012. Products such as Aquafina, and Propel

are well established products and in a position to ride the upward crest.PepsiCo products

such as, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips,

Fritos corn chips, Ruffles potato chips, Sun Chips multigrain snacks, Rold Gold pretzels,

Santitas are also benefiting from a growing savory snack market which is projected to

grow as much as 27% by 2013, representing an increase of $28 million.

Threats

Decline in Carbonated Drink Sales - Soft drink sales are projected to

decline by as much as 2.7% by 2012, down $ 63,459 million in value. PepsiCo is in the

process of diversification, but is likely to feel the impact of the projected decline.

Potential Negative Impact of Government Regulations - It is

anticipated that government initiatives related to environmental, health and safety may

have the potential to negatively impact PepsiCo. For example, manufacturing, marketing,

and distribution of food products may be altered as a result of state, federal or local

dictates. Preliminary studies on acrylamide seem to suggest that it may cause cancer in

laboratory animals when consumed in significant amounts. If the company has to comply

with a related regulation and add warning labels or place warnings in certain locations

where its products are sold, a negative impact may result for PepsiCo.

Intense Competition - The Coca-Cola Company is PepsiCos primary

competitors. But others include Nestl, Groupe Danone and Kraft Foods. Intense

competition may influence pricing, advertising, sales promotion initiatives undertaken by

PepsiCo. Resently Coca-Cola passed PepsiCo in Juice sales.

Potential Disruption Due to Labor Unrest - Based upon recent

history, PepsiCo may be vulnerable to strikes and other labor disputes.


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COMPETITION

The Coca-Cola Company has historically been considered PepsiCos primary competitor in thebeverage market,[28] and in December 2005, PepsiCo surpassed The Coca-Cola Company inmarket value for the first time in 112 years since both companies began to compete. In 2009, the

Coca-Cola Company held a higher market share in carbonated soft drinksales within the U.S.[5]

In the same year, PepsiCo maintained a higher share of the U.S. refreshment beverage market,however, reflecting the differences in product lines between the two companies.[5] As a result ofmergers, acquisitions and partnerships pursued by PepsiCo in the 1990s and 2000s, its businesshas shifted to include a broader product base, including foods, snacks and beverages. Themajority of PepsiCo's revenues no longer come from the production and sale of carbonated softdrinks.[29] Beverages accounted for less than 50 percent of its total revenue in 2009. In the sameyear, slightly more than 60 percent of PepsiCo's beverage sales came from its primary non-carbonated brands, namely Gatorade and Tropicana.[5]

PepsiCo's Frito-Lay and Quaker Oats brands hold a significant share of the U.S. snack food

market, accounting for approximately 39 percent of U.S. snack food sales in 2009.[5]

One ofPepsiCo's primary competitors in the snack food market overall is Kraft Foods, which in thesame year held 11 percent of the U.S. snack market share


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ORIGINS

The recipe forPepsi, the soft drink, was first developed in the 1890s by a New Bern, NorthCarolina pharmacist and industrialist, Caleb Bradham, who named it "Pepsi-Cola" in 1898. Asthe cola developed in popularity, he created the Pepsi-Cola Company in 1902 and registered apatent for his recipe in 1903.[9] The Pepsi-Cola Company was first incorporated in the state ofDelaware in 1919.[10] Ownership of this company traded hands several times throughout the

1920s and 1930s, and in the early 1960s its product line expanded with the creation ofDiet Pepsiand Mountain Dew.

[11]

Separately, the Frito Company and H.W. Lay & Company - two American potato and corn chipsnack manufacturers - began working together in 1945 with a licensing agreement allowingH.W. Lay to distribute Fritos in the Southeastern United States. The companies merged tobecome Frito-Lay, Inc. in 1961.[12]

In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc., thecompany it is known as at present. At the time of its foundation, PepsiCo was incorporated in thestate ofDelaware and headquartered in Manhattan, New York. The company's headquarters were

relocated to its still-current location ofPurchase, New Yorkin 1970,[13] and in 1986 PepsiCo wasreincorporated in the state ofNorth Carolina.[10]

ACQUISITIONS AND DIVESTMENTS

Between the late-1970s and the mid-1990s, PepsiCo expanded via acquisition of businessesoutside of its core focus of packaged food and beverage brands; however it exited these non-core


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business lines largely in 1997, selling some, and spinning off others into a new company namedTricon Global Restaurants, which later became known as Yum! Brands, Inc..[14] PepsiCo alsopreviously owned several other brands that it later sold, in order to allow it to return focus to itsprimary snack food and beverage lines, according to investment analysts reporting on thedivestments in 1997.[15] Brands formerly (no longer) owned by PepsiCo include: Pizza Hut,[16]

Taco Bell,

[16]

KFC,

[16]

Hot 'n Now,

[17]

East Side Mario's,

[18]

D'Angelo Sandwich Shops,

[19]

Chevys Fresh Mex, California Pizza Kitchen,[20]Stolichnaya[21] (via licensed agreement), WilsonSporting Goods[22] and North American Van Lines.[23]

The divestments concluding in 2007 were followed by multiple large-scale acquisitions, asPepsiCo began to extend its operations beyond soft drinks and snack foods into other lines offoods and beverages. PepsiCo purchased the orange juice company Tropicana Products in1998,[24] and merged with Quaker Oats Company in 2001,[25] adding with it the Gatorade sportsdrink line and other Quaker Oats brands such as Chewy Granola Bars and Aunt Jemima, amongothers.[26]

In August 2009, PepsiCo made a $7 billion offer to acquire the two largest bottlers of itsproducts in North America: Pepsi Bottling Group and PepsiAmericas. In 2010 this acquisitionwas completed, resulting in the formation of a new wholly owned subsidiary of PepsiCo, PepsiBeverages Company.[8] Also in late 2010, the company made its largest international acquisitionwhen it purchased a majority stake in Wimm-Bill-Dann Foods - a Russian food company whichproduces milk, yogurt, fruit juices and dairy products.[27]


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PRODUCTS AND BRANDS

PepsiCos product mix as of 2009 (based on worldwide net revenue) consists of 63 percentfoods, and 37 percent beverages.[5] On a worldwide basis, the companys current products linesinclude several hundred brands that in 2009 were estimated to have generated approximately$108 billion in cumulative annual retail sales.[30]

The primary identifier of companies' main brands within the food and beverage industry arethose which generate annual sales exceeding $1 billion, and 19 of PepsiCo's brands met thisdescription as of 2009: Pepsi-Cola, Mountain Dew, Lay's, Gatorade, Tropicana, 7Up, Doritos,Lipton Teas, Quaker Foods, Cheetos, Mirinda, Ruffles, Aquafina, Pepsi Max, Tostitos, SierraMist, Fritos, and Walker's.[6][30]

AREAS OF BUSINESS

The structure of PepsiCo's global operations has shifted multiple times in its history as a result ofinternational expansion, and as of 2010 it is separated into four main divisions:[31]PepsiCoAmericas Foods, PepsiCo Americas Beverages, PepsiCo Europe, and PepsiCo Asia, Middle Eastand Africa. As of 2009, 71 percent of the companys net revenues came from North and SouthAmerica, 16 percent from Europe and 13 percent from Asia, the Middle East and Africa.[32]

PEPSICO AMERICAS FOODS

PepsiCo Americas Foods consists of the companys food and snack operations in North andSouth America. This operating division is further segmented into Frito-Lay North America,Quaker Foods & Snacks, Sabritas, Gamesa and Latin America Foods. Food and snack sales inNorth and South America combined contributed 48 percent of PepsiCos net revenue in2009.

[30][7][33]

Frito-Lay North America, the result of a merger in 1961 between the Frito Company and theH.W. Lay Company, produces the top selling line of snack foods in the U.S. Its main brands inthe U.S., Canada and Mexico and include Lay's and Ruffles potato chips, Doritos tortilla chips,Tostitos tortilla chips and dips, Cheetos cheese flavored snacks, Fritos corn chips, Rold Gold

pretzels, Sun Chips and Cracker Jackpopcorn. Products made by this division are sold toindependent distributors and retailers, and are transported from Frito-Lay's manufacturing plantsto distribution centers, principally in vehicles owned and operated by the company.[34]

Quaker Foods North America, created following PepsiCos acquisition of the Quaker OatsCompany in 2001, manufactures, markets and sells Quaker Oatmeal, Rice-A-Roni, Cap'n Crunchand Life cereals, as well as Near East side dishes within North America. This division also owns


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and produces the Aunt Jemima brand, which as of 2009 was the top selling line ofsyrups andpancake mixes within this region.[35][5]

Sabritas and Gamesa are two of PepsiCos food and snack business lines headquartered inMexico, and they were acquired by PepsiCo in 1966 and 1990, respectively. Sabritas markets

Frito-Lay products in Mexico, including local brands such as Poffets, Rancheritos, Crujitos andSabritones. Gamesa is the largest manufacturer ofcookies in Mexico, distributing brands such asEmperador, Arcoiris and Maras Gamesa.[36]

PepsiCos Latin America Foods (Spanish: Snacks Amrica Latina) operations market and sellprimarily Quaker- and Frito-Lay-branded snack foods within Central and South America,including Argentina, Brazil, Peru and other countries in this region.

[37]Snacks Amrica Latina

purchased Peruvian company Karinto S.A.C. including its production company BocaditasNacionales (with three production facilities in Peru) from the Hayashida family of Lima in 2009,adding the Karito brand to its product line, including Cuates, Fripapas, and Papi Frits


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OUR MISSION AND VISION

At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to do, butthe right thing to do for our business.

OUR MISSION

Our mission is to be the world's premier consumer products company focused on convenientfoods and beverages. We seek to produce financial rewards to investors as we provideopportunities for growth and enrichment to our employees, our business partners and thecommunities in which we operate. And in everything we do, we strive for honesty, fairness andintegrity.

OUR VISION

"PepsiCo's responsibility is to continually improve all aspects of the world in which we operate -environment, social, economic - creating a better tomorrow than today."

Our vision is put into action through programs and a focus on environmental stewardship,activities to benefit society, and a commitment to build shareholder value by making PepsiCo atruly sustainable company.

PERFORMANCE WITH PURPOSE

At PepsiCo, we're committed to achieving business and financial success while leaving apositive imprint on society - delivering what we call PERFORMANCE WITH PURPOSE.


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Our approach to superior financial performance is straightforward - drive shareholder value. Byaddressing social and environmental issues, we also deliver on our purpose agenda, whichconsists of human, environmental, and talent sustainability.


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PEPSICO VALUES & PHILOSOPHY

Our Values & Philosophy are a reflection of the socially and environmentally responsiblecompany we aspire to be. They are the foundation for every business decision we make.

OUR COMMITMENT

We are committed to delivering sustained growth through empowered people acting responsiblyand building trust.

WHAT IT MEANS

Sustained Growth is fundamental to motivating and measuring our success. Our quest forsustained growth stimulates innovation, places a value on results, and helps us understandwhether today's actions will contribute to our future. It is about the growth of people andcompany performance. It prioritizes both making a difference and getting things done.

Empowered People means we have the freedom to act and think in ways that we feel will get

the job done, while adhering to processes that ensure proper governance and being mindful ofcompany needs beyond our own.

Responsibility and Trust form the foundation for healthy growth. We hold ourselves bothpersonally and corporately accountable for everything we do. We must earn the confidenceothers place in us as individuals and as a company. By acting as good stewards of the resourcesentrusted to us, we strengthen that trust by walking the talk and following through on ourcommitment to succeeding together.


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GUIDING PRINCIPLES

We uphold our commitment with six guiding principles.

We must always strive to:

1. Care for our customers, our consumers and the world we live in.

We are driven by the intense, competitive spirit of the marketplace, but we direct this spirit

toward solutions that benefit both our company and our constituents. Our success dependson a thorough understanding of our customers, consumers and communities. To foster this

spirit of generosity, we go the extra mile to show we care.

2. Sell only products we can be proud of.The true test of our standards is our own ability to consume and personally endorse the

products we sell. Without reservation. Our confidence helps ensure the quality of our

products, from the moment we purchase ingredients to the moment it reaches the

consumer's hand.3. Speak with truth and candor.

We tell the whole story, not just what's convenient to our individual goals. In addition tobeing clear, honest and accurate, we are responsible for ensuring our communications are

understood.4. Balance short term and long term.

In every decision, we weigh both short-term and long-term risks and benefits. Maintaining

this balance helps sustain our growth and ensures our ideas and solutions are relevant both

now and in the future.5. Win with diversity and inclusion.

We embrace people with diverse backgrounds, traits and ways of thinking. Our diversity

brings new perspectives into the workplace and encourages innovation, as well as theability to identify new market opportunities.

6. Respect others and succeed together.

Our mutual success depends on mutual respect, inside and outside the company. It requires

people who are capable of working together as part of a team or informal collaboration.While our company is built on individual excellence, we also recognize the importance and

value of teamwork in turning our goals into accomplishments.


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Non-free media use rationale - non-free logo for PepsiCo Description

This is a logo for PepsiCo.

Source

The logo may be obtained from PepsiCo.

Article

PepsiCo

Portion used

The entire logo is used to convey the meaning intended and avoid tarnishing or misrepresentingthe intended image.

Low resolution?

The logo is of a size and resolution sufficient to maintain the quality intended by the company ororganization, without being unnecessarily high resolution.

Purpose of use

The image is placed in the infobox at the top of the article discussing PepsiCo, a subject ofpublic interest. The significance of the logo is to help the reader identify the organization, assurethe readers that they have reached the right article containing critical commentary about theorganization, and illustrate the organization's intended branding message in a way that wordsalone could not convey.

Replaceable?

Because it is a logo there is almost certainly no free equivalent. Any substitute that is not a

derivative work would fail to convey the meaning intended, would tarnish or misrepresent itsimage, or would fail its purpose of identification or commentary.

Other information

Use of the logo in the article complies with Wikipedia non-free content policy, logo guidelines,and fair use underUnited States copyright law as described above


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PEPSICO IDENTITY

The brand of LG is delightfully smart. LG strives to enhance the customers life and lifestyle

with intelligent features, institutive functionality and exceptional performance.

The brand platform:-

The LG brand is composed of four basic elements

1. Value

2. Promise

3. Benefits

4. Personality

The Brands core Value that never changes.

a. Trust,

b. Innovation,

c. People

d. Passion

The benefits that are consistently delivered to the customer includes

Reliable products

Simple design

Ease of use

Extraordinary Experience

Personality describes the human characteristic that are expressed to the customer through

Trustworthy, Considerate

Practical, Friendly


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OUR LEADERSHIP

PepsiCo is a company full of strong, talented individuals starting with the company leadership.Get to know the inspiring people helping lead PepsiCo on its 'Performance with Purpose'journey.

1.

INDRA K. NOOYI

Chairman and CEO, PepsiCo

2.

JOHN COMPTON

CEO, PepsiCo Americas Foods

3.

MASSIMO D'AMORE

CEO, PepsiCo Beverages Americas


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4.

ERIC FOSS

CEO, Pepsi Beverages Company

5.

ZEIN ABDALLA

CEO, PepsiCo Europe

6.

SAAD ABDUL-LATIF

CEO, PepsiCo Asia, Middle East, Africa

1.

A. SALMAN AMIN

Executive Vice President Sales and Marketing, PepsiCo


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2.

JILL BERAUD

Chief Marketing Officer and President, Joint Ventures, PepsiCo Beverages Americas

3.

RICH BECK

Senior Vice President, Global Supply Chain Operations, PepsiCo

4.

NEIL CAMPBELL

President, Tropicana Beverages North America

5.

ALBERT P. CAREY

President and Chief Executive Officer, Frito-Lay North America


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6.

TIMOTHY P. COST

Executive Vice President,Global Corporate Affairs, PepsiCo

7.

PAMELA CULPEPPER

Senior Vice President, Global Diversity and Inclusion Officer, PepsiCo

8.

ROBERT DIXON

Senior Vice President and Chief Information Officer

9.

RICHARD GOODMAN

Executive Vice President, PepsiCo Global Operations


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10.

TOM GRECO

Executive Vice President and Chief Commercial Officer, Pepsi Beverages Company

11.

JULIE HAMP

Senior Vice President, Chief Communications Officer, PepsiCo

12.

HUGH F. JOHNSTON

Chief Financial Officer, PepsiCo

13.

MEHMOOD KHAN

Chief Executive Officer, Global Nutrition Group and Chief Scientific Officer, PepsiCo


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14.

JAYA KUMAR

President, Global Nutrition Platforms, PepsiCo Global Nutrition Group

15.

LUIS MONTOYA

President, Latin America Beverages

16.

TIM MINGES

Chairman, PepsiCo China

17.

SARAH ROBB OHAGAN

Gatorade President North America & Global Chief Marketing Officer, Sports Nutrition


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18.

PEDRO PADIERNA

President, PepsiCo Foods Mexico, Central America & Caribbean

19.

JOSE LUIS PRADO

President, Quaker Foods and Snacks North America, PepsiCo

20.

GRACE PUMA

Senior Vice President and Chief Procurement Officer

21.

LARRY D. THOMPSON

Senior Vice President, Government Affairs, General Counsel and Secretary, PepsiCo


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22.

CYNTHIA M. TRUDELL

Senior Vice President, Human Resources and Chief Personnel Officer

23.

OLIVIER WEBER

President, South America Food


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QUALITY INNOVATION

At PepsiCo, Performance with Purpose means delivering sustainable growth by investing in ahealthier future for people and our planet.

Specifically, we have defined three areas of influence: Human, Environmental and TalentSustainability.

y Human Sustainability: Encouraging people to live healthier by offering a portfolio ofboth enjoyable and wholesome foods and beverages.

y Environmental Sustainability: Protecting the Earths natural resources through innovationand more efficient use of land, energy, water and packaging in our operations.

y Talent Sustainability: Investing in our associates to help them succeed and develop theskills needed to drive the companys growth, while creating employment opportunities inthe communities we serve.


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CODE OF CONDUCT

5(63(&7)25285(03/2


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ABOUT PEPSICO INDIA

PepsiCo entered India in 1989 and has grown to become the countrys largest selling food andBeverage Company. One of the largest multinational investors in the country, PepsiCo hasestablished a business which aims to serve the long term dynamic needs of consumers in India.

PepsiCo nourishes consumers with a range of products from treats to healthy eats that deliver joyas well as nutrition and always, good taste. PepsiCo Indias expansive portfolio includes iconicrefreshment beverages Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorieoptions such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water,isotonic sports drinks - Gatorade, Tropicana 100% fruit juices, and juice based drinks Tropicana Nectars, Tropicana Twister and Slice, non-carbonated beverage and a new innovationNimbooz by 7Up. Local brands Lehar Evervess Soda, Dukes Lemonade and Mangola add tothe diverse range of brands.

PepsiCos foods company, Frito-Lay, is the leader in the branded salty snack market and all Frito

Lay products are free of trans-fat and MSG. It manufactures Lays Potato Chips, Cheetosextruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands andthe recently launched Aliva savoury crackers. The companys high fibre breakfast cereal,Quaker Oats, and low fat and roasted snack options enhance the healthful choices available toconsumers. Frito Lays core products, Lays, Kurkure, Uncle Chipps and Cheetos are cooked inRice Bran Oil to significantly reduce saturated fats and all of its products contain voluntarynutritional labeling on their packets.


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The group has built an expansive beverage and foods business. To support its operations,PepsiCo has 36 bottling plants in India, of which 13 are company owned and 23 are franchiseeowned. In addition to this, PepsiCos Frito Lay foods division has 3 state-of-the-art plants.PepsiCos business is based on its sustainability vision of making tomorrow better than today.PepsiCos commitment to living by this vision every day is visible in its contribution to the

country, consumers and farmers.

Establishment

PepsiCo established it's business

operations in India in 1989 and has

grown to become one of thecountrys leading food and

beverage companies. One of the

largest multinational investors in

the country, PepsiCo has

established a business which aims

to serve the long term dynamic

needs of consumers in India.

Investment

PepsiCo India and its partners

have invested more than USD1

billion since the company wasestablished in the country.

Employment

PepsiCo India provides direct

and indirect employment to

150,000 people includingsuppliers and distributors.

PEPSICO BOILERPLATE

PepsiCo is one of the worlds largest food and beverage companies, with revenues of nearly $60billion. PepsiCo offers the worlds largest portfolio of billion-dollar food and beverage brands,including 19 different product lines that each generates more than $1 billion in annual retailsales. Our main business - Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade also makehundreds of other nourishing, tasty foods and drinks that bring joy to our consumers in more than200 countries.

PepsiCos people are united by our unique commitment to sustainable growth, calledPerformance with Purpose. By dedicating ourselves to offering a broad array of choices forhealthy, convenient and fun nourishment, reducing our environmental impact, and fostering adiverse and inclusive workplace culture, PepsiCo balances strong financial returns with givingback to our communities worldwide. For more information, please visit www.pepsico.com.

BRAND FACTS

PepsiCo nourishes consumers with a range of products from tasty treats to healthy eats thatdeliver enjoyment, nutrition, convenience as well as affordability

BEVERAGES


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PepsiCo Indias expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP,Nimbooz, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi,hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks -Gatorade, Tropicana100% fruit juices, and juice based drinks Tropicana Nectars, TropicanaTwister and Slice. Local brands Lehar Evervess Soda, Dukes Lemonade and Mangola add tothe diverse range of brands.

FOODS

PepsiCos food division, Frito-Lay, is the leader in the branded salty snack market and all FritoLay products are free of trans-fat and MSG. It manufactures Lays Potato Chips, Cheetosextruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands. Thecompanys high fibre breakfast cereal, Quaker Oats, and low fat and roasted snack optionsenhance the healthful choices available to consumers. Frito Lays core products, Lays, Kurkure,Uncle Chipps and Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats andall of its products contain voluntary nutritional labeling on their packets.

OUR MISSION AND VISION

OUR MISSION

"To be the world's premier consumer products company focussed on convenience food and

beverages. We seek to produce healthy financial rewards to investors as we provide opportunities

for growth and enrichment to our employees, our business partners and the communities in which

we operate. And in everything we do, we strive for honesty, fairness and integrity."

OUR VISION


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"To build Indias leading total beverage company, delighting consumers by best meeting their

everyday beverage needs, and stakeholders, by delivering performance with purpose, through our

talented people."

PEPSICO SUSTAINABILITY VISION

"PepsiCos responsibility is to continually improve all aspects of the world in which we operate environment, social, economic creating a better tomorrow than today"

Tomorrow better than Today

CHALLENGES IN INDIA

The challenges faced by LG when entered in Indian market

1. Low brand awareness about LG in India.

2. One of the last MNCs entered in India (Samsung, Panasonic entered in 1995 in India).

3. High import duty

4. Compitition from local market players and other MNCs in consumer durable segment.

5. Price sensitiveness of the Indian consumer

LGEI over comes these challenges to emerge as

Innovative marketing strategy

1. Launch new technologies in consumer electronic and home appliances.

2. LG was the first brand to enter in cricket in big way a way, by sponsoring the 1999 world

cup followed it up in 2003 as well.

3. LG brought in four captains of the Indian cricket team to endorse its products. LG

invested more then US$ 8 million on advertising and marketing in this sport.


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4. LG has differentiated its product using technology and health benefits. CTV has Golden

eye technology Air conditioner has Health air system and microwave ovens have

the Health wave system.

Local and efficient manufacturing to reduce the cost

To overcome high import duties LG manufactures TV refrigerator in India at manufacturing

facility at Noida and Pune. LGEI had already commissioned contract manufacturing at Mohali

Kolkata and Bhopal for CTVs. This has helped LGEI to reduce cost. LGEI implementing the

Digital manufacturing system (DMS) as the cost cutting innovation this system is follow-up to

the six sigma exercise LGEI had initiate earlier.

R&D potential

LG has the research and development facilities in Bangalore and Pune. Both the unit carry out

R&D department for the domestic as well as the parent company it also dose customize R&D for

the specific countries to which it export product.

Regional channel and wide distribution network

1.

LG has adopted the regional distribution channel in India. All the distributers workdirectly with the company. This has resulted in quicker rotation of the stock and better

penetration into B, C, D, class market.

2. LG also follows the stock rotation policy rather then dumping stock on channel partners.

Product localization:-


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1. Product localization is the key strategy used by the LG

2. LG came out with Hindi and regional language menus on its TVs.

3. Introduced the low-priced Cineplus and sampooma for the rural market.

4. LG was the first brand to introduce gaming in TVs in continuations of its association with

cricket LG introduce cricket game in CTVs

MAJOR KEY SUCCESS FACTORS

Industry analysts are projecting that the soft drink industry will grow by almost 4%

over the next five years. The significant growth is estimated to occur within the realms

of the bottled water sector and new developments for both snacks and sodas in the U.S.,

as well as, the rest of the world.

A.What are industry analysts saying about your industry? What are the

foreseeable trends? What will be the major forces that will affect the industry in the

next five years?

Industry analysts are projecting that the soft drink industry will grow by almost 4% over the next5 years. The significant growth is estimated to occur within the realms of the bottled water sectorand new developments for both snacks and sodas in the U.S., as well as, the rest of the world.Although there are numerous substitutes and alternatives, the savory snack and soft drinkindustry is going to be a large part of our economy for many more decades. Foreseeable trendsare obviously toward the healthier version of this industry. Bottled water sales and revenues have

been continually rising since 2003. By 2012 they are projected to increase another 34% in theU.S. alone. Also, with this healthier America outlook many snacks and drinks are changing theiringredients leaning towards diet, zero carbohydrates, caffeine free and other healthier variationsof currently popular soft drinks. However, on the opposite end of the spectrum are energy drinks,which are unhealthier than normal sodas, are representing an ever growing percentage of the softdrink industry.


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Companies need to know these factors if they intend to operate with a competitive advantage inthis industry, especially at a time when the economy is slumping. Major forces affecting theindustry are economies of scale and barrier to entry. These forces represent the complexity anddifficulty of emerging in this market, new entrants are few and far between one another.Additionally, oil prices could vastly affect this industry based on production costs and

transportation costs, both are major fixed costs. Furthermore, as mentioned before, growinghealth concerns are going to somewhat force companies in this industry to start offering healthierand smarter choices for their everyday snacking needs.

B. Economic forecast: What is forecast for the industry regarding growth and the

factors that will affect it? Existing markets? Emerging markets? Changes in demand

for products/service? Global competitiveness?

According to Datamonitor the soft drink industry is projected to show an average growth rate ofaround .7% for the next 5 years, culminating in a total marketplace increase of 3.6% for 2008-2013. Production and transportation are two of the largest costs in this industry; therefore the

price of oil is going to affect the industry in numerous ways. Another significant expense is thecost of labor, as a direct result of Pepsi currently employing about 185,000 employeesnationwide. Some of the existing markets in this industry have been around for many decadesand are common household names, these include; Coke, Kraft, Dr. Pepper, Proctor and Gamble,Cadbury Schweppes, Nestle, and General Mills. Due to the large barriers to entry and economiesof scale new markets are hard to find in this industry. Many of the newcomers are largercompanies who have since decided to enter the savory snack or soft drink industry. Since thecompanies are all well established previous market entry for a brand new company entry is nearimpossible due to high fixed costs, expensive marketing requirements, and economies of scale.Supply and demand for this industry has been constant with some despite occasional up anddowns. However, the new power sellers are the bottled water sector starting in 2000 and energydrink sector since 2002. As with many other international companies, global competiveness ismaintained by market tests and approvals, by changing flavors and advertisements, and byfurther segmenting the soft drink and savory snacks sectors.

C.Financial performance: What is the financial profile of the industry? What areindustry averages for the major financial ratios? What specific ratios are used to

measure performance within your industry group? What are these ratios predicted to

do over the next five years?

The ratios that were used to measure performance in the soft drink and processed food industrieswere: ROA, ROE, EBT Margin, quick ratio, current ratio, long term debt to equity, total debt toequity, interest coverage, days sales outstanding, days inventory, receivables turnover, inventoryturnover, fixed asset turnover and asset turnover.

The activity ratios in particular are critically important to the soft drink and processed foodindustries. Efficient inventory management is crucial to the profitability of companies in thesesectors. Inventory is often the least liquid asset. It's also the one for which the book values areleast reliable measures of market value, since the quality of the inventory is not considered. Thequick ratio removes the inventory component so as to give a more accurate assessment of a


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firm's ability to pay its bills in the short run. Short-term creditors prefer a high current ratio sinceit reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm'sassets are working to grow the business. Typical values for the current ratio vary by firm andindustry

Market Analysis: The United States soft drinks market grew at a slow and steady rate between2003 and 2007. This growth is set to follow a similar pattern in the forthcoming five years. TheUnited States soft drinks market generated total revenues of $110.1 billion in 2007, representinga compound annual growth rate (CAGR) of 2.2% for the period spanning 2003-2007. Incomparison, the European and Asia-Pacific markets grew with CAGRs of 2.9% and 3.5%,respectively, over the same period, to reach respective values of $117.8 billion and $69.9 billionin 2007. Market consumption volumes increased with a CAGR of 2.7% between 2003 and 2007,to reach a total of 113.3 billion liters in 2007. The market's volume is expected to rise to 132.8billion liters by the end of 2012, representing a CAGR of 3.2% for the 2007-2012 period.Carbonates' sales proved the most lucrative for the United States soft drinks marketing 2007,generating total revenues of $63.5 billion, equivalent to 57.6% of the market's overall value. In

comparison, sales of juices generated revenues of $18.4 billion in 2007, equating to 16.7% of themarket's aggregate revenues. The performance of the market is forecast to accelerate, with ananticipated CAGR of 3.5% for the five-year period 2007-2012, which is expected to drive themarket to a value of $130.5 billion by the end of 2012. Comparatively, the European and Asia-Pacific markets will grow with CAGRs of 3.8% and 5.3%, respectively, over the same period, toreach respective values of $141.9 billion and $90.4 billion in 2012.

Market Value: The United States soft drinks market grew by 2.5% in 2007 to reach a value of$110.1 billion.

Market Value Forecast: In 2012 the market is forecast to have a value of $130.5 billion, an

increase of 18.6% since 2007. The compound annual growth rate of the market in the period2007-2012 is predicted to be 3.5%.

Market Volume: The market grew by 2.8% in 2007 to reach a volume of 113.3 billion liters.

Market Volume Forecast: In 2012, the market is forecast to have a volume of 132.8 billionliters, an increase of 17.2% since 2007.

Market Segmentation I: In value terms, the largest category is carbonates with 57.6% of themarket.

Market Segmentation II:The United States accounts for 33.4% of the global soft drinks

market values.

Market Share: In value terms, the largest company is The Coca-Cola Company with 30.5% ofthe market.

Distribution: In volume terms, the largest channel is supermarkets/hypermarkets with 76% ofthe market.


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D. Driving forces: What are the major factors that drive your industry group? What

are the key success factors that every major competitor must have to survive in your

industry?

There are many major forces that drive an industry and numerous key success factors that

determine the survival of a competitor. PepsiCo uses strategic planning to determine the futuresuccess of their company. The major forces that drive this industry group include customersatisfaction and unique varieties of beverages and snacks. The food and beverage industry offersa wide variety of options for a consumer, and the specific company must please the consumer inorder to foster their success and growth. Customer satisfaction is vital in the success of acompany and at the end of the day that is what matters most.

There are also numerous key success factors that every major competitor must have in order tosurvive. To endure the crucial competitiveness within this industry companies must: be able tocompete with low prices, product diversity and meeting the consumer's wants and needs.Location is an essential factor in order for competitors to survive in the tough nature of this

industry. PepsiCo has an exclusive agreement with the fast food giants Taco Bell, KFC and PizzaHut to only sell Pepsi products. PepsiCo is exploiting its unique relationship with theserestaurants to gain more recognition and popularity for its various products. Another importantaspect of surviving in the food and beverage industry is the requirement to adequately advertiseproducts. By doing this, companies attract the attention of their prospective consumers andmaximize brand awareness. The more the consumers visually see the product, the more likelythey are to buy and use that specific product. Brand loyalty is vital to surviving in this industry.The companies' goal is to ultimately reach the point where their customers are consistently andfaithfully using their products.

E.Technology: What are the dominant technologies within your industry? What

changes in technology do you foresee in the next five years, and how will they affectyour industry?

The food and beverage industry relies primarily on two forms of technology, physical productiontechnology and Enterprise Resource Planning (ERP) systems. The industry's physical productiontechnology centers around high volume, high speed, large scale production. This form isessential to the industry because firms must take advantage of economies of scale in order toremain profitable in the face of small margins. Firms in the industry also have a particularaffinity for the latest and newest technology, all in hopes of gaining the slightest edge on thecompetition. The food and beverage industry also requires a method to manage its vastproduction systems, and this where ERP comes into play.

An ERP is an enterprise wide system that unifies all aspects of an organization. The ERP systemspans all the functional areas of an organization, and forms them all into one seamless andcohesive unit. ERP systems allow organizations to manage relationships with customers andvendors to help integrate them into the ERP system. This integration allows for the ease of valuechain management. Lastly, an ERP system allows firm managers and executives to extract andanalyze a wealth of information to make strategic decisions. This information is crucial to thefood and beverage industry because it allows the firms to quickly adapt to fickle consumer tastes.


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ERP systems also have a number of advantages specific to the soft food and drink industry. Foodsafety is a paramount issue to all firms within the industry and ERP systems allow specificbatches to be tracked and removed even after they have been shipped. This ability promotesresponsibility on the part of the firm which is an ever increasing factor in the minds ofconsumers. ERP are also essential for maintaining flexibility in times of economic uncertainty

and fluctuations in consumer demands.

In the next five years the industry will become increasingly dependent on ERP based systems. AsERP systems increasingly become the norm, all the major players within the industry will berequired to utilize them to remain competitive.

F. Best Case Scenario: Based on your research, for the industry what is the most

optimistic scenario you can support?

The compound annual growth rate of the carbonated soft drink market in the period 2007-2012 ispredicted to be 3.5%.

Under the best case scenario the price of the inputs, the raw materials integral to the companies,would continue to decrease. Commodities prices (oil, corn, sugar, wheat) have steadily decreaseduntil recently, from their all-time peaks in mid 2008. If this trend continues the leadingcompanies in the industry will improve their profit margins substantially.

The stock prices of the major players in the industry serve as a barometer of the companies'financial well-being. The average five-year return for a publicly-held company in the beverageand food manufacturing industry was -5.3% and -5.8%, respectively. The ROA of an averagecompany in the soft drink and food manufacturing industry ranged from 4.2% to 6.8%. Bycontrast, PepsiCo and Coca-Cola both have consistently realized double-digit returns on their

ROA and ROE figures. Both of these companies are benefitting highly from economies of scaleand will benefit most from a best case scenario.

Another favorable scenario for PepsiCo would involve the acquisition of a beverage or processedfood manufacturer for book value or below. This scenario is somewhat realistic due to the factthat many smaller snack companies incurred sizeable debt obligations in the mid 90s when theU.S. economy was thriving. These same companies are experiencing smaller profit margins dueto higher commodities prices and increasing competition from giants such as Frito-Lay. All thesefactors combine to make the smaller companies prime targets for acquisition for PepsiCo. Pepsialso favors partnerships as a method of controlling risk when entering new markets.

G. Worst Case Scenario: Based on your research, for the industry what is the worstset of circumstances that you can envision? What evidence do you have to support this

scenario?

All of the companies in the soft drink and food manufacturing industry are heavily dependent onlogistics management to efficiently execute their day-to-day operations. In a worst case scenariothe price of a highly integral input, in this case oil, would increase dramatically within a shortperiod of time. This very scenario occurred when petroleum prices began their ascent in 2005


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and peaked in mid 2008. The increase in oil price would also cause a drastic rise in the price ofcommodities. Both of these factors would combine to take a heavy toll on the industry. If thisscenario were to repeat in the current recessionary landscape the companies with the weakerfinancial profiles would suffer most. The contributory factors would be the decrease in consumerdiscretionary spending, the shortage of loan instruments, and the capitulation in the capital

markets.

Another equally dismal scenario for PepsiCo would be product contamination or producttampering. This very scenario occurred to Tylenol and it never recovered from the bad press. Italso occurred to both PepsiCo and Coca-Cola in India. Their respective products were evenbanned in some Indian states for a short while. The culprit in this instance was pesticidecontamination. On a related note, Frito-Lay, sensing the public's mistrust of genetically modifiedproduce, instructed its suppliers to refrain from using genetically modified corn. If it had notdone so it is highly probable that the snack food giant would have suffered a public relationsnightmare.

Read more: http://www.bukisa.com/articles/211702_industry-analysis-pepsico#ixzz1HLecd7wM

Strategy adopted by the organization

When the "You're in the Pepsi Generation" advertising campaign launched in 1963, it may havebeen the first time a brand was marketed primarily with an association to its consumers'aspirational attitudes. A decidedly youth-oriented strategy, the campaign hoped to hook youngBaby Boomers while they were still young. In 1984 Pepsi launched another long-runningcampaign, "The Choice of a New Generation," and in 1997 they debuted the "GeneratioNext"concept.

The newest campaign slogan, introduced this year, is "More Happy," which definitely coincideswith one concrete example of "more" in the packaging of Pepsi products todaymore designs.Many more. At least 35 distinct design ideas will grace the packaging of Pepsi's cans and bottlesthis year alone, and this design strategy may continue indefinitely.

Though not "generational" in word, the campaign certainly has a youth-oriented feel withpackage designs, advertising, and websites that are fun and playful. PepsiCo worked closely withPeter Arnell and Arnell Group, based in New York City, to devise a comprehensive new strategythat would connect with Pepsi's core consumers. Arnell reinvented the Pepsi package as ameaningful and appealing communications tool for the latest generation of youth that are notoverwhelmed by media, music, or digital distractions.


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Experiental packaging

Arnell Group (a wholly-owned subsidiary of Omnicom Group) is a design and brand creationfirm specializing in experiential design and product innovation, preferring to take completebranding and packaging projects from first concept to complete market solutions. Peter Arnell,

currently chairman and chief creative officer of Arnell Group, formed the Arnell GroupInnovation Lab in 1999 to place invention and innovation at the forefront in a collaborativelaboratory for corporations interested in designing for next generation products and experiences.Arnell applied many of his philosophies in the Pepsi project.

"Peter has taken a classic and turned it into a modern, innovative, and relevant marketing andcommunications tool," said Ron Coughlin, chief marketing officer, beverages, PepsiCoInternational. The new global look launched in February with eight new package designs acrosscans and bottles, and the campaign is unfolding in a similar manner overseas. The can designsroll out one at a time approximately three weeks apart to enhance the anticipation of discoveryand to pique the interest of collectors.

"Product innovation today must be driven by deep consumer meaning and connectivity," saysArnell. "It is less about unmet needs and more about giving people what they haven't asked forbut are dying to have. Using design to turn packaging into personal consumer-powered mediahelps create the ultimate supportive and inspiring relationship between Pepsi and its youthaudience."

Thinking globally

The Pepsi can designs roll out one at a time, but the two-liter Pepsi bottles will have three

or four designs out at any given time.

Mike Doyle, creative director at Arnell Group, explains that there was a great depth ofexploration and research that was conducted before even beginning to formulate a new Pepsipackaging strategy. PepsiCo and Arnell Group traveled extensively to emerging markets to findkey consumer product drivers for youth cultures and to learn how the Pepsi brand was perceivedin different countries.

They found, somewhat surprisingly, that there were very few differences around the world inhow consumers felt about Pepsi's fun, effervescent brand image. "The brand equity is really

consistent," says James Miller, marketing director, Pepsi-Cola North America. They also foundmany consistencies in youth cultures around the world in how today's youth is preoccupied withnewness, discovery, and personalization of their possessions. Miller describes the designcampaign's goal as "sustainable discovery," where the consumer audience is constantly intriguedand engaged.

Designers at Arnell Group created the dozens of new and vibrant designs with only a handful ofblue and gray shades. Each design tells a story of sorts and each can design has a unique website


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address on the side of the can. The first one on the "Your Pepsi" can allows web users to design adigital billboard that will appear in Times Square, and one coming shortly will allow users tomix their own music online.

"We redefined packaging as media in the marketplace for Pepsi," says Doyle. "It speaks to youth

in their language." Doyle believes that the designs succeed because they are able to capture theaudience's mind space. "The designs are reflecting back to the culture instead of talking to theculture or imposing on it."

Reassuringly Pepsi

Pepsi actually asked their loyal consumers what brand elements would have to remain so thatthey would be intuitively reassured that their favorite drinks were not changing and the brandthey trusted was still essentially the same. Their answer was direct and consistent. Pepsi-loversneeded to see three elements for surethe Pepsi "globe," the iconic Pepsi blue, and the familiartilted Pepsi capital letters.

Arnell Group updated the primary logo substantially and cleverly without really redesigning itskey elements. The most recent logo design had the Pepsi wordmark on top of and slightlyoverlapping the iconic Pepsi red-white-and-blue "globe." On the previous can design, thewordmark wrapped halfway around the can, and the globe was off-center. The new cans andbottles have un-bundled the word and globe, making the newly centered globe more of the hero,and the smaller Pepsi wordmark less prominent.

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