PepsiCo, Inc. · NASDAQ:PEP
PepsiCo — Sanford Bernstein Strategic Decisions Conference 2013
34 slides from PepsiCo's conference presentation, May 29, 2013
Slide 1: Built for Consistent, Durable Performance and Returns
Built for Consistent, Durable Performance and Returns Sanford Bernstein Strategic Decisions Conference May 29, 2013 Indra Nooyi Chairman and Chief Executive Officer
Slide 2: Safe Harbor Statement of Terms & Non-GAAP Information
Safe Harbor Statement of Terms & Non-GAAP Information Note: This presentation should be viewed in conjunction with PepsiCo’s presentation at the Sanford Bernstein Strategic Decisions Conference on May 29, 2013 and PepsiCo’s 8-K filed with the Securities and Exchange Commission on May 29,2013. Safe H
Slide 3: PEP: Portrait of a Consistent, Durable CPG
PEP: Portrait of a Consistent, Durable CPG Revenue $65B Organic Revenue Growth 5% Core Operating Margin 15% Core Net ROIC 15% 10 Year EPS CAGR 9% 10 Year Dividends Per Share CAGR 14% 10 Year Cumulative Cash Returns $53B All figures are for the year 2012. Certain of the above items represent non-GAAP
Slide 4: Delivered Strong Shareholder Returns
Delivered Strong Shareholder Returns Annualized Total Shareholder Return (%) 5-Year 10-Year +140 bps +90 bps +170 bps 9.3 +150 bps 8.4 7.9 6.9 5.4 5.2 PEP DJIA S&P 500 PEP DJIA S&P 500 The total shareholder return for PepsiCo and the S&P 500 and Dow Jones Industrial Average indices include dividends
Slide 5: Transformed PepsiCo for Durability
Transformed PepsiCo for Durability Eight Macro Trends How We Transformed to Thrive 1. Global growth shifting to D&E markets • Invested to increase D&E market participation 2. Consumer base changing • Increased permissibility of FFY products/ Stepped up focus on GFY products 3. Increasing preoccupati
Slide 6: We're Positioned to Deliver Top-Tier Long-Term Performance
We’re Positioned to Deliver Top-Tier Long-Term Performance Long-Term Goals Top Tier TSR • Revenue Growth MSD, • Core, Constant Currency • Core MOCF growth mostly Organic EPS HSD = Net Income growth • Balanced offerings between • Operating Margin • Strong returns to FFY, BFY, GFY +30-50 bps / year sh
Slide 7: Today's Agenda: Roadmap to Achieve
Today’s Agenda: Roadmap to Achieve • Revenue Growth • Margin and Profit Growth • Capital Allocation • Talent/ Culture • Go Forward Priorities 7
Slide 8: We have Terrific Positions in Growing Categories
We have Terrific Positions in Growing Categories • Projected global • Projected global growth 5% growth 5% Beverages • Strong #2 position • Clear #1 position Snacks 49% with leadership in • Leadership in many markets salty snacks; 51% • Compete broadly in opportunity to all LRB categories target oth
Slide 9: D&E Markets Positioned to Drive Disproportionate Growth
D&E Markets Positioned to Drive Disproportionate Growth D&E as % of Total Net Revenue Consumption Highly Correlated to GDP/Capita Emerging Developed Per Capita Consumption 35% 27% 10K 20K 2007 2012 GDP / Capita Source: Euromonitor 9
Slide 10: We've had Good Success Entering New Markets
We’ve had Good Success Entering New Markets Example: Uganda Beverages • Since 2003 – Volume ~20% CAGR – Volume market share +25 points • Key Initiatives – Strengthened bottling partner – Go-to-market improvement – Locally relevant innovation – Capacity investment 10
Slide 11: Our Brands are Iconic and Leaders in Their Categories
Our Brands are Iconic and Leaders in Their Categories Over 40 $250M-$1Bn Portfolio of 22 $1Bn Brands Brands 11
Slide 12: Our Brands are Important to Retailers
Our Brands are Important to Retailers PepsiCo Has 9 of the Top 40 Trademarks at Retail 1 15 29 2 16 30 3 17 31 4 18 32 5 19 33 6 20 34 7 21 35 8 22 36 9 23 37 10 24 38 11 25 39 12 26 40 13 27 14 28 52 Weeks Ending Dec 30, 2012, SymphonyIRI Group - Total Store Advantage, Total US – MultiOutletC 12
Slide 13: Strengthening Our Brands Through Increased Investment and New Capabilities
Strengthening Our Brands Through Increased Investment and New Capabilities • Focusing on 12 global mega brands • Increased overall investment • Focusing investment on direct consumer-facing media • Increasing weight and impact of digital • Developing new sub-brand platforms 13
Slide 14: Innovation Capability Strengthened
Innovation Capability Strengthened • Demand Moments framework • Increased investments in R&D • Created new design-led innovation capability • Cross-company visibility enabling lift & shift of ideas • Reverse innovation now an opportunity 14
Slide 15: Innovation: Recent Successes
Innovation: Recent Successes Trop 50 $200 million in retail sales annually Pepsi Next > $100 million in retail sales in one year Tropicana Farmstand Achieved 80 percent distribution YTD in grocery Doritos Locos Tacos 325 million sold in 9 months Achieved 87 percent distribution in C&G channel Mtn De
Slide 16: Revenue Management Flexibility Allows Us to Tailor to Channels
Revenue Management Flexibility Allows Us to Tailor to Channels, Occasions, Cohorts & Needstates • Packaging innovation • Precision assortment enabled by DSD • Maximize price value for different consumers • Offer more relevant price points everyday 16
Slide 17: Power of One Delivers Unique Top-Line Benefits
Power of One Delivers Unique Top-Line Benefits • PepsiCo is the largest branded F&B business in many of our key markets • Our presence in beverages supports our snacks growth • Snacks and beverages purchased and consumed together 17 Source: IRI, Euromonitor
Slide 18: Combination of Product and Geographic Portfolios Provides Balanced Top-Line Growth
Combination of Product and Geographic Portfolios Provides for Balanced Top-Line Growth Category Geography Growth Rate % of Revenue % of Growth Growth Rate % of Revenue % of Growth LSD-MSD LSD-MSD ~1/3 ~1/3 49% 65% MSD HSD-LDD ~2/3 ~2/3 Beverages 51% Developed 35% Snacks Developing & Emerging Mid-Sin
Slide 19: Combination of Product and Geographic Portfolios Provides Balanced Top-Line Growth
Combination of Product and Geographic Portfolios Provides for Balanced Top-Line Growth Category Geography Growth Rate % of Revenue % of Growth Growth Rate % of Revenue % of Growth LSD-MSD LSD-MSD ~1/3 ~1/3 49% 65% MSD HSD-LDD ~2/3 ~2/3 Beverages 51% Developed 35% Snacks Developing & Emerging Deliver
Slide 20: Today's Agenda: Roadmap to Achieve
Today’s Agenda: Roadmap to Achieve • Revenue Growth • Margin and Profit Growth • Capital Allocation • Talent/ Culture • Go Forward Priorities 20
Slide 21: Our Operating Model Provides Cost Leverage Across the Value Chain
Our Operating Model Provides Cost Leverage Across the Value Chain Procurement Sustainability 1% Fleet Charge Finished Waste Portfolio Compaction Automation & Technology GTM Strategy 21
Slide 22: We've Strengthened Our Business Systems Leveraging Scale of Our Partners
We’ve Strengthened Our Business Systems Leveraging Scale of Our Partners Partners Provide Added ‘System’ Scale International PEP Beverage Scale RMS to Largest Competitor PEP System Scale ~2x PEP Company Scale Company RMS to System RMS to largest competitor largest competitor Source: Mars & Co “Syste
Slide 23: Doubled Our Historic Productivity
Doubled Our Historic Productivity Doubled Annual Productivity ($ million) From: 1,000 To: • Decentralized, largely • Centrally coordinated supply chain focused global best practice driven 500 • Buttressed by • Supported by periodic management multi-regional reorganizations business restructuring Pre
Slide 24: Further Leveraging Our Global Enterprise to Deliver Additional Productivity Savings
We’re Further Leveraging Our Global Enterprise to Deliver Additional Productivity Savings Incremental Productivity 2015+ • Global structure, common standards and greater visibility enabling next generation productivity • Changing processes to lower cost – R&D focused on reduced-cost design – Flexibl
Slide 25: Today's Agenda: Roadmap to Achieve
Today’s Agenda: Roadmap to Achieve • Revenue Growth • Margin and Profit Growth • Capital Allocation • Talent/ Culture • Go Forward Priorities 25
Slide 26: Our Businesses are Prolific Cash Generators
Our Businesses are Prolific Cash Generators Consistently Delivering ~90% MOCF Conversion from Net Income 90% 2005 2006 2007 2008 2009 2010 2011 2012 2013+ Note: The item above represents a non-GAAP financial measure that excludes certain items. Please refer to the “Reconciliation of GAAP and Non‐GAA
Slide 27: Long, Impressive Record of Returning Cash to Shareholders
We Have a Long, Impressive Record of Returning Cash to Shareholders 53 47 Cumulative cash returned to shareholders of more than $53B 41 over ten years 33 31 23 17 12 7 3 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Dividends Share Repurchase 27
Slide 28: Disciplined Capital Allocation to Drive Even Higher Return on Invested Capital
Disciplined Capital Allocation to Drive Even Higher Return on Invested Capital and Cash Returns to Shareholders Capital Allocation Priorities 1 Invest in the business ‒ Capital spending of no more than 5% of net revenue 2 Pay dividends ‒ Increased dividend for 41 consecutive years 3 Strengthen posit
Slide 29: Today's Agenda: Roadmap to Achieve
Today’s Agenda: Roadmap to Achieve • Revenue Growth • Margin and Profit Growth • Capital Allocation • Talent/ Culture • Go Forward Priorities 29
Slide 30: Strengthening Our Business by Building Talent and Reinforcing Culture
Strengthening Our Business by Building Talent and Reinforcing Culture • Globalizing knowledge – Innovation – Brand-building Talent – R&D – Supply Chain • Augmenting team with key external talent • Reinforced culture of execution • Incentives designed to drive value creation – Market share – Operatin
Slide 31: Today's Agenda: Roadmap to Achieve
Today’s Agenda: Roadmap to Achieve • Revenue Growth • Margin and Profit Growth • Capital Allocation • Talent/ Culture • Go Forward Priorities 31
Slide 32: Our Priorities
Our Priorities Developed Market Snacks Developed Market Beverages • Defend and grow share of salty snacks • Defend share and grow profitability • Grow organically into broader sustainably savory/sweet snacking • Exploit available productivity opportunities • Leverage beverage business to expand • Ex
Slide 33: We're Positioned to Deliver Top-Tier Long-Term Performance
We’re Positioned to Deliver Top-Tier Long-Term Performance Long-Term Goals Top Tier TSR • Revenue Growth MSD, • Core, Constant Currency • Core MOCF growth mostly Organic EPS HSD = Net Income growth • Balanced offerings between • Operating Margin • Strong returns to FFY, BFY, GFY +30-50 bps / year sh
Slide 34: PepsiCo
S PEPSICO
PepsiCo — Sanford Bernstein Strategic Decisions Conference 2013 on 6ix