The document discusses PBG's financial highlights and growth in 2000. Key points: 1) PBG had strong financial results in 2000, with net revenues of $7.982 billion and EPS of $1.53, up from 1999. Operating income and EBITDA also grew substantially. 2) Two-thirds of PBG's business comes from take-home sales. In 2000 PBG focused on growing its bottled water and flavor carbonated soft drink segments in the take-home market. 3) PBG launched Sierra Mist, a new lemon-lime flavor, to capitalize on the fast growing lemon-lime segment of the carbonated soft drink category. The launch was swift in

5. F I N A N C I A L H I G H L I G H T S
(1)
2000 1999 1998
$ in millions, except per share data
$7,982
Net Revenues $7,505 $7,041
$ 590
Operating Income (2) $ 396 $ 277
$1,061
EBITDA(2) $ 901 $ 721
$ 1.53
EPS(2)(3) $ 0.71 $ 0.17
$ 273
Operating Free Cash Flow(4) $ 161 $ 125
7.6%
Return On Invested Capital 6.0% 5.0%
(1)Our 2000 results were impacted by a change in estimated useful lives of certain categories of assets and the inclusion of
an extra week in our fiscal year.The favorable impact from the change in asset lives increased EPS by $0.26,and the extra
week in fiscal year 2000 increased EPS by $0.05.
(2)Excludes the impact of unusual impairment and other charges and credits.
(3)Fiscal years 1999 and 1998 reflect the initial public offering of 100 million shares of common stock on March 31,1999,
as if the shares were outstanding during the entire periods presented.
(4)Operating Free Cash Flow is defined as net cash provided by operations less net cash used for investments, excluding cash
used for acquisitions of bottlers.
L E T T E R T O S H A R E H O L D E R S
consistency. Our stock grew more than Earnings Before Interest,Taxes,Depre-
Dear Fellow Shareholder,
140 percent in 2000, and was one of the ciation and Amortization (EBITDA)
elling soda is an exciting proposition.
top performers on the New York Stock grew 18 percent for the year, led by
That excitement can come from the
Exchange. In a sea of ‘new economy’ solid net revenue per case growth of
launch of a new brand, as you feel quick
companies, it was refreshing to note 6 percent in the United States and
success and the glimmer of a promising
that in 2000, our internal mantra of continued strong international per-
future. Sometimes the rush of adrenaline
“We Sell Soda” translated externally formance.We generated $273 million
comes from bringing new focus to an
to “We Deliver Returns.” in operating free cash flow for the year,
established brand. Or when you provide
great service, become more productive
or develop new capability. Satisfaction
also comes from delivering on what you
promised. The year 2000 at The Pepsi
Bottling Group was a memorable one
for all these reasons. In this, our second
year as a public company, we continued
to build on the strong foundation we
established in 1999.This year’s story
is about profitability, our people and
their capability, and most importantly,
it’s all about growth.
We once again delivered outstanding
results, and the market rewarded our
1

6. up $112 million from last year’s results. Ensuring continuing cold drink growth icant investments in them.We also gave
We more than doubled our earnings per remained a key area of emphasis. In our front-line supervisors the tools and
share for the year to $1.53, and our return 2000, we added more than 140,000 the skills they needed to lead their teams.
on invested capital continued its move cold drink equipment placements in We launched one standardized method
upward, finishing the year at 7.6 percent. the U.S. and Canada. of selling and ensured it was understood
This was 1.6 points higher than 1999, and used effectively by our sales force.
On a constant territory basis, our pricing
achieving our weighted average cost of And we went back to school this year,
increases, cold drink growth and strong
capital well ahead of our original plans. recruiting many talented new employees
international volume growth of 7 per- off college campuses to make sure PBG’s
cent resulted in worldwide volume leaders of tomorrow are learning our
growth of 1 percent and healthy net business today.
revenue growth of more than 4 percent.
We expect that the increasing volume As remarkable as this year’s results were,
momentum we established in the fourth I feel that the future holds even more
quarter will continue to pick up steam promise. Our category, liquid refresh-
in 2001. ment beverages, is expected to grow at
a 4 percent rate, which in comparison
Another important lever impacting to other packaged goods, is very healthy.
our overall results is controlling cost. No other company is in a better
In 2000, we did this, all while achieving position to capitalize on that trajectory.
new records in product quality and So our biggest challenge is to ensure
consumer satisfaction.We improved the we get at least our fair share of that
number of cases we produce per hour category growth.
with the introduction of several new
high-speed bottle lines.We were able We have all the necessary elements to
to hold transportation costs per case in succeed,beginning with our brands. In
the U.S. flat, despite fuel increases, by 2000, we brought new excitement to
increasing the payload our vehicles carry. Brand Pepsi by re-launching the Pepsi
A key driver behind these results was
These are just two examples of what Challenge across our system, which we
continuing our progress in improving
occurs in some of the 400 locations will continue in 2001. In flavors, we
the take-home economics of our busi-
across our system, as our teams look for increased the activity and visibility of
ness.Two-thirds of our business comes
new ways to increase their productivity, Mountain Dew, Mug Root Beer,
from sales in this segment. Plain and
extend the life of our assets and reduce Orange Slice,Wild Cherry Pepsi and
simple, we must get the pricing element
costs.Those important efforts are Lipton Brisk.We launched a new
of this equation right in order to achieve
continuing in 2001. lemon-lime, Sierra Mist. And, in the
success.The only way to do that was
non-carbonated segment of our business,
to increase our pricing in our largest
The capability of our organization grew our powerhouse brand, Aquafina, has
take-home channel, supermarkets, in a
by leaps and bounds in 2000.We have a already become the number one player
way that provides good value for our
front-line workforce of smart,dedicated, in the water category. There is a big
consumers and a profitable return for
hardworking people and we made signif- opportunity to take advantage of this
our investors.We began this effort in
lead and move into a commanding
1999 and continued it in 2000, raising
U.S. net price per case by about 5 percent.
2

7. position, and we are focused on doing
just that. In the single-serve juice drink
category, Pepsi’s FruitWorks is coming
on strong.
With the switch to Dole juices at the
beginning of 2001, we see significant
growth possibilities for both juices and
juice drinks.We also hold almost a
90 market share in the ready-to-drink
coffee market, with our Frappuccino
product from Starbucks.
Beyond our brand portfolio, we are
blessed with many other assets. Our
strong culture is framed by a simple
mission statement that emphasizes the
importance of winning each day, in
every market and with every customer.
We are improving the business with
new tools and technology that add to
our efficiency and productivity. Our and dedication of our front line, and rest of our strong team of senior leaders,
partnership with PepsiCo grows stronger ends with our senior management our talented employees and me, ready
each day. We depend on each other team and Board of Directors, whose to guide PBG’s continuing success, and
and we work together to enhance our experience and will to win are an yours. As you turn the pages of this year’s
mutual progress. I believe our proven unbeatable combination. annual report, I hope you’ll feel the
ability to execute in the marketplace confidence that I feel about The Pepsi
is second to none. Our capability to Because of the health of this business Bottling Group.We are growing – and
succeed begins with the commitment and all we’ve accomplished, it’s time to all signs point to unlimited prospects for
pave the way for a new generation of the future.
leadership for PBG. In January of 2001,
with the full support of our Board of
Directors, I announced that we intend
to elect John Cahill, our President and
Craig Weatherup
Chief Operating Officer, as PBG’s new
Chairman & Chief Executive Officer
Chief Executive Officer later this year.
I will continue on as Chairman,with
John as my partner, just as he has been
since the launch of our company. John
has the intelligence, the experience and
the discipline to continue moving this
business forward. He stands, with the
3

8. We are...
Clear
Consistent
The year 2000
marked the begin-
ning of PBG’s push
to make Aquafina
the leading water
in the take-home
segment. Efforts
included the strate-
gic placement of
Aquafina displays
near likely pairings
with produce,
prepared salads
and health foods.
Unstoppable
4

9. G R O W T H I N O U R S E G M E N T S
The year 2000 was undoubtedly one of W ith two-thirds of our volume sold larly strong fronts to foster growth
strong financial growth for PBG, as take-home product – that is, product in the U.S. take-home segment:
the result of improvements in the basic sold for future consumption – the bottled water and flavor carbonated
economics of our business. But the year cornerstone of our business is in soft drinks (CSDs).
wasalso marked by substantial progress foodstores,supermarkets and mass-
A water-tight strategy
in our marketplace execution, presence merchandise outlets.These markets are
and distribution, marketing and selling ca- dynamic, drawing household shoppers PBG sales in 2000 confirmed what
pability, and customer service. who are more convenience-driven and industry research has told us: today’s
health-conscious than ever, and who consumers show a growing
We have demonstrated that we are face an increasing number of beverage preference for non-
U.S. consumption
consistent, confident, determined, options every time they shop.The good carbonated soft
of bottled water is
projected to increase
focused, progressive, consumer-savvy... news is that the PBG lineup offers a drinks.They are
by 10 gallons per
person by 2010.
and so much more. Going forward, these beverage to suit nearly every soft drink more likely than ever
are the qualities that will enable PBG to need and preference. to select juices and juice
continue adding great value drinks, ready-to-drink teas and coffees,
to the brands we carry. They are Even better news is that among the and bottled water – to consume on the
the attributes that will ensure our numerous types of beverages we offer, run and at home. And by far, the fastest
future growth. in 2000, PBG moved on two particu- growing non-carbonated category in
the U.S. is water,
The placement which has grown
of thousands of
Aquafina end- cap
on average almost
displays – many
of which were
11 percent
centered around
an Aquafina cooler
annually over the
– helped build
brand presence
past three years,
for our water in
supermarkets and
nearly five times
mass -merchandise
outlets.
the rate of the
overall liquid refreshment beverage
industry in the same time period.
With Aquafina already the leading
bottled water brand in the cold drink
segment of our business, a top priority
for PBG in 2000 was to build greater
brand presence for Aquafina in take-
home outlets.
non-cola carbonated soft drinks a moderate-sized general Take-home: products sold for at-home or future
Flavor CSD: Mass merchandiser:
that are fruit-flavored, such as cherry, orange, merchandiser carrying health and beauty items consumption. 5
lemon-lime and root beer. and a limited grocery selection, often at dis-
counted prices.

10. We are...
SWIFT
SMOOTH
SYSTEMATIC
The launch of
Sierra Mist , Pepsi’s
new lemon -lime
product, gives PBG
a strong player in
the lemon-lime
segment – which is
the largest of the
CSD flavors. The
Sierra Mist launch
was swift and
complete – a virtual
“overnight” blitz
in more than two-
thirds of PBG’s
U.S. markets.
6

11. G R O W T H I N O U R S E G M E N T S
Lisa “Water, water One of the biggest opportunities in the
Rice,
Merchandiser,
everywhere” CSD category is in the largest flavor
Norfolk, VA.
Lisa is responsible will continue to segment,lemon-lime. Lemon-lime has
for merchandising
five major large be our direction been responsible for almost 15 percent
format accounts –
for 2001.And of CSD growth over the last four years,
in which she
has grown volume
we’re confident and is expected to grow substantially
substantially.
Because of her
that in PBG over the next five.
efforts, her ac-
counts contain
markets,the
more occasion-
based merchandis-
brand that will We are now positioned to capitalize on
ing racks than in
any of the other
be everywhere lemon-lime volume growth with the
stores in the
Norfolk market.
will be Aquafina. addition in 2000 of the
More than
new Sierra Mist brand
We made the brand more visible
1,000,000
A lemon-lime debut to our product cases of Sierra Mist
and available by placing thousands of
were sold in the first
While non-carbonated beverage growth portfolio, in the
end-cap displays and incremental week of the
launch.
is climbing, carbonated soft drinks markets where we do not
free-standing “Cool Blue” racks
remain the largest overall beverage cate- bottle 7Up. The opportunity for
throughout our large format outlets –
gory, comprising more than 80 percent Sierra Mist is particularly strong in our
where consumers are likely to purchase
of the total liquid refreshment beverage take-home segment, where the potential
water, on store perimeters and near
industry. CSDs are a household staple volume payoff for lemon-lime growth
produce and health products.We
in the U. S. ,h ave continued to grow is substantial.
established beverage aisle standards to
over the past several years, and still
increase Aquafina’s presence in the
make up more than 70 percent of In a triumphant distribution and
water section, adding a 24-ounce
take-home beverage volume. merchandising feat that only a
multi-pack to the shelves. And we
captured thirsty
Over the
shoppers by in- past two years,
PBG has made
stalling thousands its take- home
beverages readily
of Aquafina available and more
convenient to
checklane purchase, through
the placement
merchandisers of displays and
racks on the
and dedicated store perimeter,
and strategic
Aquafina vending merchandising
to create visible
machines. “meal solutions”
for consumers.
Our focus on the take-home segment
yielded almost 30 percent growth for
Aquafina in just our U.S. foodstore
accounts.
refers to accounts that are large Checklane merchandiser (CLM): cold equipment End-cap display: a prominent display of soft
Large format:
chain foodstores, mass merchandisers, chain designed for use in supermarket and foodstore drink products at the end of an aisle. 7
drug stores, club stores and military bases. checkout lanes.

12. We are...
Mountain Dew
is the top-selling
20-ounce beverage
in convenience
outlets. It’s also
one of the most
popular beverages
on the slopes.
PBG’s Grand
Junction,Colorado
Market Unit, which
serves some of the
top ski resorts in
the U.S. including
Vail and Brecken-
ridge (pictured
here), leverages
the power of the
brand with the
Mountain Dew
Vertical Challenge,
a PBG - sponsored
ski race in which
consumers race
for free.
8

13. G R O W T H I N O U R S E G M E N T S
PBG products
handful of companies in the world By year-end,
are among the
could accomplish, on October 14, Sierra Mist made biggest profit
drivers for small
PBG stocked store shelves and displays, inroads in heavy format accounts.
Here, brands Pepsi
and Mountain Dew
coolers and cold vaults in thousands flavor markets
are executed in a
“blue door/green
of accounts with Sierra Mist. such as Southern
door” set – in
which they are
California –
allocated space
in proportion to
The effect was dramatic: massive Sierra where we gained
sales, to drive
maximum profits.
Mist two-liter and multi-pack lobby widespread
displays,surrounded by new point-of- distribution of
purchase materials, sprang up overnight. our key packages and captured the
PBG gave the new product prominence market share we expected.
by immediately placing it among our
Watch for an approaching cold front
core brand lineup. The new green bottle
was so swiftly integrated into end-caps Comprising the other third of our our profit margin in 2000.The profit
and beverage aisles, that it had the business in 2000 was the cold drink on the 20-ounce bottle is significantly
marketplace presence of an established segment, the most profitable area of our higher than cans, and the package is
brand on Day One of the roll-out. business. For the second consecutive growing in popularity with consumers.
Sampling and local promotional events year, we allocated about half of As we work to shift our product mix to
introduced the new brand and created our capital spending for equipment contain more of that package, we will
interest and excitement. to support our cold drink growth – continue to grow our profitability.
adding more
George Tyler, than 140,000 To capitalize on the growing trend
Merchandising
Manager,
net placements toward convenience purchases and
Philadelphia, PA.
George deals with of vending on-the-go consumption, we continued
about 20 small for-
mat accounts and machines,coolers to expand our reach beyond
manages 25 driver
A cold,
deliveries daily. and checklane the traditional cold
single-serve soda is
He has played a
major role in PBG’s the most frequently
merchandisers drink venues such as
success in South purchased consumable
Philly, and is known
item in a convenience
in the U.S. Convenience and
by his co-workers
store.
and his customers
and Canada. Gas (C&G) stores and
for his profession-
alism and sense
independent business stores (IBS).
of urgency in re-
solving customer
Of our existing Increased placements in supermarkets,
issues. The key
to his success?
placements, mass merchandisers and drugstores have
“I don’t lose
focus that the
the growth of resulted in double-digit growth of our
customer is why
we’re here,” he
20-ounce, full- cold single-serve sales in those channels
says. “That is
always foremost
service vending versus 1999.
in my mind.”
sales played a big
role in enhancing
cold products sold in retail and Full-service vending: PBG places and stocks Channel: outlets that are similar in size, and
Cold drink:
on-premise channels, which typically carry the the vending machine, paying a commission to that buy, merchandise and sell soft drinks in 9
highest profit margins. the account on the machine’s sales. similar ways.

14. satisfying
We are...
consumer-savvy
reliable
For the third
consecutive year,
PBG placed well
over 100,000
incremental pieces
of cold drink
equipment across
the U.S. and
Canada, putting
our products
where thirsty
consumers need
them most – such
as on this South
Beach, Miami
boardwalk.
10

15. G R O W T H I N O U R S E G M E N T S
In leaders in the
the Little
Havana section
of Miami, Florida, small format
Pepsi products
are an integral channel,hands
part of the daily
game of dominoes. down.Mountain
Dew and Pepsi are still the top two
best-selling 20-ounce beverages respec-
tively.The leading water is Aquafina,
and the best-selling ready-to-drink tea
and coffee are Lipton and Frappuccino,
respectively. Then there is FruitWorks,
Nevertheless, a significant amount of Our products are among the biggest
our cold drink sales do occur in small profit drivers for small format accounts,
format accounts – C&G and IBS and in 2000 we aggressively pursued
outlets up and down the street – where the space that is proportionate to those
The
we face increasing competition for very profits.We reset thousands of cold still a relatively
placement
of register-area
limited and premium space in the cold vaults, gained miles of additional shelf new juice drink,
coolers, such as
this one in a local
vault and near the register. space, and placed tens of thousands of but emerging as a
Miami grocery
store chain, helps
Antonio Rivodo, register-area PBG capture potential market
impulse sales.
Pre-Sell Represen-
coolers and ice leader.The brand
tative, Miami, FL.
In the two years chests.We are grew more than 300 percent versus
Antonio has been
with PBG, he armed with a 1999,driven largely by increased
has made quite
an impact on the compelling selling distribution and strong
PBG now
Miami market and
on his colleagues has more than
platform to win consumer response.
by consistently
1,000,000
out-performing
pieces of cold drink
the battle for With the juice drink
his goals. Anto-
equipment across
nio’s 2000 results
incremental cold category growing at a North America.
included overall
volume growth
space: in the U.S., healthy rate in the U.S.,
in the double
digits, and 100
the brands we sell we expect FruitWorks to be a
percent distribu-
tion of Aquafina
are the market rising star in the coming years.
and FruitWorks
in his large
format accounts.
Small format: convenience stores, gas stations non-chain, Cold vault: refrigerated units housing an
Independent business store (IBS):
and independent business store accounts. small independent foodstore. assortment of beverages for consumer purchase; 11
typically found in Convenience and Gas stores.

16. We are...
A “new and
improved” Pepsi
Challenge, con-
ducted across
PBG’s U.S. markets
over the summer,
brought renewed
excitement and
interest to brand
Pepsi.TheChallenge
was conducted at
special events,
such as this
Massachusetts
rock concert,
and at the retail
store level.
12

17. G R O W I N G O U R M A R K E T P L A C E P R E S E N C E
Execution of
The PBG promise
national Pepsi
While PepsiCo promotions,
such as this
summertime
ownsthetrademarks
“Choose Your
Music” program,
on the products
helped PBG
increase our total
we make and sell,
number of product
displays – one
by building Pepsi
key to capturing
incremental con-
marketplace sumer purchases.
PBG increased
presence, PBG its total number
of foodstore
plays a big part displays by 11
percent in 2000.
in delivering what
those trademarks
promise:excitement,innovation,fun,
quality and thirst-quenching satisfaction.
That is a big promise to keep. It means
implementing national and local
programs tailored to individual markets
and accounts, establishing PBG affilia-
The Pepsi Challenge, in particular, it into an even more powerful retail
tions with community resources and
helped reignite excitement around the merchandising event.
events, and linking our business to
102-year-old cola brand.This time, the
prestigious sports centers,professional
What’s in a name?
revamped taste-test pitted both Pepsi
teams and cultural institutions.
versus Coke, and Pepsi ONE versus Prestige properties – high-profile
Diet Coke. Across the nation, the results entertainment venues,professional
In 2000, national Pepsi-Cola programs
proved Pepsi brands to be the preferred sports teams and arenas – offer a multi-
such as “Choose Your Music” and
products. And in the process, the faceted platform to reach consumers.
“Eat,Drink, and Be Scary,” featuring
TM
Pepsi Challenge provided excitement They help drive local sales through
popular cartoon dog Scooby-Doo ,
in stores and at major events across the the prominent visibility of the brands,
and the resurrection of the Pepsi Chal-
country. In 2001 we plan to work through the excitement of our products’
lenge helped us keep our core CSDs
with The Pepsi-Cola Company to close association with these properties,
“top-of-mind” for consumers.
expand the and through the design
The “Eat, The majority
Pepsi Challenge, of exclusive,
of the people who
Drink, and Be
took the Pepsi Challenge
Scary”Halloween
starting earlier cross-promotions
over the summer
promotion,
of 2000 preferred
featuring cartoon
in the year, in conjunction
dog Scooby- Pepsi.
Doo TM , was a
running it in with local retailers.
joint program
that cross-
more markets,
merchandised
Pepsi beverages
and developing
with Frito-Lay ®
salty snacks.
National promotions: promotions developed by The Pepsi Challenge: a “blind” taste-test in Merchandising event: an event conducted in a
Pepsi-Cola USA executed across PBG mar- which consumers are offered both Pepsi and retail outlet to create interest and excitement, 13
kets, often customized to individual accounts’ Coke, and express their taste preference. and
needs. to draw consumers to purchase a particular
product.

18. We are...
The Pepsi Center,
home to the Col-
orado Avalanche
and the Denver
Nuggets, is a
Pepsi-linked
prestige property
that has put Pepsi
in the forefront
of the Denver
community. As the
centerpiece for
numerous cross-
promotions with
selected Denver-
area retailers,
The Pepsi Center
has helped drive
increased beverage
sales for both
PBG and our local
retail partners.
14

19. G R O W I N G O U R M A R K E T P L A C E P R E S E N C E
A
One example is our affiliation with The cross-promotions involving PBG, The custom-designed PBG driver
makes his way
Pepsi Center, home to the Colorado Pepsi Center and the largest Denver- coolers and to one of the
mountain lodges of
Avalanche and the Denver Nuggets, area foodstore chain, King Soopers, vending machines the Breckenridge,
Colorado ski resort,
an exclusive
a relationship we have used to drive have increased PBG’s community pres- bearing Pepsi
Pepsi account.
brand recognition and sales. Exclusive ence and driven sales for both PBG and Center graphics.
our retail partner.
Craig Brown,
Customer
In 2000, PBG The year 2000 brought some additional
Representative,
Greeley, CO.
sales in King big names to the PBG team, including
Craig, a six-year
Soopers experi- the Detroit Tigers; the Pittsburgh
Pepsi veteran, is
a top-performer
enced very strong Pirates; the Experience Music Project
in his market.
He is known for
the outstanding growth versus and The Space Needle in Seattle; the
customer service
that enables him prior year. Sales Space Center in Houston, the largest
to consistently
exceed his sales of our 20-ounce tourist attraction in Texas; Le Forum
targets. True to
form, Craig sur- package in King Pepsi in Montréal, Canada;
passed his plan
The total
for volume growth
Soopers grew and the hottest
in his accounts in number of PBG
2000, and for the foodstore displays
almost 100 per- restaurant property in
fifth year, earned
grew by more than
his market unit’s
11%
cent versus 1999, Moscow, the Starlite
Top Gun Award,
versus 1999.
which recognizes
driven by the Diner – to name a few.
outstanding job
performance.
placement of
marketing programs includes coolers, ice high-profile venues such
Cross-promotions: Cold drink equipment: Prestige properties:
designed to promote sales of two or more prod- chests, as professional arenas and tourist attractions. 15
ucts with similar target consumer groups. vending machines and fountain equipment.

20. We are...
Th rough more
widespread distrib-
ution in 2000, PBG
achieved record
volume
levels in Russia,
dramatically
exceeding expec-
tations. Here, a
PBG truck passes
The Kremlin en
route to a delivery.
M O T I V A T E D F O C U S E D F A R - R E A C H I N G
16

21. G R O W I N G O U R M A R K E T P L A C E P R E S E N C E
Stanislav
Russia: a promising frontier of Pepsi and Novikov,
Territory Sales
Frito-Lay ® Manager, Moscow.
Nowhere has the power of marketplace
Stanislav has con-
products in Russia
presence been more evident than in sistently achieved
outstanding sales
has provided
our Russia market.Through more growth in his terri-
tory, even during
economies
widespread distribution the most difficult
PBG volume economic times in
of scale in distri-
in 2000, PBG achieved
in Russia Russia. He increased
his number of
grew more than bution and helped
record sales volume PBG customers in
100% Moscow from 500
year-over-year both product lines
for Pepsi products in to more than 1,600
in 2000. during his three
gain access to
Russia. In fact, volume years on the job.
His new customers
more accounts
more than doubled versus 1999, include all three
domestic airports
through “the The tremendous growth potential
exceeding levels that preceded the in his territory –
which are now Pepsi
Power of One” of the Russian market is becoming a
exclusive accounts.
1998 ruble devaluation.
Pepsi/Frito-Lay ® reality for PBG. Our results in Russia
merchandising strength. are well ahead of where we predicted
Big account wins, including the largest
we would now be, at the time of
Russian airline, AeroFlot, added to our
Per capita consumption of bottled water PBG’s initial public offering in 1999.
marketplace presence, and to our sales
is also rising at a vigorous rate in Russia, We will continue to grow our business
volume. So did the expansion of
positioning Aqua Minerale, the Pepsi there, gaining
our popular “value line” of beverages,
In 2000, Russia’s
water brand and the leading water momentum
marketed under the Fiesta brand. largest airline,
AeroFlot Russian
there, for tremendous volume growth. through increased
Getting our products “on the street,” International
Airline, converted
In 2000, we expanded the Aqua distribution and
in outdoor kiosks and high-traffic areas to exclusive Pepsi
beverage service.
Minerale line by launching a “still” availability of
such as historic Old Arbat Street, The company
carries about five
version, which will help PBG capture our products.
also played a part.The co-distribution million passengers
a year on a fleet
our share of that consumption. of 70 planes.
refers to the purchasing and average number of bever- Value line: a group of products sold at an
“Power of One”: Per capita consumption:
marketing power achieved by the teaming of age servings (usually measured as 8-ounce servings) everyday low price aimed at the value-conscious 17
multiple products within the PepsiCo portfolio. consumed per person in a market or territory. consumer.

22. We are...
efficient
The installation
of a high-speed
filler in the
Mesquite, Texas
plant doubled the
filling capacity
to 1,000 bottles
per minute, while
taking up less
floor space. It
also requires
significantly less
time for line
change-overs.
18

23. R E I N V E S T I N G F O R G R O W T H
Me Computer
squite, Texas
Bottle Line Team,
Telephone
from left to right:
Rocky Rogers,
Integration
Mechanic;
Dempsey Crabtree,
De-Palletizer technology, and
Operator; Sharon
Edwards, Filler installed Call
Operator; Jimmy
Harris, Packaging Center Sales
Area Operator;
Angie Fields, Chief software to
Efficiency Officer.
better train our
This high-per-
forming team is
sales agents.
capable of running
two bottling lines
Combined,these
simultaneously
without losing
investments en-
efficiency. To-
gether, they keep
able Pepsi Direct
the high-speed
filler in Mesquite
representatives to
running smoothly,
and have greatly
increased the provide higher
Investing in organizational capability Operations cases per hour
their lines produce. quality customer
Our front-line sales team is undoubt- With yearly volume of more than
service and
edly our most powerful marketplace one billion cases moving through the
maximize the distribution of our most
force. In 2000, we continued to reinvest PBG worldwide manufacturing system,
profitable products.
in growing the capability of our field we are continually looking for oppor-
sales and marketing organization.We tunities to improve efficiency and
The impact of Pepsi Pepsi Direct
staffed a new field marketing leadership productivity, investing in technology accounts grew their
Direct improvements 20-ounce volume
function – professionals across our where we will see the best return. by more than
on our sales and
25%
North America Business Units For example, the installation of a high-
delivery system has been
who will ensure that our marketing speed filler in the Mesquite,Texas plant
overwhelmingly positive.With the
programs are executed to achieve was an investment
A monthly video
maximum results in our local markets. that doubled
series focuses
PBG’s front-line
bottling capacity
salesforce on
specific market-
In 2000, we launched an updated sales to 1,000 bottles
place priorities
for a four-week
training program,“P.E.P.S.I.,” to give per minute, and period.
our front line a uniform, fact-based improved the time
approach for selling our products and required to change products on the line.
equipment.And, an ongoing sales and
marketing video series,introduced in In 2000, a key area of investment was
1999,continues to be issued to more in Pepsi Direct, our centralized call
than 15,000 sales people on a monthly center for on-premise sales and service,
basis, focusing them on the specific which handled nearly a billion dollars
marketplace priorities for a four-week in sales this year. We also invested in
period.
On-premise: outlets where consumers buy soft Front line: members of the PBG sales team who Filler: plant equipment that dispenses product
drinks for immediate consumption at or near have daily, face-to-face contact with customers. into 19
the bottles and cans.
point of sale.

24. We are...
Progressive
Youthful
Cool
The establishment
of school partner-
ships is one way
to reach the next
generation of
consumers. The
PBG portfolio offers
students a variety
of alternative
beverages including
Aquafina water and
FruitWorks juice
drinks, in addition
to carbonated
soft drinks.
20

25. R E I N V E S T I N G F O R G R O W T H
PBG customer
PBG Goes
on-premise sales call already conducted
representatives
to School don’t just deliver
over the phone, our route drivers
soda: they are
company am-
can complete their deliveries more Perhaps no area
bassadors who
collectively
efficiently, gaining more than 20 of investment is
represent PBG
in thousands of
percent in productivity – the equivalent as critical to our customer interac-
tions every week.
of adding three stops business as our
We reached
per day to their routes, efforts to engage new soft drink con-
an additional
800,000 thereby reducing route sumers,particularly the next generation.
students through school
partnerships in
delivery costs. One way to reach this market is
2000.
through school partnerships, in which
Pepsi Direct customers benefited from we make our products available to
more efficient delivery schedules and students, while providing schools with
fewer out-of-stock issues. Revenue in needed financial resources.Revenue
Pepsi Direct accounts led the PBG generated by these partnerships has our younger consumers, while helping
system with more than five percent funded scholarships, athletic programs, to support the educational objectives of
same-store growth year-over-year. and other student-focused programs. their schools.
Those same accounts grew their
Soda in the City
20-ounce volume, our most profitable PBG’s well-rounded product portfolio,
package, by more than 25 percent. which offers the brands that teens The wave of the future is not solely in
prefer, along our schools. In 2000, PBG targeted U.S.
Jennifer Stenson, with a variety urban community development as a key
Key Account
of best-selling investment, aiming to be the preferred
Manager,
Jacksonville, FL.
alternatives to beverage supplier to urban retailers and
A 14-year veteran
of the Pepsi
carbonated consumers.Over the next decade, urban
system,Jennifer
knows what it
drinks, such as and ethnic consumers will contribute
takes to grow vol-
ume in her food-
Aquafina and most of the population growth in the
store accounts:
in-store execution,
FruitWorks,has top ten U.S. markets, posing a long-
solid category
management and
helped us form term growth opportunity that we began
diligent perfor-
mance tracking. In
successful school to systematically pursue in 2000.
2000, Jennifer
grew volume more
partnerships.So
than six percent
in her accounts,
has our history Recognizing that urban consumers
and gained almost
two share points
of strong com- and business owners – who span
in her market –
while getting the
munity relations ethnic backgrounds and generations –
targeted price
increases.
and youth have distinct lifestyles and beverage
activity sponsorships. In 2000, school preferences, PBG embarked on a
partnerships gave us the opportunity formal program to better meet their
to reach an additional 800,000 of needs and tastes. It included research
non-carbonated development of the Out-of-stock: refers to shelf space or vendors
Alternative beverages: Category management:
beverages with a broad product range, includ- optimum marketing strategy to maximize cate- lacking product. 21
ing water, teas, juices and “sports drinks.” gory sales and profitability.

26. In
We are... addition to
careful attention to
beverage category
management, PBG’s
urban marketing
efforts include
installation of
awnings and
murals like this
one in Hamtramck –
the most ethnically
diverse section
of Detro i t .T h e s e
exterior enhance-
ments both brighten
the neighborhood
and increase
brand awareness.
Said one Detroit
passerby, “This is
Pepsi town.”
22