Transcript - PepsiCo

FEBRUARY 23, 2012 / 3:30PM, PEP - PepsiCo at Consumer Analyst Group of New York ConferenceNow snacks and beverages as you know are often the largest categories in a store --we're either number one, number two or number three. Andbuyers of just carbonated soft drinks and snacks, those two products are bought together 30% of the time, generating $12 billion of revenue. Andretailers asked us consistently to increase that co-purchase. Why? Because of the margin and cash flow generated. And since we are number onein LRB north number one in salty snacks of course, they turn to PepsiCo to solve this riddle. Every point that we convert is worth $120 million to usand it's something we are maniacally focused against.Now as you know, we have been talking about power of one for some time, arguably about 13 years. But this idea was foundational when HermanLay and Don Kendall put the company together. And over the past 13 years we built customer teams, we've established perfect pairs for pricepromotion and we have done those occasional big holiday promotions. In all of this we'll remain in its foundational to what we do, but we thinkwe unlock the bigger idea.We took a step act and we started with a fairly basic question. How can we create a consumer identity across two of the largest brands in the world?In other words, is there a way to create an identity about which consumers would think of the brands together every day of the year, not just fouror five big promotional timeframes? Well if you happen to go to Indianapolis for the Super Bowl, you saw it in full force. We launched our identityjust in time. It's a series of streamers that originate from the brands to bring together the celebration of what these two brands can do it together.In this case, creating a great football experience.We'll be using this branding across our brands across multiple occasions, birthday parties, but all,whatever that may be. Different cohorts -- Hispanic versus boomers. And we will be launching an integrated media campaign this summer, digitaland outdoor billboards.We've standardized a toolkit for our sales teams all across the country, 72 hours point click and shoot in the store, customizedto that local market, using these identities. And beginning early summer this identity will be unavoidable. It will be on our permanent equipment.It will be on our temporary equipment. And it will be, as I said in the media and the marketplace.We think the identity allows us to bring togetherthe co- purchase of these brands and maintain the uniqueness of each individual brand. This is an idea that doesn't play just in retail. We thinkthere's a big application and food service.As many of you know, food service accounts are often big jump balls between two big companies like Pepsi and our competitor.That increasinglyfood-service is turning to us to help them build out their food service offering through food, like Doritos and Lay's and Quaker oatmeal. Case inpoint,Taco Bell.Now, you know that Taco Bell has been a terrific beverage partner of ours for many years and Taco Bell came to us and said our consumer is thesame as your Doritos consumer. Surely there's a way that we can come together and create a branded product in store. Doritos Loco's Tacos arerolling nationally right now. It's a huge idea. It's a taco that plays off the great taste experience the crunch of a Dorito with that great Dorito nachocheese taste and it's complete with that the messy orange stuff on your fingers, too, OK? It's launching nationally. Taco Bell thinks it may be oneof their biggest ideas for 2012, and I'll share with you quickly just a 15-second teaser ad that they just launched on American Idol, where one of ourcompetitors happens to be sometimes. And here is the ad that just ran.[video playing]John Compton - PepsiCo - CEOThat's a big idea. And there's many other ideas like that that we are working on.Now finally, beyond retail and food service, we do recognize the consumer remains cash craps. We are aware that gasoline prices could be $4 or$5 this summer and by leveraging the scale of our portfolio through this common identity will be launching [$100] of value during the course ofthe year to bring together our brands uniquely and remind her that PepsiCo brands uniquely can help her in a pretty tough environment rightnow.So, I hope you can take away today that we have a solid foundation from which to build and extend our undisputed leadership in macro snacks,that our global snack leadership in part is led by a continued successful Frito-Lay North American business that is increasingly learning from othermarkets around the world. And that we finally have a unique opportunity to brand, not price promote, brand, our beverage and snack rants togetherTHOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us7©2012 Thomson Reuters. All rights reserved. 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