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[edit] Corporate Facts

[edit] History

PepsiCo, Inc., incorporated in 1919, is a global snack and beverage company. The Company manufactures, markets and sells a variety of salty, convenient, sweet and grain-based snacks, carbonated and non-carbonated beverages and foods. It is organized in four divisions: Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International and Quaker Foods North America. Its North American divisions operate in the United States and Canada. Its international divisions operate in nearly 200 countries, with its largest operations in Mexico and the United Kingdom.

PepsiCo products are brought to market through direct-store-delivery, broker-warehouse and foodservice and vending distribution networks. The principal ingredients the Company uses in its food and beverage businesses are almonds, aspartame, cocoa, corn, corn sweeteners, flavorings, flour, juice and juice concentrates, oats, oranges, grapefruits and other fruits, potatoes, rice, seasonings, sugar, vegetable and essential oils and wheat. Its key packaging materials include polyethylene terephthalate (PET) resin used for plastic bottles, film packaging used for snack foods and cardboard. Fuel and natural gas are also important commodities due to their use in the Company's plants and in the trucks delivering its products. These products are purchased mainly in the open market.

PepsiCo owns many trademarks including Alegro, AMP, Aquafina, Aunt Jemima, Cap'n Crunch, Cheetos, Cracker Jack, Diet Pepsi, Doritos, Frito-Lay, Fritos, Fruitworks, Gamesa, Gatorade, Golden Grain, Grandma's, Lay's, Life, Mirinda, Mountain Dew, Mountain Dew Code Red, Mr. Green, Mug, Near East, Pasta Roni, Pepsi, Pepsi Blue, Pepsi Max, Pepsi One, Pepsi Twist, Pepsi-Cola, Propel, Quaker, Quaker Chewy, Quaker Quakes, Rice-A-Roni, Rold Gold, Ruffles, Sabritas, 7UP and Diet 7UP (outside the United States), Sierra Mist, Slice, Smith's, SoBe, Sunchips, Tostitos, Tropicana, Tropicana Pure Premium, Tropicana Season's Best, Tropicana Twister, Walkers, Wild Cherry Pepsi and Wotsits. The Company's customers include franchise bottlers and independent distributors and retailers. PepsiCo grants its bottlers exclusive contracts to sell and manufacture certain beverage products bearing its trademarks within a specific geographic area. These arrangements specify the amount to be paid by its bottlers for concentrate and full goods and for Aquafina royalties, as well as the manufacturing process required for product quality.

Frito-Lay North America

Frito-Lay North America (FLNA) manufactures, markets, sells and distributes branded snacks. These snacks include Lay's potato chips, Doritos flavored tortilla chips, Cheetos cheese-flavored snacks, Tostitos tortilla chips, Fritos corn chips, Ruffles potato chips, branded dips, Quaker Chewy granola bars, Rold Gold pretzels, Sunchips multigrain snacks, Munchies snack mix, Grandma's cookies, Quaker Quakes corn and rice snacks, Quaker Fruit & Oatmeal bars, Cracker Jack candy coated popcorn, Lay's Stax and Go Snacks. FLNA-branded products are sold to independent distributors and retailers. FLNA's net revenue, for the fiscal year ended December 27, 2003 (fiscal 2003), accounted for approximately 34% of the Company's total division net revenue.

PepsiCo Beverages North America

PepsiCo Beverages North America (PBNA) manufactures, markets and sells beverage concentrates, fountain syrups and finished goods under the brands Pepsi, Mountain Dew, Sierra Mist, Mug, SoBe, Gatorade, Tropicana Pure Premium, Dole, Tropicana Season's Best, Tropicana Twister and Propel. PBNA also manufactures, markets and sells ready-to-drink tea and coffee products through joint ventures with Lipton and Starbucks. In addition, PBNA licenses the Aquafina water brand to its bottlers and markets this brand. PBNA sells concentrate and finished goods for some of these brands to bottlers licensed by the Company, and some of these branded products are sold directly by PepsiCo to independent distributors and retailers. The franchise bottlers sell the Company's brands as finished goods to independent distributors and retailers. PBNA's net revenue in fiscal 2003 accounted for approximately 29% of the Company's total division net revenue.

PepsiCo International

PepsiCo International (PI) manufactures, through consolidated businesses, as well as through non-controlled affiliates, a number of salty and sweet snack brands including Sabritas, Gamesa and Alegro in Mexico; Walkers in the United Kingdom, and Smith's in Australia. In addition, PI manufactures, markets and sells many Quaker brand snacks. PI also manufactures, markets and sells beverage concentrates, fountain syrups and finished goods under the brands Pepsi, 7UP, Mirinda, Mountain Dew, Gatorade and Tropicana outside North America. These brands are sold to franchise bottlers, independent distributors and retailers, however, in certain markets, PI operates its own bottling plants and distribution facilities. PI also licenses the Aquafina water brand to certain of its franchise bottlers. PI's net revenue in fiscal 2003 accounted for approximately 32% of the Company's total division net revenue.

Quaker Foods North America

Quaker Foods North America (QFNA) manufactures, markets and sells cereals, rice, pasta and other branded products. QFNA's products include Quaker oatmeal, Cap'n Crunch and Life ready-to-eat cereals, Rice-A-Roni, Pasta Roni and Near East side dishes, Aunt Jemima mixes and syrups and Quaker grits. These branded products are sold to independent distributors and retailers. QFNA's net revenue in fiscal 2003 accounted for approximately 5% of the Company's total division net revenue.

[edit] Governance

[edit] Criticism

[edit] Environmental Concerns

• In May 2003 a rural community in Kerala, a state in southwestern India, revoked the water-use permit of a Pepsi plant because of fears that the exploitation of groundwater will lead to serious ecological damage and drought. A Parliament member from a local district warns that disruption of water supplies could affect not just drinking water but also irrigation in an area known for its rice paddies. Pepsi denies the charges and insist that groundwater levels have not been affected by it facility. Locals have been picketing in front of the Coca-Cola factory, and veteran environmental campaigners in India are endorsing the locals' activities and may spark more widespread protests against the multinationals. Source: New York Times, May 21, 2003

• A coalition of environmental groups organized under the "Quit India" banner are conducting a "human chain" event as well as series of public awareness campaigns to force Pepsi Cola and Coca-Cola to leave India. The groups, mainly environmental NGOs, are claiming that the companies are violating local law by using vast quantities of water which is being taken away from under-resourced Indians and that the two companies’ products are a health hazard to children and youth in the country. Source: Ethical Corporation

• India: Pepsi and Coca-Cola Deny Pesticide Claims: Coca-Cola and PepsiCo, the US soft drinks companies, yesterday angrily denied allegations that their products manufactured in India contained toxins far above the norms permitted in the developed world.

• The American Civil Liberties Union (ACLU) is fighting to keep Pepsi subsidiary Frito-Lay Inc. from permanently sealing records that show some of its snack foods were contaminated with hydrocarbons and other toxic solvents. The records came to light in a lawsuit alleging a Massachusetts woman was damaged neurologically by tainted tortilla chips. In that suit the woman alleged she sustained permanent neurological damage in 1991 after eating several Salsa Rio Doritos tortilla chips that had a strong chemical taste and odor. An independent toxicology firm, hired by the woman, tested the chips and confirmed the presence of perchloroethylene, a cleaning solvent. Frito-Lay disputed the lab's findings, although the company also acknowledged it had not tested the chips for solvents itself. In court records the company also said there is no evidence that the plaintiff's health problems stemmed from its chips.
  
  During the suit Frito-Lay revealed documents related to hundreds of consumer complaints. In many of the cases, the company's own lab tests confirmed the presence of chemical contaminants in products returned by consumers who suspected problems. In June 2001 Frito-Lay moved to seal the records after the plaintiff dropped her suit, citing unfavorable pretrial rulings and her inability to continue paying for the case. She had earlier turned down a settlement offer from Frito-Lay because it would have required a gag order, and she wanted the public to know about the alleged contamination problems.Source: The Seattle Post Intelligencer, July 17, 2001

• In June 2003, PETA appealed to the U.S. Fish and Wildlife Service to investigate PepsiCo’s Buena Park, Calif., warehouse, where the company has admitted to hiring a pest-control company to line its warehouse with sticky glue traps, which kill animals slowly and painfully. If PepsiCo were found to have set these traps during the week of May 26th, PETA argued that the company would have been in violation of the Migratory Bird Treaty Act (MBTA). Source: PETA, June 2003

• According to CorpWatch, PepsiCo responded to the non-government Indian group, the Centre for Science and Environment’s claims that Pepsi bottled in the company’s Kerala plant had unacceptably high levels of commonly used pesticides by publishing purportedly independent results from selected laboratories in western countries to show that their products - sales are a combined six million bottles annually -- are safe. (see related item) (CorpWatch, February 6, 2004) (See related alert item) Source: CorpWatch, February 6, 2004

• PepsiCo's Frito-Lay is "uncertain" whether products contain genetically engineered ingredients in Canada (see related Genetic Engineering praise). Source: Greenpeace Canada, November 1999

• In August 2003 the head of the India-based Center for Science and Environment told reporters the levels of pesticides in Pepsi products in India was 36 times higher than guidelines used by the European Union. Levels of pesticides in rival Coca-Cola brands tested were 30 times higher than European Union standards. The Center acknowledged that Indian brands also have high pesticide levels, because agricultural pesticides are in the country's ground water, but said the focus was on Pepsi and Coke because they account for more than three-fourths of the bottled soft drinks consumed in India. India has no laws banning pesticides in soft drinks.
  
  Top executives of Pepsi and Coke held a rare joint news conference denying the allegations and demanding to know what laboratories did the testing, and how the research was conducted. Source: Environmental News Network

• The Indian parliament banned Coke and Pepsi products from being sold in its cafeteria. According to the non-profti group CorpWatch, "The ban came as the result of tests, including those by the Indian government, which found high concentrations of pesticides and insecticides, including lindane, DDT, malathion and chlorpyrifos, in the colas, making them unfit for consumption. Some samples tested showed the presence of these toxins to be more than 30 times the standard allowed by the European Union." Source: CorpWatch

[edit] Unethical Business Practice

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• USA: New Report Examines Commercialism in Schools: From exclusive soft-drink contracts to computers displaying continuous advertising, corporate marketing in public schools is rising sharply. But few states have laws in place to address the phenomenon, and most decisions on commercial arrangements in schools are made piecemeal by local officials, according to a report from the General Accounting Office scheduled to be released today.

[edit] Political Influence & Litigation

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• Pepsi donated over $127,000 to defeat Oregon’s Measure 27, requiring GMO food to be labeled in that state. Source: Oregon Secretary of State

• Senator Cheryl Jacques, D-MA, has accused PepsiCo of violating state regulations by not disclosing that its Aquafina bottled water comes from a public water supply. Instead, the cap says only, "Bottled at the source, P.W.S., Ayer, MA." The initials stand for "public water supply." Jacques has argued that the label shows a sun setting over a mountain, leaving the impression that the water comes from a mountain spring. However, the Department of Public Health said Pepsi had state permission that did not require the company to identify the source of Aquafina, because the water is purified to remove salts and organic contaminants, making it cleaner than the town of Ayer's water. Source: The Boston Globe, March 17, 2000

• Pepsi-Cola Company contributed $100,000 to the 2005 Presidential Inaugural Committee. Source: Presidential Inaugural Committee

Environment

• In March 2003, Custom Vending, a Maryland-based vending machine company, filed an unfair trading practices lawsuit in the U.S. District Court of Maryland by Custom Vending Co. Inc., alleging that Pepsi Bottling Company granted the Maryland company's competitor, Aramark Corp. of Philadelphia, favored product policies and marketing bonuses. Former New Jersey Gov., Thomas Kean, is director of both Pepsi Bottling Co and Aramark Corp. The suit also alleges that due to Pepsi’s preferential treatment of Aramark, Custom Vending has lost five vending accounts worth $450,000 since March 2000, 11 bids on new contracts that went to Aramark and $230,000 in new Pepsi machine bonuses it would have been entitled to under fair trading laws. Using the grounds of the 1914 Robinson-Patman Act , a federal law that protects small vendors, Custom Vending sought $1 million in restitutions. Source: The Daily Record, Baltimore MD, March 13, 2003

[edit] Praise

• The PepsiCo Foundation donated $5 million to organizations providing disaster relief to the victims of the September 11, 2001 terrorist attacks on the World Trade Center and the Pentagon. The company also made a separate donation of $100,000 to the Salvation Army for humanitarian relief. Pepsi and its subsidiaries also donated truckloads of food, water, juice and sports drinks to American Red Cross locations, the New York City Police Department, the New York Office of Emergency Management, the Salvation Army in Washington, DC. Source: PR Newswire, Sept. 27, 2001

Pepsi has been Praised for Promoting Diversity:

• Pepsi achieved a perfect score of 100 on the Human Rights Campaign 2004 Corporate Equality Index which rates large corporations on policies that affect their gay, lesbian, bisexual and transgender employees, consumers and investors. The 2004 HRC Corporate Equality Index rated companies on a scale of 0 percent to 100 percent on seven factors. The company achieved a score of 71 on the organization's 2003 Corporate Equality Index.
• PepsiCo ranked 7th on Fortune magazine's list of "50 Best Companies for Minorities" in 2004. The company was cited for its PepsiCo Urban Development program that works with community leaders to focus on consumers in minority neighborhoods. Pepsi ranked 9th on the magazine 2003 listing.
• PepsiCo has been named one of the "50 Best Companies for Latinas to Work for in the U.S." by Latina Style in 2004.
• PepsiCo is a supporter of the Global Sullivan Principles. The objectives of the Global Sullivan Principles are to support economic, social, and political justice by companies where they do business; to support human rights and to encourage equal opportunity at all levels of employment, including racial and gender diversity on decision-making committees and boards; to train and advance disadvantaged workers for technical, supervisory, and management opportunities; and to assist with greater tolerance and understanding among peoples; thereby, helping to improve the quality of life for communities, workers, and children with dignity and equality.
  Source: Fortune Magazine, et al.

• The Pepsi Bottling Group ranked 95th on Business Ethics' list of "The 100 Best Corporate Citizens" in 2004. Companies were chosen according to its relations with employees, customers, and the community as well as its commitment to the environment and diversity. Source: Business Ethics

• Pepsi planned to donated a minimum $1 million to tsunami relief efforts. Additionally, the company rushed out Aquafina bottled water from one of its Indian bottlers. Source: MSNBC

• In October 2001, PepsiCo was one of four New York-based companies that introduced a $2 million incentive program designed to help make state hospitals safer. The companies started planning the program after a 1999 report by the Institute of Medicine of the National Academy of Sciences that claimed mistakes in hospitals kill tens of thousands of Americans each year. Through the program, which was co-sponsored by IBM, Verizon and Xerox, hospitals will receive bonuses for incorporating safety measures--such as the use of computerized systems that guard against errors and the hiring of physicians that specialize in intensive care. Source: The New York Times, Oct. 18, 2001

• As of Oct. 22, 2004 Frito-Lay, an EPA Energy Star Partner since 2003, has implemented a successful company-wide energy-efficiency and water conservation effort for its 44 manufacturing plants and 193 distribution centers in the U.S. and Canada. Since the program's inception in 1999, Frito-Lay has already met nearly fifty-percent of its five-year goals for saving water, fuel and electricity. Source: CSRWire

• In January 2000, Frito Lay, a division of PepsiCo, told farmers that supply their food to stop using genetically altered seed for corn for this year's planting for products sold in the U.S. The farmers supply about 95 percent of the corn used in popular snack foods. The remaining 5 percent bought in open market may be genetically altered. In 2001, the company will do the same with potato farmers. Source: New York Times, February 9, 2000

• PepsiCo's ingredients are not derived from genetically modified sources and no genetically modified organisms are used in the manufacturing process or by ingredient suppliers in Europe (see related Genetic Engineering alert). Source: Greenpeace UK, May 1999

• In September 2002 Pepsi subsidiary Frito-Lay announced that it would eliminate trans fats from its Doritos, Tostitos and Cheetos snack products by early 2003. Trans fats have been linked health problems in humans. Frito-Lay said its Lay's and Ruffles potato chips have been prepared in trans fat-free oils for years. Source: Reuters, Sept. 24, 2002

[edit] Brands & Subsidiaries

• Pepsi, Mountain Dew, Aquafina, Sierra Mist, IZZE, SoBe, Mug, Tropicana juice drinks, Mug root beer
• Frito-Lay - Tostitos, Sun Chips, Doritos, Twistos, Lay's potato chips
• Tropicana juice
• Naked juice
• Quaker Oats, Cap'n Crunch, Life cereal
• Aunt Jemima, Rice-A-Roni
• Gatorade, G2[1]
• Doritos, Tostitos, Sun Chips, Pepsi, Mountain Dew, Lipton Ice Tea, Dole Juices, Aquafina, Sobe, Frappuccino (Partnership), Gatorade, Tropicana, Quaker Oats