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Coca-Cola Amatil (CCA) manufactures, distributes and markets carbonated soft drinks, still and mineral waters, fruit juices, coffee and other alcohol-free beverages. The company also distributes alcohol-based beverages through its joint venture company Pacific Beverages. It is also involved in processing and marketing of fruits, vegetables and other food products. The company operates in Australia, New Zealand, Fiji, Indonesia and Papua New Guinea. It is headquartered in Sydney.¹⁵⁷

The beverage business consists of non-alcoholic and alcoholic businesses. The company, through its non-alcoholic beverage business, manufactures, distributes and markets carbonated soft drinks.¹⁵⁸

The company’s sparkling beverages brands include: Coca-Cola, Diet Coke, Coca-Cola Zero, Sprite, Sprite Zero, Fanta, Lift, Deep Spring Natural Mineral Water, Appletiser, Grapetiser, Kirks, and Bisleri. Its still beverages brands include: Mount Frankling Lightly Sparkling Water, Pump, Pumped, Vitamin water, PowerAde Light, PowerAde Isotonic, Nestea, Neverfail Spring Water, Goulburn Valley, Goulburn Valley dairy co., Goulburn Valley fruity drink, Fruitbox, Grinders, and Peats Ridge Springs. The company's alcoholic beverages brands are Peroni Italy, Bluetongue, Miller, Russian standard vodka, Grolsch, Pisner Urgwell, Peroni Leggera, The Macallan, Canadian Club, Maker’s Mark, The Famous Grouse, Souza, Highland Park, Bols Amsterdam, Cockburns, Harveys Bristol cream, Basil Haydens, Oldcrow, Galliano, Bbakers, Millerchill, Bookers, and Tamdhu. Its food (SPC Ardmona) brands include: SPC, Goulburn valley, Ardmona, IXL, and Taylors.¹⁵⁹

The company recorded revenues of A$4,609.4 million (approximately $4,240.4 million) in the fiscal year ended December 2010, an increase of 1.1% over 2009. The company's operating profit was A$844.9 million (approximately $777.3 million) in fiscal 2010, an increase of 7.3% over 2009. Its net profit was A$497.3 million (approximately $457.5 million) in fiscal 2010, an increase of 10.8% over 2009.¹⁶⁰

Coca-Cola was introduced to Australia in the 1930s. In 1964, British Tobacco Company (Australia) purchased a controlling interest in Coca-Cola Bottlers (Perth).¹⁶¹

AMATIL changed its name to Coca-Cola Amatil (CCA) in 1989, and the Coca-Cola Company became CCA's major shareholder.¹⁶²

CCA expanded in South East Asia with the formation of joint ventures with the Indonesian Tirtalina Group and the Indonesian Pan Java Group in 1991. In the following year, the company sold its Snack Foods Division to United Biscuits of the UK. The company opened its new plant at Richlands in Brisbane, Australia in 1994.¹⁶³

CCA acquired Rio Beverages in New Zealand in order to increase its exposure to the juice and lifestyle beverages segments in New Zealand and Australia, in 2002. In the same year, the company acquired Pacific Beverages; and CCA sold its PET manufacturing assets for approximately $157 million.¹⁶⁴

In 2003, CCA acquired Neverfail Springwater, a specialist in the delivery of bulk water to Australian homes and offices; and Peats Ridge Springs.¹⁶⁵

CCA opened an automated materials handling facility in Mentone, Victoria and also purchased Crusta Fruit Juices in Australia along with its subsidiary, Quenchy Crusta Sales, a cold chain distribution company, in 2004. In the same year, CCA acquired Quirk's Refrigeration.¹⁶⁶

The company purchased the Northern Territory soft drink sales, distribution and production assets from Parmalat Australia in 2005. This acquisition made CCA the sole licensee of Coca-Cola products in Australia.¹⁶⁷

The company signed a new three-year agreement with the National Rugby League Partnership (NRL) in March 2010.¹⁶⁸

Brands - Sparkling beverages: Coca-Cola Diet Coke Coca-Cola Zero Sprite, Sprite Zero, Fanta Lift Deep Spring Natural Mineral Water Appletiser, Grapetiser Bisleri¹⁶⁹

Still beverages - Mount Frankling Lightly Sparkling Water Pump Pumped Vitamin water, PowerAde Light PowerAde Isotonic Nestea Neverfail Spring Water Goulburn Valley, Goulburn Valley Dairy Goulburn Valley fruity drink Fruitbox Grinders Peats Ridge Springs¹⁷⁰
Major competitors of Coca-Cola Amatil Ltd: National Beverage Corp. PepsiCo, Inc. Just Water International Limited¹⁷¹
According to Group Managing Director statement the Coca-Cola Amatil Ltd is focused on: effectively balancing pricing, volume growth and market share to improve our profitability and market position as well as infrastructure programs in expanding capacity, operational efficiency and cold drink coolers, as well as successful new product and package innovation.¹⁷²

CCA will continue to focus on executing its organic growth strategy. Company focus will be on efficiency, service and revenue gains right across the business. Investment in capacity and capability improvements, capacity expansion and the accelerated rollout of cold drink coolers. CCA’s major capital investment program continued to reduce operating costs and materially improve customer service levels in 2010, leading to higher returns for CCA’s shareholders.¹⁷³

Continue to grow the core Australasian business through further new product and package innovation, acceleration of our cooler placement programme and delivery of efficiency gains from Project Zero; Accelerate the growth of our Indonesian business with increased investment in one-way-pack production capacity and rollout of cold drink coolers into the market place; and continue to grow our share of the alcoholic beverages market in Australia and New Zealand.¹⁷⁶

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  10) MARKET DEFINITION: global beverages industry consists of total revenue generated through sales of beers, ciders, winesflavoured alcohol food beverages and spirits and also softdrinks.
  
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  Market value(11) Beverage manufacturers usually differentiate their products, meaning they can occupy different areas of the beverage industry at the same time, reducing their reliance on revenues from one product.
  
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  INDUSTRY PROFILE, Global Beverages, Reference Code: 0199-2014 Publication Date: May 2011, www.datamonitor.com,
  
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  Top 3 players in the AUS market – Coca-Cola, Asahi Brewery and PepsiCo. These 3 hold 54.9% of the total soft drink market Companies may choose one of two distribution channels; (1) intergrated buiness approach – selling reaty-tooncume drinks to retailers or adopt a business model where they sell raw materials to a network of bottling companies¹⁷⁸.
  
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  Australia’s resources boom boosted advertising spend- ing in 2010 to the pre-GFC levels of 2008. The strenght- ened economy helped Australia out-do markets globally and a market boom in August, with significant ad spend- ing during the federal election, ensured the Australian media market was surging¹⁷⁹.
  
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  Compared to 2009, the media market last year ampli- fied by an estimated 13% and remained strong, albeit at lowering percentage increases after mid-year.
  
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  Improved performances was key as the market started lifting in the second half and particularly in the last quar- ter of 2009¹⁸⁰.
  
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  On a year-to-date basis to November 2010 - adjusted to reflect equal numbers of weeks to 2009 - only five of the 39 major categories decreased¹⁸¹.
  
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  Among the top 20, which combined represented 89% of all media ad spending, only the Media category recorded a marginal 1% decline¹⁸²
  

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It is imperative for manufacturers to shorten the time to market so they can build their initial market share. Redbull's stranglehold in energy drinks is a prominent example of the benefits of first mover advantages. In the drinks industry, it is often the early bird that catches the worm.¹⁸³

Traditional cola was the baby-boomers' drink of choice when they were young. As obesity and other health concerns become more of an issue among aging boomers, manufacturers are racing to court and understand today's youth.¹⁸⁴

…a number of manufacturers have introduced new stevia products, including Coca Cola and PepsiCo.¹⁸⁵

[INTERNATIONAL/GLOBAL MARKET] The global beverages industry grew by 15% in 2010 to reach a value of $1,749,350.9 million. In 2015 the global beverages industry is forecast to have a value of $1,909,008.8mil. The compound annual growth rate of the industry period 2010-15 is forecast to be 1.8%. Market volume The global beverages industry grew by 13% in 2010 to reach a volume of 245,177.3 million Kg¹⁸⁶.

The compound annual growth rate of the industry in the period 2006–10 was 2.2%. Market volume forecast In 2015, the global beverages industry is forecast to have a volume of 262,286.5 million Kg, an increase of 7% since 2010. Market segmentation I - Beer, cider & FABs is the largest segment of the global beverages industry, accounting for 33.5% of the industry's total value¹⁸⁷.

Since the economic downturn, manufacturers have sought cost-effective packaging, which also helps differentiate products. There has been expansion in the use of newer substrates (such as RPET, PLA and other biodegradable plastics, barrier films and pouches). Innovative packaging shapes and designs are aimed at specific target consumers. Value added functional features have been introduced (i.e. re-closable can ends and pouches designed for vending applications), which are used to attract more customers¹⁸⁹.

Entrance to the industry could prove problematic when the large scale of leading incumbents and brand loyalty is taken into account, however substitutes are cheaper and just as popular with consumers, providing new entrants with an avenue to entrance. All of these factors increase rivalry between players. Entrance to this industry can be achieved by starting up a new company, an existing company diversifying operations or by the acquisition of an existing company. There is growing opportunity to enter the industry on a small scale by occupying a niche. In order to compete with leading incumbents, new entrants must operate on a large scale. This requires significant capital outlay, which poses a barrier to entry for some. Furthermore, leading incumbents have strong brands already present within the industry. Brand loyalty is key in this industry and can therefore provide increased competition¹⁹⁰.

SWITCHING COSTS aren’t high, leading companies such as Nestle have diversified operationse e.g Nestle producing tea and coffee as well as soft drink. Overall there is a moderate threat from alternatives! Industry Competition: The global beverage industry is fragmented with leading incumbents such as Coca-Cola, Pepsi Co, Nestle and Anheuser Busch holding. Moderate industry growth over recent years does little to reduce the level of rivalry, however developing markets in the middle east provide market players with viable expansion opportunities. Overall, there is a moderate degree of rivalry in this industry. 35.1% of the total industry value. The large number of industry players serves to increase rivalry. The main substitutes to soft drinks and alcoholic beverages are other beverages such as tea, coffee or milk. Products are easily differentiated with brand loyalty having key influence¹⁹¹.

Market share - The Coca-Cola Company is the leading player in the global beverages industry, generating a 16.3% share of the industry's value¹⁹².

Market rivalry

The global beverage industry is highly fragmented. The presence leading incumbents and lare numbers of market players boosts rivalry.

The global beverage industry is characterized by the presence of large companies such as PepsiCo and Coca-Cola.

Aus softdrinks generated tot revenues of $11 billion in 2010 representing compound annual growth rate (CAGR) of 3.3% for the period spanning 2006 – 2010. Carbonate sales are the most lucrative for the Australian soft drinks market in 2010 – generating total revenues of 6.6billion, equivilent to 59.9% of the overall market value. To reduce the threat of substitutes, big players offen have diverse product offerings e.g PepsiCo offers breakfast cereals and a range of soft drinks. Overall there is a moderate threat for substitutes¹⁹⁴.

Market Value The Australian Carbonated Soft Drinks market grew by 3.7% in 2001, to reach a value of $1,446 million. The compound annual growth rate of the market in the period 1996-2002 was 3.8%. The strongest growth was in 1997, when the market grew by 6.9%.The largest fall in the market was recorded in 2000, when the market shrank by (1.1%).

Market Segmentation I Cola is the largest sector of the Australian Carbonated Soft Drinks market, representing 72.3% of the market in value terms. Mixers is the smallest sector of the Australian Carbonated Soft Drinks market, representing 4.8% of the market in value terms. Market Share I Coca-Cola products account for the largest share of the Australian Carbonated Soft Drinks market, with 41.2% of the market in value terms. The top three brands in the Australian Carbonated Soft Drinks market (Coca-Cola, Diet Coke, Diet Pepsi) account for 64.7% of the market between them¹⁹⁵.

Market Distribution Off-trade accounts for the largest share of distribution in the Australian Carbonated Soft Drinks market, with 56.2% of the market in volume terms.

Market Forecast In 2006 the Australian Carbonated Soft Drinks market is forecast to reach a value of $1,703 million, an increase of 13.8% since 2002. The compound annual growth rate of the market in the period 2002-2006 is predicted to be 3.3%¹⁹⁶.

AUSTRALIAN CARBONATED SOFT DRINKS MARKET SHARES % BY VALUE DIAGRAM

AUSTRALIAN CARBONATED SOFT DRINKS MARKET DISTRIBUTION % BY VALUE DIAGRAM

AUSTRALIAN CARBONATED SOFT DRINKS MARKET VALUE FORECASTS % BY VALUE DIAGRAM

AUS BEVERAGE MARKET:

In Brief: Market value in Aus soft drinks grew by 3.3% in 2010 to reach value of $10,953 million. Market value forecast: In 2015 Aus soft drinks forecasted to vale $12,721.8mil. Market Volume: Aus soft drink market grew by 2.9% in 2010 to reach a volume of 4,649.7 million litres. Market volume forecast n 2015 for the Aus market = volume of 5,308.1 litres (increase of 14.2% since 2010). Market segmentation: carbonates is the largest segment of the soft drinks market in Aus accounting for 59.9% of the markets total value. Aus counts for 85% of the Asia Pacific soft drinks market value. Market Share: Coca-Cola Company is the leading player in the Australian soft drinks market, generating 39.4% share of the markets volume. Market Rivalry: Aus soft drink market = concentrated, top 3 players holding 54.9% of the total market volume. The market has the presence of leading players such as the coca-cola company, Asahi Breweries and PepsiCo¹⁹⁷.
While Australia continues to be one of the most optimistic developed markets globally; there is still pessimism clouding the year ahead as we juggle the good with rising interest rates, escalating debt levels, increasing utility costs and economic uncertainty with the recent change in leadership so close to the upcoming Federal Election¹⁹⁸.

ENVIRO FORCES

Threats to the industry may be reduced consumer spending in natural disaster states??

Commentators, including Princeton University’s Alan Blinder, estimate 40 million jobs could be at risk of being offshored over the next 20 years and suggest American workers should specialize in services that can be delivered face-to-face. In contrast, Jensen and Kletzer expect the process of globalization in services will proceed much as it has in manufacturing: They estimate only 15–20 million jobs are at risk of being offshored to low-wage, labor-abundant countries; approximately 40 percent of these jobs will be in the manufacturing sector, long considered “at risk”?¹⁹⁹.

http://www.iie.com/publications/interstitial.cfm?ResearchID=880
LEGAL
TECHNICAL

Pepsi has announced plans to produce its own vanilla-flavored cola, following the success of Coca-Cola's Vanilla Coke. Copycat competition is coming from own brand colas as well. Soft drinks makers need to shorten the time it takes to get new products to market so they can make the most of any first mover advantage. Pepsi is launching a vanilla-flavored cola drink to challenge Coca-Cola's rival product. The two companies are renowned for going head to head in the cola drink market where product imitations are commonplace and competition is aggressive. Coca-Cola launched Vanilla Coke in May last year. The product has proved successful - it has sold over 90 million cases in the US. These new developments in the soft drink market highlight the increasing threat of own label brands taking market share.²⁰⁰ Marketing practitioners are now faced with growing demands to show greater awareness and speed in planning product launches to reduce the threat of being pre-empted.²⁰¹

The buyer power of retailers is moderate. Supplier power isn’t great, as most inputs are readily available commodities. Would be difficult for new entrant to compete with brand strength and reach existing players – may be possible to achieve small scale success stressing unique production method or nutritional benefits. Even if new entrants opted for business model employing use of bottoling partners (eliminating much of the production process) there is still need to invest in manufacturing capacity in order to produce the concentrates²⁰⁵.

…advertainment is very costly and for smaller companies there are cheaper alternatives with proven success rates such as guerilla marketing.²⁰⁶

“For decades, Coca-Cola’s main competitor has been Pepsi. However, in recent years Coca-Cola has faced increasing competition from non-carbonated drinks such as tea, coffee, and fruit juices. This has been especially true in Japan. In response to this growing trend, Coca-Cola has developed a new product – green tea-flavored Coke. The product targets mainly health concious women in their 20s and 30s. In response to this product, Pepsi is planning on launching basil-flvaored Pepsi. As of right now these new products are going to be sold in Japan only, however if Coca-Cola’s new bevarage is met well by customers, it will be marketed in other countries such as the United States and countries in Western Europe.

Is it possible that the global bevarage market could see a major shift in the next decade? More consumers are becoming concious about the health threats that some carbonated drinks pose, and about the benefits from drinks such as green tea. Coca-Cola and Pepsi are taking steps to make some of their carbonated products more appealing to this segment of consumers. But will this trend be concentrated mostly in Asia, or will it be a truly global phenomenon?”²⁰⁷

(5) Costs to workers, families, firms and communities are exacerbated by the lack of national comprehensive strategy to deal with these economic disruptions. The collection of out-of-date/ inadequate programs provide too little assistance for those in need.

Workers are the first to feel negative consequences of economic restructuring due to increased domestic and international competition.

Designing a National Strategy for Responding to Economic Dislocation by Howard F. Rosen, Peterson Institute for International Economics Testimony before the Subcommittee on Investigation (pto) and Oversight House Science and Technology Committee
June 24, 2008 http://www.iie.com/publications/testimony/t

(16) There has been increased demand for organic products, including organic wines, spirits and beers. These specialty products can often be sold at a higher price.

INDUSTRY PROFILE, Global Beverages, Reference Code: 0199-2014 Publication Date: May 2011, www.datamonitor.com,
(19) Players in the Australian soft drink market need to distinguish their products to some extent by stressing the health benefits (esp’ juices and functional drinks) as well as taste.

Trend moving away from soft drinks and moving towards healthier healthier fruit juice and bottled water.

INDUSTRY PROFILE, Soft Drinks in Australia, Reference Code: 0125-0802, Publication Date: May 2011,
(29) Key insights from the 2010 Nielsen ShopperTrends

Report reveal that the profile of the Australian shopper

is evolving, and in order to succeed in the future, retailers and manufacturers will need to develop strategies that accommodate growing ethnicity, population increases and an ageing society. “From both a supplier and retailer point of view, it is important to understand how ethnicity impacts shopping patterns.”
ECONOMIC

Costs to workers, families, firms and communities are exacerbated by the lack of national comprehensive strategy to deal with these economic disruptions. The collection of out-of-date/ inadequate programs provide too little assistance for those in need.

Workers are the first to feel negative consequences of economic restructuring due to increased domestic and international competition²⁰⁸.

There has been increased demand for organic products, including organic wines, spirits and beers. These specialty products can often be sold at a higher price²⁰⁹.

Players in the Australian soft drink market need to distinguish their products to some extent by stressing the health benefits (esp’ juices and functional drinks) as well as taste.Trend moving away from soft drinks and moving towards healthier healthier fruit juice and bottled water²¹⁰.

Key insights from the 2010 Nielsen ShopperTrends

Report reveal that the profile of the Australian shopper

is evolving, and in order to succeed in the future, retailers and manufacturers will need to develop strategies that accommodate growing ethnicity, population increases and an ageing society. “From both a supplier and retailer point of view, it is important to understand how ethnicity impacts shopping patterns.”²¹¹

The Peterson Institute calculates that the US economy is approximately $1 trillion richer each year owing to past globalization—the payoff both from technological innovation and from policy liberalization—and could gain another $500 billion annually from future liberalization (Bradford, Grieco, and Hufbauer 2005 [pdf])²¹².

They expect these losses to be offset by job gains in high-wage activities from services exporting. The United States will retain its comparative advantage in high-skill, high-wage production and increase these activities in tradable service industries as trade barriers diminish. While the loss of low-wage activities that are offshored and the gain from high-wage service exports will cause dislocation, the globalization of services production is likely to have productivity-enhancing effects similar to the impact of globalization in the manufacturing sector, offering significant potential to improve living standards in the United States and around the world²¹³

The 2009 update of TAA addressed both of these major shortcomings (that the bill originally only covered workers in the production of goods not services and that it focused primarily onof the program and updated it in many small but important ways. Though it did not receive the attention it deserved, the 2009 TAA bill was one of the most important revisions of US worker adjustment legislation in decades²¹⁶.

Obama Administration extension of the TAA (Trade Adjustment Assistance) program due to a largely eclipsed debt-limit rancor. TAA provides training and other assistance to workers who lose their jobs due to foreign competition²¹⁷.

BS350 Strategic Marketing - Group Assignment RESEARCH

Competitor analysis research MASTER
Virgin Group: Jerome (Virgin Group)

Data from connect4:

Data from data monitor:

Data from google scholar:

Data from datamonitor360:

Data from annual reports:

 

Virgin Australia: Hannah (Virgin Cola)

Data from google scholar:

The Virgin Cola Company was a joint venture with the Canadian soft drink company Cott & Company, the world’s largest supplier of retailer own-brand soda drinks. Virgin Cola was introduced in the UK in 1994 and achieved

318

GCT15 10/26/2004 4:34 PM Page 318RICHARD BRANSON AND THE VIRGIN GROUP OF COMPANIES IN 2004

https://www.blackwellpublishers.co.uk/grant/docs/15Virgin.pdf

http://www.connect4.com.au.ipacez.nd.edu.au/products/ar/index.html

Set forth below is a line graph comparing, for the fiscal years ended the last day of February 2006, 2007, 2008, 2009 and 2010, the cumulative total stockholder return of the Company’s Class A Common Stock and Class B Common Stock, with the cumulative total return of the S&P 500 Index and a peer group index comprised of companies in the beverage industry (the “Peer Group Index”) (see footnote (1) to the graph). The graph assumes the investment of $100.00 on February 28, 2005 in the Company’s Class A Common Stock, the Company’s Class B Common Stock, the S&P 500 Index and the Peer Group Index, and also assumes the reinvestment of all dividends.

Comparison of Five-Year Cumulative Total Return

(1) The Peer Group Index is weighted according to the respective issuer’s stock market capitalization and is comprised of the following companies: The Boston Beer Company, Inc.; Brown-Forman Corporation (Class A and Class B Shares); Coca-Cola Bottling Co. Consolidated; The Coca-Cola Company; Coca-Cola Enterprises Inc.; Diageo plc; LVMH Moet Hennessy Louis Vuitton; Molson Coors Brewing Company (Class B Shares); PepsiCo, Inc.; and PepsiAmericas, Inc.

The stock price performance included in this graph is not necessarily indicative of future stock price performance. The Company neither makes nor endorses any predictions as to future stock performance.
_Data Data from datamonitor360:(Already included in research document [diagrams and tables etc]).ß

PepsiCo, Inc.

Company Profile

Publication Date: 11 Jul 2011

www.datamonitor.com

COMPANY:

The company’s headquaters employs 294,000 people.

(FY2010), an increase of 33.8% over 2009. The operating profit of the company was $8,332 million

in FY2010, an increase of 3.6% over 2009. The net profit was $6,320 million in FY2010, an increase

of 6.3% over 2009.

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  Pepsi has 41 brand names
  
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  Is constantly struggling with there leading competitior Coke-cola
  
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  Epsi holds a 37.5% share in the carbonated drinks market (Coke 42.9%)
  
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  Founded as a bottling company in the 1800’s.
  
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  PepsiCo’s long-term success has been attributed to their domination of the market and superior reputation for being a stable, quality brand name.
  
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  Advertising efforts first marketed Pepsi-Cola as a bargain brand
  
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  After changing hands four times and declaring bankruptcy twice in the first part of the 20th century, Pepsi shifted its focus from bargain brand promotions to advertising geared toward young people—this is where the “Pepsi Generation” marketing plan originated from.
  
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  PEST ANALYSIS
  

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  New regulatory pressures regarding health concerns and other global concerns have forced companies in the food/beverage industry to take on new challenges and reevaluate their products to meet new consumer demands,
  
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  PepsiCo has developed a Blue Ribbon Advisory Board, made up of leading health and wellness experts and third-party advisors from across the globe in order to help the corporation face these newly strengthened consumer demands. Furthermore, PepsiCo has recently worked alongside the Clinton Foundation, American Heart Association, and the North American beverage industry in order to set policies regarding placement of the correct products in the correct areas.
  

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  The major economic issue facing PepsiCo and its subdivisions is the rising input costs of their businesses due to structural inflation. Agricultural, energy, and some metal industries are going through periods of steady inflation.
  
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  Because PepsiCo relies on these industries, inflation costs must be factored into their cost equations. The corporation acknowledges its fortunate ability to navigate through tough economic times in the past.
  

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  Social environment of food service markets are changing significantly. A new demand for healthy food and beverages coupled with a push towards green operations and environmentally-friendly company management has changed the social playing field within most markets.
  
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  PepsiCo and PBNA have successfully adopted new goals and produced new products in order to follow these growing trends. Not only has PBNA recently began to offer new products such as Diet Pepsi Max, a cola with zero calories, sugars, carbohydrates, or Total Fat, but it has also added new lines of product in order to meet this more health-conscious market.
  
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  TECHNOLOGY:
  
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  PepsiCo and its subdivisions utilize technology in order to sustain company growth, keep up with the demands of its sustained growth, and perform efficiently.
  
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  PepsiCo’s delivery systems provide a strong competitive advantage. In particular, their most powerful distribution system, Directstore-delivery (DSD) allows them to supply all of their retailers and customerdistributors with up-to-date stock. “Directstore-delivery allows us to create maximum appeal and visibility for our brands and support in-store promotions. DSD works well for popular 7 products we restock often, because it allows us to distribute new products quickly. Our DSD system reaches hundreds of thousands of retail outlets this way, from neighborhood convenience stores to large-format supermarkets” (Annual Report, 11).
  

http://www.pepsico.com/Company/Our-Mission-and-Vision.html

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

Our Mission

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 a truly sustainable company. Data from PepsiCo.com/Annual Report 2012

http://www.pepsico.com/Company/Our-Mission-and-Vision.html

Performance with Purpose

At PepsiCo, we're committed to achieving business and financial success while leaving a positive imprint on society - delivering what we call Performance with Purpose.

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

Learn more about Perfor

Data from annual reports:

http://www.pepsico.com/Download/PepsiCo_Annual_Report_2010_Full_Annual_Report.pdf

“Good for all… is good for business”

At PepsiCo, Performance with Purpose means delivering sustainable growth by investing in a healthier future for people and our planet. As a global food and beverage company with brands that stand for quality and are respected household names — Pepsi-Cola, Lay’s, Quaker Oats, Tropicana and Gatorade, to name but a few — we will continue to build a portfolio of enjoyable and healthier foods and beverages, find innovative ways to reduce the use of energy, water and packaging, and provide a great workplace for our associates. Additionally, we respect, support and invest in the local communities where we operate, by hiring local people, creating products designed for local tastes and partnering with local farmers, governments and community groups. Because a healthier future for all people and our planet means a more successful future for PepsiCo. This is our promise.
Other subhadings of the report inc:

“Providing people with choices… is good for business.”

“Supporting our planet… is good for business.”

“Investing in our people… is good for business.”

“And good business… Is good for all.”

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  +33% Net revenue grew 33 percent on a constant currency basis.1
  

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  + 7% Raised the annual dividend by 7 percent.
  

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  + 23% core division operating profit rose 23% on a constant currency basis
  

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  +12% core ESP grew 12 percent on a constant currency basis (Core earnings per share; 2008 - $3.68, 2009 - $3.71, 2010 - $4.13).
  

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  +23% management operating cashflow, excluding certain items, reached $8.9billion, up 23 percent. (Management operating cash flow, excluding certain items [in millions]: 2008 - $4,831, 2009 - $5,583, 2010 - $6,892).
  

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  $119 billion estimated worldwide retail sales.
  

2010 Snapshot

Net Revenue1 +33%

Division Op. Profit1 +23%

EPS2 +12%

Mgmt OCF1 +23%

Annual Dividend +7%

₌

Values of PepsiCo include:

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  Human Sustainability
  

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  increase the amount of whole grains, fruits, vegetables, nuts, seeds and low-fat dairy in our global product portfolio,
  
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  reduce the average amount of saturated fat per serving in key global food brands, in key countries, by 15% by 2010, compared to 2006 as a baseline,
  
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  display calorie count and key nutrients on our food and beverage packaging by 2012.
  

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  Performance
  

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  sustain and improve brand equity scores for PepsiCo’s 19 billin-dollar brands in the top 10 markets
  
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  rank in the top two suppliers in customer (retail partner)surveys where third party measures exist
  
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  continue to expand division operating margins
  
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  increase cash flow in proportion to net income growth over three-year windows.
  

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  Environmental sustainability
  

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  to improve our their water use efficiency by 20% per unit of production by 2015,
  
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  Provide access to safe water to three million people in developing countries by the end of 2015,
  
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  Reduce packaging weight by 350 million pounds – avoiding the creation of one billion pounds of landfill waste by 2012,
  
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  Work to eliminate all solid waste to landfills from our production facilities.
  

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  Talent sustainability
  

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  Ensure high levels of associate engagement and satisfaction as compared with other fortune 500 companies,
  
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  Foster diversity and inclusion by developing a workforce that reflects local communities,
  
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  Encourage our associates to lead healthier lives by offering workplace wellness programs globally.
  

• 
  Our primary customers include wholesale distributors, grocery stores, convenience stores, mass merchandisers, member- ship stores, authorized independent bottlers and foodservice distributors, including hotels and restaurants.
  
• 
  We normally grant our independent bottlers exclusive contracts to sell and manufacture certain beverage products bearing our trademarks within a specific geographic area.
  
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  These arrangements provide us with the right to charge our independent bottlers for con- centrate, finished goods and Aquafina royalties and specify the manufacturing process required for product quality.
  

Prior to our acquisitions of PBG and PAS on February 26, 2010, we had noncontrolling interests in these bottlers. Because our ownership was less than 50%, and since we did not control these bottlers, we did not consolidate their results. Instead, we included our share of their net income based on our percentage of economic ownership in our income statement as bottling equity income. On February 26, 2010, in connection with our acquisi- tions of PBG and PAS, we began to consolidate the results of these bottlers. Our share of the net income of Pepsi Bottling Ventures LLC (PBV) is reflected in bottling equity income. Our share of income or loss from other noncontrolled affiliates is recorded as

a component of selling, general and administrative expenses. See Note 8 for additional information on these related parties and related party commitments and guarantees.

Our Distribution Network

Our products are brought to market through DSD, customer warehouse and foodservice and vending distribution networks. The distribution system used depends on customer needs, prod- uct characteristics and local trade practices.

Our Competition

Our businesses operate in highly competitive markets. We compete against global, regional, local and private label manu- facturers on the basis of price, quality, product variety and distribution. In U.S. measured channels, our chief beverage competitor, The Coca-Cola Company, has a larger share of CSD consumption, while we have a larger share of liquid refreshment beverages consumption. In addition, The Coca-Cola Company has a significant CSD share advantage in many markets outside the United States. Further, our snack brands hold significant leadership positions in the snack industry worldwide. Our snack brands face local, regional and private label competitors, as well as national and global snack competitors, and compete on the basis of price, quality, product variety and distribution. Success in this competitive environment is dependent on effective pro- motion of existing products, the introduction of new products and the effectiveness of our advertising campaigns, marketing programs and product packaging. We believe that the strength of our brands, innovation and marketing, coupled with the quality of our products and flexibility of our distribution network, allow us to compete effectively.

Other Relationships

Certain members of our Board of Directors also serve on the boards of certain vendors and customers. Those Board members do not participate in our vendor selection and negotiations nor in our customer negotiations. Our transactions with these vendors and customers are in the normal course of business and are con- sistent with terms negotiated with other vendors and customers. In addition, certain of our employees serve on the boards of PBV and other affiliated companies and do not receive incremental compensation for their Board services.

Changes in the legal and regulatory environment could limit our business activities, increase our operating costs, reduce demand for our products or result in litigation.

The conduct of our businesses, and the production, distribu- tion, sale, advertising, labeling, safety, transportation and use of many of our products, are subject to various laws and regulations administered by federal, state and local governmental agencies in the United States, as well as to foreign laws and regulations administered by government entities and agencies in markets

in which we operate. These laws and regulations and interpre- tations thereof may change, sometimes dramatically, as a result of political, economic or social events. Such regulatory envi- ronment changes may include changes in: food and drug laws; laws related to advertising and deceptive marketing practices; accounting standards; taxation requirements, including taxes specifically targeting the consumption of our products; competi- tion laws; privacy laws; and environmental laws, including laws relating to the regulation of water rights and treatment. Changes in laws, regulations or governmental policy and the related interpretations may alter the environment in which we do busi- ness and, therefore, may impact our results or increase our costs or liabilities.

Governmental entities or agencies in jurisdictions where we operate may also impose new labeling, product or production requirements, or other restrictions. For example, studies are underway by various regulatory authorities and others to assess the effect on humans due to acrylamide in the diet. Acrylamide is a chemical compound naturally formed in a wide variety of foods when they are cooked (whether commercially or at home), including french fries, potato chips, cereal, bread and coffee.

It is believed that acrylamide may cause cancer in laboratory animals when consumed in significant amounts. Studies are also underway by third parties to assess the health implications of carbonated soft drink consumption. If consumer concerns about acrylamide or carbonated soft drinks increase as a result of these studies, other new scientific evidence, or for any other reason, whether or not valid, demand for our products could

decline and we could be subject to lawsuits or new regulations that could affect sales of our products, any of which could have an adverse effect on our business, financial condition or results of operations.

We are also subject to Proposition 65 in California, a law which requires that a specific warning appear on any product sold in California that contains a substance listed by that State as having been found to cause cancer or birth defects. If we were required to add warning labels to any of our products or place warnings in certain locations where our products are sold, sales of those products could suffer not only in those locations but elsewhere.

In many jurisdictions, compliance with competition laws is of special importance to us due to our competitive position in those jurisdictions. Regulatory authorities under whose laws we operate may also have enforcement powers that can subject us to actions such as product recall, seizure of products or other sanc- tions, which could have an adverse effect on our sales or damage our reputation.

In addition, we and our subsidiaries are party to a variety of legal and environmental remediation obligations arising in the normal course of business, as well as environmental remedia- tion, product liability, toxic tort and related indemnification proceedings in connection with certain historical activities and contractual obligations of businesses acquired by our subsidiar- ies. Due to regulatory complexities, uncertainties inherent in litigation and the risk of unidentified contaminants on current and former properties of ours and our subsidiaries, the potential exists for remediation, liability and indemnification costs to differ materially from the costs we have estimated. We cannot assure you that our costs in relation to these matters will not exceed our established liabilities or otherwise have an adverse effect on our results of operations.

Company website: CCA’s product portfolio consists of: Coca-Cola, diet Coke, Coke Zero , Fanta , Sprite, Powerade, Glacéau and Pump, as well as other trademark beverages of The Coca-Cola Company.  CCA bottles and distributes these brands in its territories under license from The Coca-Cola Company.²¹⁸

Beverage brands owned, manufactured and distributed by CCA including Mount Franklin, Deep Spring and Kirks.²¹⁹

The premium spirits portfolio of Beam Global Spirits & Wines including Jim Beam, Canadian Club, Makers Mark and The Famous Grouse.²²⁰

Coca-Cola Amatil Australia uses water from metropolitan supplies from natural groundwater sources.²²¹

Their Environmental Management System continues to improve efficiency in water production facilities while maintaining open dialogue with governments, non-government organizations and local communities regarding water resource management.²²²

Coca-Cola Amatil (CCA) is one of the largest bottlers of non-alcoholic ready-to-drink beverages in the Asia-Pacific region and one of the major Coca-Cola bottlers in the world.²²³

CCA’s diversified product portfolio includes carbonated soft drinks, water, sports and energy drinks, fruit juice, coffee, flavored milk and ready-to-eat fruit and vegetable products and snack foods.²²⁴ Pacific Beverages, CCA’s 50/50 joint venture with SABMiller, manufactures and markets a range of premium beers in Australia and New Zealand and sells and distributes premium spirits. CCA has access to over 270 million consumers through over 600,000 active customers.²²⁵

To improve its portfolio in the noncarbonated drinks segment, Coca-Cola acquired Mad River Traders (tea, juices, and sodas) and Odwalla (juices and smoothies) in 2001. Also signed a licensing deal with Danone to promote Evian brand in the US.²²⁹

Coca-Cola introduced new products, such as Coca-Cola C2, in Japan and the US during 2004. In the UK and 19 other countries, the company began selling its Dasani bottled water.²³⁰

In 2005, Coca-Cola introduced a new product called 'Coca-Cola with Lime' in the US.²³¹ Coca-Cola replaced Pepsi as the primary beverage served on University of Arizona campus, as part of the exclusive 10-year deal products from Coca-Cola would be offered in every vending machine and fountain outlet across every University-operated dining location on the University of Arizona's main campus.²³² In the same year, Coca-Cola entered into a partnership agreement with six US restaurant chains owned by affiliates of Sun Capital Partners to promote its products in more than 1,750 restaurant locations across 28 states.²³³

Coca-Cola Company and H.J. Heinz Company announced a strategic partnership in February 2011 that enables Heinz to produce its ketchup bottles using Coca-Cola's PlantBottle packaging.<sup>234

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The company’s products are made available to consumers throughout the world through a network of bottling partners, distributors, wholesalers and retailers - the world’s largest beverage distribution system. The company’s vast distribution network spans the globe and allows the company to sell products in some of the most remote markets in the world. This distribution model is costly for competitors to replicate, and has acted as a sturdy barrier to entry in the industry.²³⁶

The company's large scale of operation allows it to cater to demands in upcoming markets with relative ease and enhances its revenue generation capacity.²³⁷ Growing nonalcoholic ready-to-drink (NARTD) beverage industry.²³⁸

Globally the nonalcoholic ready-to-drink (NARTD) market is growing at a significant pace. The NARTD beverage industry is expected to continue growing retail sales approximately 6% per year for the next 12 years (2008-20).²³⁹ This projected growth is being fueled by increase in middle-class consumers and fast-growing urban societies expected to form in the future. These trends indicate that there will be more people with more disposable income who potentially will tap into refreshment and convenience. This growth opens up a new world of opportunity for Coca-Cola. The company can capture this growth with innovative products and targeted go-to-market strategies, which will continue to drive its global beverage leadership.²⁴⁰

Threats - Evolving consumer preferences

Increasing concern among consumers, public health professionals and government agencies of the potential health problems associated with obesity and inactive lifestyles represents a significant challenge to Coca-Cola’s industry. In addition, some researchers, health advocates and dietary guidelines are encouraging consumers to reduce consumption of sugar-sweetened beverages, including those sweetened with high fructose corn syrup (HFCS), a form of sugar, or other nutritive sweeteners. Furthermore, there has been an increase in the number of regulations regarding carbonated soft drinks in the US in response to the heightened desire for healthy food consumption. Many state public school systems banned the sale of soft drinks on their campuses. The Center for Science and Public Interest proposed that a warning label be placed on all beverages containing more than 13g of sugar per 12-oz serving. This proposal would affect all non-diet, full calorie drinks produced by the company. These factors have driven a shift in consumption away from carbonated soft drinks to healthier alternatives, such as tea, juices, and water. An increased consumer preference for healthier drinks has resulted in slowing growth rates for sales of carbonated soft drinks, which constitutes 77% of company’s sales. Although Coca-Cola responded to the changing preferences by developing a range of diet and light beverages, evolving customer preferences will adversely impact the sales of its carbonated beverages which will in turn impact its overall profitability.²⁴¹

Water is the main ingredient in substantially all of Coca-Cola’s products. Rapid population growth and continued pollution of existing freshwater sources have created water shortages in nearly every country. Global consumption of water is doubling every 20 years, more than twice the rate of human population growth. According to the UN, more than one billion people already lack access to fresh drink water. By 2025, the demand for freshwater is expected to rise by 56% from the amount that is currently available. As a result, Coca-Cola may incur increasing production costs or face capacity constraints which could adversely affect its profitability in the long run.²⁴²

The Australian beverage business delivered a solid result with earnings before interest and tax (EBIt) increasing by 3.0% to $281.0 million. The business has had to deal with the impact on volumes and a short-term increase in costs caused by the destructive floods in Queensland and Victoria and Cyclone yasi which occurred during the peak summer trading season.²⁴³ As well, the generally softer consumer spending environment experienced in 2010 continued into 2011, limiting category growth.²⁴⁴ Notwithstanding the difficult conditions, mix improvements, Project Zero efficiency gains and cost out initiatives underpinned the growth in margins from 19.9% to 20.2%. The business has maintained its strong market share position despite a high level of competitor discounting activity in the grocery channel during May and June. New product development for the half was focused on the rollout of new packages and flavor extensions. The frozen beverage portfolio continues to grow strongly with volume growth of over 20% as a result of the expansion of the customer base combined with the introduction of new flavors.²⁴⁵

The successful execution of our infrastructure programs in expanding manufacturing capacity and improving operational efficiency has again delivered a reduction in operating costs and further improvements in our customer servicing capability. Combined with the restructuring of the spc ardmona (spca) business, I believe these initiatives will continue to widen the operating capability lead on our competitors.²⁴⁶

Looking forward, cca will continue to focus on executing its organic growth strategy.²⁴⁷

There have been an unprecedented number of natural disasters across our major markets over the last six months. The floods in Queensland, Victoria and NSW, Cyclone Yasi and the Christchurch Earthquakes.²⁴⁸

CCA has deployed teams to provide assistance to those affected and provided customers with extended terms and special offers for re- stocking CCA product. In addition, CCA has donated beverage and food products to communities and emergency services in need and we are matching all employee donations to the flood relief program.²⁴⁹

Dividends up 11.5% in 2010²⁵⁰

Improve our profitability and market position.²⁵¹

Weaker consumer demand²⁵²

Cadbury has entered into a conditional agreement to sell its Schweppes beverages business in Australia to Asahi Breweries for a total cash consideration of approximately GBP550 million.²⁵³

m P&N Beverages Australia Pty., Ltd., a manufacturer and distributor of non-alcoholic and non-dairy beverage products. Both the companies are based in Australia.²⁵⁴