Pepsi Strategy

Our mission is to be the world's premier consumer products

company focused on convenient foods 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 to act

with honesty, fairness and integrity.

In all of its business dealings with suppliers, customers and

competitors, PepsiCo will:

Ð'* Compete vigorously and with integrity.

Ð'* Treat all customers and suppliers honestly, fairly and

objectively.

Ð'* Avoid any unfair or deceptive practice and always

present our services and products in an honest and

forthright manner.

Ð'* Never comment on a competitor's product without a good basis

or need for such statements.

Ð'* Make clear to all suppliers that we expect them to compete fairly and

vigorously for our business, and endorse the principles in our Code of

Conduct. We will select our suppliers strictly on merit.

Ð'* Comply with all laws prohibiting agreements with competitors to: fix prices or

other sales terms; divide or assign sales territories, customers or product lines; or

coordinate bids and agreements with customers to fix their resale prices. These

types of agreements are generally illegal in the United States and

many other markets where we conduct business.

g l o b a l r e l a t i o n s

PepsiCo firmly believes that international commerce

strengthens stability and peace by fostering economic growth,

opportunity and mutual understanding. As a global enterprise,

we recognize our responsibility to act in concert with the

legitimate interests of the countries in which we do business. We

obey all laws and regulations and respect the lawful customs of host countries. Our objective is to be a good corporate citizen wherever we operate.

E N V I R O N M E N T

PepsiCo is committed to being an environmentally responsible

corporate citizen. We are committed to minimizing the impact of our businesses on the environment with methods that are socially

responsible, scientifically based and economically sound. We

encourage conservation, recycling and energy use programs that

promote clean air and water and reduce landfill wastes.

Comparison To Industry & Market (2006)

Company Industry

Median Market

Median1

Price/Sales Ratio 3.38 1.00 1.76

Price/Earnings Ratio 20.78 21.00 16.31

Price/Book Ratio 7.76 2.18 1.68

Price/Cash Flow Ratio 18.21 10.18 10.58

1 Public companies trading on the New York Stock Exchange, the American Stock Exchange, and the NASDAQ National Market.

Detailed Comparison Data

Top Competitors

Cadbury Schweppes Coca-Cola Kraft Foods

Annual Sales ($ mil.) 14,550.2 24,088.0 34,356.0

Employees 67,011 71,000 90,000

Market Cap ($ mil.) -- 151,312.5 50,593.3

Industries Where PepsiCo Competes

Ð'* Beverages

o Nonalcoholic Beverages

 Carbonated Beverages (primary)

Ð'* Food

o Canned & Frozen Foods

o Grains

Industry Overview

The soda drink and bottled water industry in the US includes about 3,000 companies that manufacture and distribute beverages, with combined annual US revenue of $70 billion. Coca-Cola and PepsiCo hold more than 50 percent of the market, following strong consolidation in the past decade. Only a few other companies have annual revenue above $500 million. Most are local or regional manufacturing and bottling operations with annual revenue under $100 million.

Marketing

A large advertisement made to resemble a Pepsi cup at the Mall of America.

The first of many new designs of Pepsi cans were released in 2007.

In 1975, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up a blind tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the majority of participants picked Pepsi as the better tasting of the two soft drinks. PepsiCo took great advantage of the campaign with television commercials reporting the test results to the public.[6].

In 1996, PepsiCo launched the highly successful Pepsi Stuff marketing strategy. By 2002, the strategy was cited by Promo Magazine as one of 16 "Ageless Wonders" that "helped redefine promotion marketing."[7]

In 2007, PepsiCo redesigned their cans for the fourteenth time, and for the first time, included more than thirty