BIAC Final Deck

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PepsiCo Confidential
Ghar ke Baahar bhi

Maximizing Out of Home Eating & Drinking Opportunities for PepsiCo
As the year draws to a close, there is much excitement in the PepsiCo office. It is that time of year when plans are made for the next year, and senior leaders in the company are making choices where should we resource ahead of the curve? India is an exciting market, and has always been a key focus area for PepsiCo. Among the many exciting opportunities present, one of those that is being discussed more often these days is the exciting out of home arena. Globally a huge business, this is now finally taking shape in India too. The buzz around this is evident, as seen by the number of people consuming some beverage or snack while out on the streets or restaurants and malls!. Clearly, there is something here that merits serious attention and resourcing! Inviting Indias brightest young minds to help PepsiCo India make the most of this opportunity! PepsiCo is waiting to hear from you!
The question you are invited to help us answer

How should PepsiCo India participate in the rapidly expanding business opportunity provided by increased out-of-home eating and drinking?*
What is the best end-to-end business solution to monetize our brand and equipment assets, to ensure we gain on every front viz. Volume & Value Profit Equity Partnerships
*also referred
to as On Premise(OP) or Foodservice (FS) within the industry
CONTENTS
1. The opportunity
2. Key insights, trends, information data-bank

Consumer Customer Pepsico
3. Best practice case studies - inspiration 4. What we expect from you
5. Appendix
About Pepsico Business fundamentals
1. THE OPPORTUNITY
Young On-the-Go lifestyles seek food & drink on the move

More young people on the move students, working women, working men populations increasing significantly Urbanization, personal mobility and longer commutes means time starved people want to eat and drink on the move
OPPORTUNITIES: Packaging
(convenience, fresh, cool etc)
Ready to Eat Ready to Cook/Half Cooked

PepsiCo Confidential 8
This has spurned over a trillion $ food service industry!

Globally, Food Service comprises a mix of channels serving almost 50% of FB consumption occasions, All Out of Home Channels
Vending Hospitals Welfare & Services Workplace Education
Airports & Hotels
Restaurants
Sports Stadiums
Leisure
Retail Street & mobile vendors Hotels & lodging Takeaways Cafs Pubs/bars
On-board
Nightclubs
Recreation
QSR
Cafeterias
(Workplace, Healthcare, etc.)
Parks, Movie Theaters, etc.
Education
(Schools University)
40-50%
FSR
Global FS sales (manufacturer)

QSR=Quick Service Restaurant; FSR=Full Service Restaurant; FB= Food & Beverage
In India, too the Food Service footprint is large, varied & growing
Eateries & Dining Entertainment Travel & Lodging Business and Institutions
Cafes & Bars Clubs/Bars
College/Univ.
FSR
Hotels
Workplace
Theme Parks
QSR
Govt & Military
Kiosks & Food courts
Cinemas
Travel
Catering & Social Services

10
A platform to build both revenue and brand equity

Large and Growing Volume
Growing faster than retail since the last 3 years in India, and globally too
Drives Beverage & Snack Adoption

Compared to home, consumption of specialty beverages are higher and consumption of snacks as a meal replacement are higher
Unique Access to tough-toreach consumers

Has higher per capita trips than retail among a core target youth, working men, upper SECs
SEC= Socio Economic Classification
Drives Brand visibility and equity

Allows controlled quality brand activations in the right mood and environment
11
In India, PepsiCos On Premise Sales have had a great run over the last 5 years
Volume Growth Hi Double Digit CAGR Share Growth
ON PREMISE CHANNEL LEADERS

Urban Advantage >10% Volume Mix & Growing! Regular Brand Activations
12
QSRs and T&L most important channels for beverages today and tomorrow!
Contribution
Others Entt B&I
1% 11%
10%
The top contributors to growth 20122016 Tier 1 growth drivers 1. QSR 2. T&L Next level growth drivers 1. Entertainment
T&L Retail Caf/Bar FSR
21% 4% 10%
QSR
43%
2012
QSR- Quick Service Restaurant; T&L- Travel & Lodging, B&I Business & Institutions
13
Led by key accounts who will drive growth

Acceleration of growth in QSRs
Rapid growth in regional cities
Global QSR key accounts expanding rapidly
Top 5 Global QSRs contributes 85% of growth
Outlet growth of 20% per annum
Travel & Lodging growth through new development
Room nights set to double over next 5 years
Market leaders strengthening their share of T&L
TAJ and ITC to contribute to significant portion of the total growth
Rapid growth through Cinemas
Number of multiplex screens to double by 2018
Cinemas dominated by key players
PVR and INOX becoming more dominant, acquiring smaller National operators
Source: Euromonitor
14
Channels provide different benefits to PepsiCo
XX
X - Profitability +
Railways Institutions
X
XX X
Hotels
X X
QSRs/Food Courts
X X
X
X
X
Vending
X
FSRs
Airports
Cinemas
(MM) 8 oz
13
17
- Branding +
15
*size of the bubble indicates volume
And gives us new opportunities to grow for Food Service

Day Part
FACT #1 80%+ of business from Morning & Evening
Portfolio
FACT #2 Huge Mix of CSDs for PepsiCo FACT #3 75% of industry sales is from foods
75% 76% 54%

Breakfast Morning Snack Evening
73%
Grow beyond morning & evening Grow beyond CSDs Grow beyond beverages
An example of how we can make the most of the channel opportunity

Lodging
Differentiated portfolio based on location/occasion within Lodging channel

Dri ve Quaker Breakfast meal s olutions 100% premi um juice offerings
Travel
Customized Pack Solutions that provide convenience, portability, and competitive pricing
Breakfast
CSD 150ml Cans
Trop Tetra 200ml
In Room
Expl ore low-cost Water option Penetrate distribution on Salty Sna cks and Quaker Cookies
Fitness Center
Water - Cups
Broa den Gatorade and G-Series trial
Lipton
Restaurant /Bar
Introduce Premium Water brands Devel opment of Pepsi Hi-Image contour bottle Dri ve Mi xology ra nge chef-led reci pes and innova tion
Lays Stax - Minis
Quaker Cookies
Gift Shop
Introduce high end coolers to drive i mpulse purchase
Peanuts/Snacks
Quaker Inst. Oats
Event Catering
Represents up to 60% of total Beverage s a les
Vending Solutions
Source: US Travel & Lodging Fact book 2012
17
The way to think about this opportunity: 3 Lenses

Examine the WIFM* for each of the 3 key players
What brings customer footfalls, increases revenue per customer? What is the role of our category in their portfolio? How do we give them a Competitive advantage? How can we ensure best Service?
CUSTOMER
Who is he? Whats his life like? Where is he? What is he doing there? What is he looking for from the occasion/channel? What is the interaction with our categories today?
How do we build brand visibility and equity in a unique and impactful way?
How do we innovate around equipment to satisfy consumer and customer needs in a way that ensures profitability and gains us a competitive advantage?
CONSUMER
PI BRANDS/ EQUIPMENT
What is the role for culinary innovation? How do we design and implement against this?
SWEET SPOT
*WIFM: whats in it for me
18
2. KEY INSIGHTS & TRENDS

The Consumer
Global trends show high potential for India

Frequency Of Eating Out Is High In The Developed World; Translating Into Huge Potential For India
Key drivers of beverage adoption are hanging out with friends and visiting your favorite restaurant
220
Annual Per Cap Trips
Drivers of Beverage Adoption*

Favorite Hangout with Friends Favorite Restaurant 26%
121 40 Total FS QSR 26

15
15
FSR C&G/Ent
Grocery Super Club
Eating Out
23%
Retail
Huge Eating Out potential in India

Going to the Movies
17%
42
Drinking at the Mall
8%
1.2
Entertaining Advertising
8%
India
Singapore
Source Annual visits, Foodservice - NPD/Crest June 08, Retail - IRI Panel (Q308)
20
Supported by key indicators already evident in India
21
Consumers are more emotionally connected here

Foodservice
Environment With Friends Spontaneous Relax & connect Savor the time 45 minutes plus Consumer
Retail
Alone Routine Chore Get it done Complete in < 20 minutes Shopper
Emotional Framework Decision Maker
22
Afternoon-Evening and social gatherings are a natural affinity for LRB

WHERE Significant In Home play but OOH is a strength ; High consumption while relaxing
Packaged Beverages & Soft Drinks overindex on out of home consumption 3-4 times vs. Average beverage consumption (which is mostly in home) Over 60% of beverages consumption happens during leisure/relaxation time
WHEN LRB consumption mostly during non-meal occasions

Over half of soft drinks consumption happens in the afternoon/evening (between lunch & dinner), & another 1/5th happens in the morning (between breakfast & lunch) But other packaged beverages have a more even consumption profile through the day
1/3rd in afternoon/evening 1/3rd at breakfast/morning
10-15% in mid morning
10-15% post dinner too
23
And freshly-prepared food forms the core of what these food services deliver
24
Our core consumer for this opportunity is

Consumers who eat and drink outside home, and are positive to our categories are more likely to be:
Male & Female Younger (<35 years) Urban, from larger town classes
Newly-working and students Across all SEC groups, but those who frequent organized E&D outlets come from upper SEC
25
Some key insights about our core consumer

1. Relationships are changing Need to deliver shared experiences
Nuclearization of joint families- less time for extended families, higher cost of living together in urban Hidden cost of nuclearization- no emotional anchors Friends are the new family- Fun is New Experiences with friends Reduced power distance with celebrities
2. Self as a Project Need to help build social & evolving identity
Im a Rapper, Social Media Expert, Lyricist, Musician Harshit, Roadies Introduction
26

3. MONEY, TECH, BRANDS Need to deliver individual progress & success
Today if you were to see any graphic or poster in my room, I would have either found it online or created it myself on either Photoshop , Picasa.. I can create things which I personally identify with and have it with me
MONEY is an absolute must, I will only go after something (a profession) if there is big money in it!
It is best to buy famous brands, not only because they are good quality but they also say something about who you are in society
4. Digital Native Need to provide tech solutions
27

5. Health & Wellness: Should not compromise on taste
Talking Health
Health = Not-Fall-Sick & Do-My-Work
Energy Immunity
Walking Indulgence
Pleasure Foods
Mental Agility
Personalized consumption (in shared contexts too)
Eating well is a way of life, Physical activity is not

Balanced Meals 71% Never Exercise
Quasi-meals growing
28
2. KEY INSIGHTS, TRENDS & INFO BANK

The Customer
Trends : QSRs/Fast Food chains will dominate the restaurant landscape in the years ahead
2011
Channel
QSR QSR QSR QSR
QSR
2015
Total Outlets
900 385 74 40
410
Company
Domino's Pizza McDonald's Papa John's Sbarro
Subway
403 255 30 12
250
QSR
FSR
KFC
PH/PHD
123
253
400
500
Cafes
Cafes
Barista Lavazza
Whitbread/Costa Coffee
145
80
165
100
FSR
FSR
Carlson/ TGIF
Blue Foods/Pan India
10
70
13
150
FSR FSR FSR FSR

FSR/QSR
Nirulas Specialty Group/MLC BJN Group Barbeque Nation

Litebite Foods
25 68 35 17
43
25 90 42 20
90
FSR
FSR
Encore/Twinkle Hospitality
Kebab Factory
100
12
200
20
30
Trends: Entertainment channel Malls, Cinemas Up

Mall Mania Driving New Consumption Points Cinemas - 3.7 Trips p.a.
(vs <1% for other APAC countries)
#1 Entertainer For Indians PVR acquisition of Cinemax makes it the largest Inox is in acquisition mode Fame & CCPL Cinemas (9 Locations)
Mall visits emerge as a key hangout activity, both during weekends and weekdays
Hang out/shopped at the mall Visited relatives/friends Watched movies in multiplex
70 78 69 57 57 57 56 74 84 87 80 80
885
1100
Been to Rest/Hotel/Cafe Been to clubs/pubs/parties

Been on a long drive/vacation
Weekends
Screen Number 2011 2013
Weekdays
Source MTV
Helping Expansion of FS & Cinemas

Invest in the Investors (Cinepolis)

31
Trends: Hotels also seeing high growth

Room Supply in India set to grow exponentially
No of Rooms
173000
India Upcoming Supply (2010-13)

18497 5714 6874
1835 543
95087 23185
1998/99
150
114000
2514 2013
Midscale Economy
2010
2008/09
2012
2017
Hotel Expansion (2012-17)
Upscale
Source HVS Research, Knight Frank Research
120
112
137 100 38
5 12 35 42 10
7 10
24
28
10 17
9 12
26
30
14
33
20
37
31
42 12
ITC
Leela
EIH Ltd.
Taj
Hyatt
Marriott Bharat Hotels

2012
Park
2017
Starwood Pride
Accor
Royal Orchid
Carlson
IHG
Source: Euromonitor,
32
Customers typically want us to help their business grow in different ways

Attract new / right consumers Drive Occasion / Day-part / Health / Sustainability agendas
Increase ticket size with value adds
Drive productivity via operations
33
How do restaurants/cinemas generate sales?

Driving Revenue Inside the Four Walls Trading Area Marketing
Trading Area
Schools Offices 87% of business within 5 km 50% live there 37% work/ shop/go to school/cinema Primary traffic generators may be different by day part
Restaurant
Shops Cinemas
Homes
34
The restaurant profit equation uses TATC to grow revenues

Restaurant Sales Equation
Sales = TC x TA
Objectives
Increase Transaction Count (Traffic)
Increase Average Check
Strategies

Build Traffic

Increase Conversions
Great Ambience Great Product/NPD Great Customer Service Speed of Service Multiple Vending points Service On Seats Currency/Price-offs Scratch card Promo Great Collectibles Loyalty Cards (Buy 4 get 5th Free)
Sell Larger Items
Sell More Items Per Transaction

Combos Premiums Special prices Proper use of POS Suggestive selling Kids Meal Packs Take Away Family meal days/nights Combo Crew Incentives
Tactical Techniques
Grand opening Newspaper Ads Newspaper Inserts Direct Mailers Anniversary/Spl Event KA Cross Promo PET Label Promo News: NPD Preview, etc. Celeb Meet & Greet
Upsizing XL Combos Suggestive selling Crew Incentive Staff Buttons Go Large Feature better value Impactful POSM
Target Audience
Actions must get New Customers
Actions are targeted to Current Customers

35
Key challenges for customers

Full Control over the Supply Chain
Shortage of trained manpower & attrition

Margin pressures accentuated by rising real estate costs Currently turbulent economic environment
Differentiation
36
2. KEY INSIGHTS & INFO DATABANK

PepsiCo Brands & Strategies
PepsiCo India owns an incredibly rich house of brands

Powerhouse of Muscular Brands
The largest Food & Beverage combined business 8 Rs1000 crore+ brands: Pepsi, Lays, Mirinda, Kurkure, 7Up, Slice, Aquafina, Mountain Dew Every brand well known & loved across the country (awareness of 50%+ & distribution reach of 60%+ on most brands) A strong mix of globally advantaged brands that have loyal following (like Pepsi, Lays & Dew), as well as locally crafted lovemarks, anchored on India rituals (like Kurkure, Slices, Nimbooz) Strong innovation footprint & locally created brands: Slice, Kurkure, Nimbooz, Atom, Kurkure puffed snacks, Nimbooz Masala Soda
38
That span all consumer needs through the day

Mid-Day Indulgence Through The Day Treat Afternoon Family Snack
Morning Health Dose
Different Tastes of Evening Refreshment
Mind & Body Boost Breakfast Nutrition
Thirst Thru The Day
Sports Hydration
39
Our Brands own priceless image and associations
Youth Aspiration
Family: Modern Twist on Tradition
Older Adults
International Flavors, Irresistible Taste
Kitchen Logic Ingredients
Super Grain for Nourishment and Health
Energy for today, Heart Healthy for Life
40
Indian Adults/ Family Snacking
(Younger) Adults, middle class
Tweens
Traditional Indian Namkeens
Hunger Filling, Satisfaction
Light & Fun Shapes & Flavours
Joy of Sharing
Bole Mere Lips...I Love Uncle Chips
Cheesy Mischievous Fun
41
Youth: Capture the excitement of NOW Electric Taste of Cola
Youth: Impulsive Uninhibited Fun
Young Adults: Mood Uplifting
Young Men: Courage liquid
Bold Orange Taste
Lemon Refreshment
Mind & Body Boost
42
Young Adults: Sensorial Pleasure
Young Families: Breakfast Nutrition
All Adults
Sports & Active Fans Rehydration, Sports Achievement
Mango Indulgence
9 Fruit Nutrients
Quality, Purity, Taste
Make Breakfast 100%
The Purest Part of You
Is it in you?
43
The PepsiCo Foodservice Philosophy

Help our customers grow their entire business!
Towards that end, we believe that One solution doesnt work for everyone Our focus is customized and based on the customers priorities We aim to set best-in-class standards in service, quality and innovation We use the power of shared Insights
44
PepsiCo leverages 4 most commonly used strategies in QSR/Cinema

1. Combos 2. Cup Upsize
3. Crew
4. News
45
Some examples of how PepsiCo has partnered them

Attract new/right consumers Drive Occasion/Day part/Health/Sustainability agendas
Utilizing fleet vehicles to drive awareness and footfalls for our customers
Quaker in a cup format customized for airlines
Increase ticket size with value adds
Drive productivity via operations
Leveraging platforms/celebs to drive high ticket size items
Lowered cost of ingredients, packs; operational efficiencies saving labor cost
46
And extended our range into various solutions

QSR BEV
Lipton FTN Juice FTN Premium Water Premium Glass Bottle
Frozen
FSR
Cinema
Asian Specialty Bev.
Smoothies
Mixology
Powder Teas/Juice
Premium Water
Mixology
FOODs
Breakfast Snacks
Breakfast Muffins Nachos Station
Muffins
Cookies
Nachos
Premium Snacks
47
2. KEY INSIGHTS & INFO DATABANK

PepsiCo Equipment
PepsiCo India owns an array of equipment assets

In both the foods and the beverages categories Equipment is critical to success in this space it must match customer needs on several dimensions:
Financial Operational Space Imagery Portfolio
Each machine may perform a different function ranges from simply stocking to a complete creation of finished product from scratch
The next few pages explains the functions of each of these, along with some basic financials to help you understand how the business works, and devise suitable solutions either using these or better still, developing your own out-of-the-box ideas.
49
What is Post Mix?

Soft drink made on location- miniature factory installed on-premise Local water must be filtered, carbonated and blended with syrup at the location while being dispensed.
Tubing Syrup Pump (Gas) 60 -65 psi
Valve
Fountain Dispenser
1200 psi
Bag-in-Box
80-85 psi
Pre-carbonation cooling coil
Carbonator
CO2
Water supply (filtered)
In remote chilled systems, the syrup is chilled in a back room away from the dispenser and then pumped through the tubing into the dispenser. PepsiCo Confidential 50
The process at the PLANT

Concentrate
Sugar Simple Syrup

Finished Syrup Post Mix .syrup rests
Water Treatment
Soda Water Filter Carbonator Bottles, Cans, Premix
CO2
Cooler Refrigeration System Type
52
Functioning of Refrigeration System

COMPRESSOR - Low temperature low pressure vapor at State A is compressed
to high temperature pressure vapor at State B (SUPERHEATING PROCESS)
CONDENSER - Vapor is condensed into high pressure vapor at State C

(DE-SUPERHEATING/ HEAT REJECTION/ SUB COOLING PROCESS)
CAPILLARY - Condensed liquid passes through expansion devise (capillary) where

high temperature & pressure gets converted into low temperature & pressure
EVAPORATOR - Vapor is throttled down to low pressure liquid & passed on to

evaporator at State D. where it absorbs heat from surroundings from circulating fluid (being refrigerated) & vaporizes into low pressure vapor at State A
HEADER - Excess liquid coming from evaporator gets stored here which helps in
reducing excessive liquid getting into compressor. Excess liquid in compressor would result in increasing load on pumping & thereby failure of Compressor
FILTER DRIER - Moisture is absorbed from Refrigerant
53
Beverages Equipments
Cost Rs 2.85 Lakh Rs 8000/Annum One Trip/Month Yes 2 Water, Concentrate
Maintenance Cost
Water Connection
Bunn Machine
No. of Valves Input Ingredients
Output Product Dimensions (cm) Hurdle rate
Frozen Slush 80 (H) X 40 (W) X 62 (D) 35 glasses/day
Cost Maintenance Cost
Rs 10,000 Rs 300/Annum
Water Connection
No NA NA
NA 89 (H) X 44 (W) X 43 (D)
Counter Top Cooler

Output Product Dimensions (cm)
Capacity Hurdle rate PepsiCo Confidential
70 Litres (42 Bottles of 300ml) 100cases/year 54
Cost Rs 35,000
Maintenance Cost Water Connection No. of Valves
Rs 850/Annum No NA
NA NA
Visi Cooler
Input Ingredients Output Product
Dimensions (cm) Capacity Hurdle rate
200 (H) X 64 (W) X 72(D) 650 Litres (315 Bottles of 300ml) 700 cases*/year
Cost Maintenance Cost
Rs 55,000 Rs 1200/Annum
Water Connection
No NA NA
NA 200 (H) X 116 (W) X 84 (D)
Double Door Visi Cooler

Capacity Hurdle Rate PepsiCo Confidential

* 1 case = 24 servings of 300ml beverage
1000 Litres (760 Bottles of 300ml) 1500 cases/year 55
Cost Maintenance Cost Water Connection
Rs 1.75 Lac/unit (Installed in Pair) + Rs 2.6 Lac (other equipment's)
Rs 10,000/Annum. 2 Trips Monthly for Preventive Main and Sanitation Yes

8 per machine (Total 16)
Pmx Tower
No. of Valves
Input Ingredients Output Product Dimensions (cm) Hurdle rate

Cost
Conc., CO2, Water Carbonated Beverage 69 (H) X 47 (W) 100 cups/day

Rs 2.65 Lakh
Maintenance Cost
Pmx Machine
Water Connection
Rs 1200/Annum Rs 10,000/Annum 2 Trips Monthly One for Preventive Main., Other for Sanitation Yes 6 Conc., CO2, Water Carbonated Beverage 90 (H) X 55 (W) X 78 (D)
65 cups/day
No. of Valves Input Ingredients Output Product Dimensions (cm)

Hurdle rate
56
BEVERAGES/FOODS EQUIPMENTS
Cost Rs 4.5 Lakh
Water Connection No. of Valves Input Ingredients
No NA NA
NA 180 (H) X 110 (W) X 95(D)
Avm Merchant 6
Maintenance Cost
Capacity
Rs 12,000/Annum 30 Packs of Snacks + 200 Bottles of Beverages 2920 cases/year
Hurdle rate
57
FOODS EQUIPMENTS
Counter Top Rack Counter Top Rack
Premium Hospitality Rack
Cost Shelves Facings/Shelf

Depth/Facing Capacity (Packs)
Rs 1500 2 2
2 8

Rs 2500 2 5
2 20

Rs 4000 4 4
8 128
58
FOODS EQUIPMENTS
MODC Rack Foods Rack Quaker Express Rack Cinema Hawking Tray

Rs 1800 5 5
3 75

Rs 5000 5 5
5 125

Rs 1500 3 2
2 12
Cost
Rs 2500
59
An example of a recent innovation success Pepsi Touch

Touch Screen User Interface Small footprint Capable of running digital media Suitable for Self Serve or Crew serve 12 ingredients e.g.: 8 brands & 4 flavor shots Capability for high-low-non carb One common architecture supports multiple languages, brands globally
60
Another recent success: ICE BOLT frozen slush at cinemas
61
Our Equipment priorities are to

Get the right throughput from the equipment to justify ROI
Ensure Quality Control

Reduce base equipment acquisition cost & service costs Meet customer need of space constraints & energy efficiency, while be attractive looking to drive impulse purchase Support innovations that can drive innovative products (e.g. Flavor Shots)
62
The Key Considerations for PepsiCo when launching an innovation

How will we differentiate so as to earn a premium revenue realization Does the capex justify the volume and ROI
Who will be our partners in-house, franchisee, 3rd Party manufacturer, customer, etc.
How will we distribute effectively: go-to-market strategy
How will we control product quality

How will we protect the brand from dilution
63
3. BEST PRACTICE CASE STUDIES
The Sweet Spot: Consumer, Customer And PEPSICO
A few of our success stories from across the world

Country A B C D E F INDIA Mexico Puerto Rico US UK Initiative Cinemas Activation Doritos street snack Quaker Culinary Innovation Breakfast Other Products/Cases QSRs Taco Bell McDonalds Customer PVR
65
A. CINEMAS ACTIVATION
India
Cinema is the no. 1 entertainer in India
988+
Multiplex screens
3.04
Average trips p.a. to a cinema
1200%
Growth in multiplexes over past five years
Opportunity to engage with consumers & generate billions of consumer impressions
3770 million
Number of tickets sold p.a. Fuelled by a exponential growth in multiplex culture Consumers are most engaged in this channel
67
CINEMA IS A RELIGION IN INDIA
68
We first identified barriers to beverage consumption

Unreasonable Pricing Wasn't Enough Time Lack of Choice Packaging Show Time Others 6% 16% 10% 10% 16% 42%
69
Tackling Barrier 1: Too expensive
SR Strike Rate
70
Overcoming Barriers 2/3: Time shortage, Less choices
Mirinda Freeze
7Up Nimbooz Masala Soda
71
Ensuring we built brand imagery at every touch point
Queues
72
RESULTS: Both Volumes and Imagery Up significantly
73
Learnings captured in a 6*2 framework
74
Resulting in continued leadership at Indian Cinemas
75
B. DORITOS
Mexico
Winning on the Street in Mexico

Leverage existing packaged offering; Customize for a portable Center of Plate/Snack Doritos Spicy Sweet Chili Walking Chicken Curry
77
C. QUAKER
Puerto Rico
Consumer lifestyles are changing

On the go lifestyle. 55% of consumers that eat breakfast, consume it OOH. 45% of consumers that have breakfast OOH, eat @ a Quick Service Restaurant (QSR) Chain. Consumers have considerably reduced their grocery expenses. Consumers look for prepared meal options.
79
Quaker has strong equity in the market

Quaker Oatmeal #1 in the World High SOM 83% (Value) High TOM 90% Penetration 85% Strong Health related attributes: Nutritious, Healthy and Good for the Heart
Cholesterol helper and Fiber among the most remembered product characteristics
16% 4%
7%
Total PR SOM - Hot Cereal

2%
Puerto Rico carries one of the highest Oatmeal Per cap around the world (1 KG) Oatmeal is the most important segment in Hot Cereals PR, accounting for 71% of mix
SOM - Share of market | TOM - Top of Mind
71%
Oatmeal
Wheat
Cream of Corn Mixed
Rice
80
Based on Customization, Logistics

Channel Customized Product Quick Delivery Response
Client Orders
BH Delivers 48 hours
Final Client
Product: Instant Oatmeal Fortified with Iron Cut: PRs Market Oatmeal Special Cut Size: 70.5 ounces/2,000 Grs. per bag Case Count: 6 units/per case Cost: $XX per case
Engaged through Ballester Hermanos (Distributors) Food Service Representatives
81
Profitability and Partnership

High Margin Proposition Contract Elements
In Store Visibility
Media Exposure
Oatmeal Cooking Trainings
Client Cost per bag- XX

XX% SRP/Kilo benefit
Servings per bag- 32 (for a finished 8 ounce

product)
Specialized Equipment
Ounces per serving- 2.0 Oz (0.2oz of spoilage) Oatmeal cost per serving- XX Average SRP per cup - XX
Targeted Nutritional Seminars
Media, In Store and equipment negotiations varies by QSR Based on BE
82
Created a strong Quaker QSR relationship
Register Topper
Billboards
Windows Decal
Banners
Menuboard
Trayliner
Menuboard
In-Store Dangler Table Tent
83
Product Specifications (e.g.)
Recipe for 8 ounces serving/Costs
Quaker Oats X
Milk X
Sugar X
Salt X
Cup, Lid & Spoon X
Estimated Raw Material Cost: XX Average SRP 8 ounces-XX Oats Cooker Storage/Quality Preservation
Additional Equipment
Cooking Time: 20 min/Cost per unit XX

Canister/Cost per unit X

84
D. CULINARY INNOVATION
USA
How Does PepsiCo add Value

Our brands provide flavor, texture and fun to existing offerings
and they also must be simple for an operator to execute
86
Taco Bell: Evolution from CSD Supplier to Total Culinary Solutions Provider
YESTERDAY: CSD Supplier TODAY: Total Food & Beverage Solutions Partner
87
New Opportunity:
Drive Center of the Plate Menu Innovation Leveraging PepsiCo Brand Portfolio and Culinary Expertise
Taco Bell needed to re -invigorate the menu

Building a solid, incremental foods business with Taco Bell

Establish Permanent Menu Item
2010: P5 National Launch (XX MM) 2011: FY (XX MM) 2012: FYF (XX MM)
Build Culinary Pipeline

2011: P1-P5 (X MM) 2012: P1-P2 (X MM)
Launch Iconic Signature News

2011: Test Market 2012: P3 National Launch
PepsiCo Brands can Add Value by Differentiating Base Offerings Through Branded Innovation
Doritos Loco Taco Re-inventing the Taco!
Greg Creed
Taco Bells DLT Launch Objective: Build a $1B platform
Fire and Ice

driving increased PepsiCo importance to Taco Bell

Taco Bell Sales 2008 $X Billion Taco Bell Sales 2012F $X Billion
Pepsi = 13-15% of TB Sales
Pepsi + Frito-Lay = 22-25% of TB Sales
We have just begun
DLT Extensions
Late Night
Breakfast
OASIS
91
E. BREAKFAST
UK
Bending breakfast habits in the UK
93
Overview/Launch Rationale
We launched Quaker with McDonalds at the end of 2004 as part of their new Breakfast menu
Front window display
Drive Thru menu
94
Overview/Launch Rationale
the key benefit for McDonalds was huge positive PR . Their objective was to drive consumer re-evaluation of the offer
Sandwell Express Walsall Express Wolverhampton Express
95
Product Proposition
Simple and high quality porridge, a healthier way to start the day breakfast positioning FMO Build
The product consists of approximately 27gr of Quaker Rolled Oats that is topped with skim milk 100% organic. Made-to-order in single servings, it is served hot microwave - and offered in a paperboard cup with plastic spoon
Porridge Oats served with Jam or Syrup
96
Product Performance
We also refreshed our packaging in 2007 and McDonalds gave Oatso Simple a more defined role supporting Healthier core food items
97
Product Performance
Quaker breakfast bowl giveaway leverages momentum and adds value
98
Stringent Operations Procedures
99
Huge Success
Delivered over
3.5 Million
servings annually through McDonalds. Sales driven predominantly by significant up weight in McDonalds Marketing spend to support Breakfast
100
F. SOME OTHER EXAMPLES
In China, Unilever has seen big success in Food Service

Unilever Food Solutions success driven by 3-step philosophy
1 2
3
Outside of Unilever most concentrate & powder players are small Concentrate
Open Pour powder Pour water
Powder
For LRB, Lipton currently provides mango tea and lemon tea in powdered format for preparation onpremise
102
Factors that have contributed to this success

Dedicated team and organization support
Unilever
Corporate HQ
Tailored GTM model
Value added service outside realm of food and beverage
Unilever Food Solutions

F/S HQ
Specialized restaurant distributors
China
F/S Country
Personal care
Foods
Icecream
Sales
Chef
Unilever F/S team
Separate reporting org. Team reports directly to Global Food Solutions head Dedicated sales force, servicing key accounts Experienced chef in each key areas for sales and service
Tailor designed GTM model Both dedicated KA sales and chef team serving all major restaurants Relying on specialized restaurant distributors to distribute, leveraging their scale benefits
Deep culinary expertise Chefs provide new menu items with recipes and ingredients to customers
Comprehensive partnership model with restaurants, providing restaurant related training Kitchen management Restaurant service management Consumer management
103
The QSR Wholesome Breakfast Landscape across markets
104
Finally, some examples of partnering customer led beverage innovation
105
4. WHAT WE EXPECT FROM YOU
Bringing up the core business challenge again

How should PepsiCo India participate in the rapidly expanding business opportunity provided by increased out-of-home eating and drinking?*
What is the best end-to-end business model solution to monetize our brand and equipment assets, to ensure we gain on every front viz. Volume & Value Profit Equity Partnerships with Food Service Customers
*also referred to as On Premise(OP) or Foodservice (FS) within the industry
107
Specifically, we would like you to answer questions such as.

What are the low hanging fruit opportunities & solutions and which ones are farther out? For Innovations, how should we do custom innovation that gives us a sustainable pipeline and builds PepsiCo incumbency? And how should we do platform innovation that creates menu by day part and/or cohort? What kind of segmentation model might be most useful to identify opportunities consumer X customer X occasion? How can we take our brand activations to the next level in this space? What should be our brand portfolio strategy i.e. which brands for which customers, occasions, cohorts? What new/modified equipment can we employ to maximize the opportunities keeping in mind cost, space, simplicity, image and convenience considerations? What is the Business Model of the idea - P&L impact of the solutions, Manufacturing details, Distribution, Partnerships, etc. Both short term and longer term? For us and for our customer partners?
For each Solution that you propose:

Please ensure that you have considered well, and have described:
A business model solution that captures:
Should it be completely company owned or have a mix of partnerships with franchise/3 rd parties to deliver your recommendation Please present the pros & cons properly before suggesting recommendation
Benefits to PepsiCo in terms of:

Strategic Win Volume Value Profit Brand Equity Sustainability and Customer relationship Partnerships Attracting/retaining consumers Ticket upsizing Portfolio planning/gaps Value/volume/profit gains Longer term strategic intent
Benefits to the Customer in terms of:
Benefits to the Consumer in terms of functional and emotional payoffs from the product and the experience together
How We Will Evaluate
Not more than 5* pages per entry

Will be entertained for the first shortlist.
If shortlisted, you will get the chance to submit a more detailed entry for the next round. Evaluations will be on the basis of:
1. 2. 3. 4. Appreciation of the business problem Power of Insight identified for the situation analysis Equipment Innovation and P&L workings Creativity and Feasibility of solutions proposed For Customer and for PepsiCo 5. Clarity of articulation/presentation
Ideas that drive revenue profitably will be given high weightage

*In power point slides, not including the cover slide. Longer entries will get automatically disqualified at the first stage
110
111
6. APPENDIX
About PepsiCo Acronyms
PepsiCo: Great Performance, Great Values!

World No.3 in FMCG
Ranked 1st in 2011 Dow Jones Sustainability World Index F&B sector
$26 mm contribution to foundation causes
Revenues $65 bn
Presence in 200 countries with over 500 brands
Water Global AwardsEnvironmental Company of the Year
World No.2 in F&B
22 brands > $1 bn sales each
3rd in CR Magazine- 100 Best Corporate Citizens
285,000 employees
113
PepsiCo India: An Exciting Journey

2012
2011
2010
2009
VOLUME
2008 2006 2000

2002 1999
1998 1996
1995
1993
TIME
PepsiCo India: Performance with Purpose!

CII National Award Water Management Golden Peacock Award Water Conservation AMCHAM Innovative CSR Award Kolkata Plant
Social Governance Award Waste to Wealth
Water Digest Award For Water Practices
PepsiCo Award Environmental Sustainability
115
Vast & structured Make-Sell-Deliver footprint

Company owned bottling plants Franchise owned bottling plants Jammu Channo Phillaur Faridabad Bhiwadi Panipat Foods plants
BEVERAGES
Plant
Distributor Hub
Channo Bazpur Delhi Sonepat Noida Guwahati Guwahati Kosi Jainpur Patna Jodhpur Sataria Kanpur Bharuch Kolkata Bhopal Rajkot Jharkhand Gwalior Kolkata Cuttak Nagpur Mahul Roha Pune Dukes Chaupanki
Pune
Wholesaler
Retailer
Urban spoke
Retailer
Rural spoke
Retailer
Retailer
FOODS
Plant
Aurangabad Kolhapur
Vizag
Goa
Dharwad
Hyderabad Guntur Hyderabad Bangalore Hosur Chennai Erode Pondicherry co-packer
DC
Bangalore
Palakkad Madurai
Distributor
Wholesaler
Trichy co-packer
Retailer
Retailer
116
Beverages Portfolio
Carbonated Soft Drinks (CSD) Pepsi/7Up/Mirinda/ Mountain Dew/InnovationPepsi Atom/7Up Nimbooz Masala Soda Evervess Soda Slice
Nimbooz
Core products
Juice Based Drinks (JBD)
Water Juices
Sports Drinks
Aquafina Tropicana
Gatorade
Premium products
Ice tea Water Lipton Ice Tea Himalayan TATA Gluco+ TATA Water+
Value Products
117
Foods Portfolio
Lays Potato Chips Lays Baked Uncle Chipps
Salty
Bridge
Kurkure
Cheetos Extruded
Extruded (Monster Paws/ Puff Corn) Traditional Lehar
Oats Poha Upma
Quaker
118
Frequently used acronyms

LRB CSD MBD FS OP QSR FSR
T&L
Liquid Refreshment Beverage Carbonated Soft Drink Mango Based Drink Food Service On premise Quick Service Restaurant Full Service Restaurant
Travel & Lodging
SEC
WIFM
Socio Economic Classification

Whats in it for me
SR SSG CTS SOM CAGR TOM

Strike Rate Same store growth Consumer Track Survey Share of market Compounded Annual Growth Rate Top of mind
119

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Disclaimer for Become Indras Advisors Contest

Ghar ke Baahar bhi

The question you are invited to help us answer

to as On Premise(OP) or Foodservice (FS) within the industry

2. Key insights, trends, information data-bank

3. Best practice case studies - inspiration 4. What we expect from you

Young On-the-Go lifestyles seek food & drink on the move

Ready to Eat Ready to Cook/Half Cooked

This has spurned over a trillion $ food service industry!

Airports & Hotels

Parks, Movie Theaters, etc.

Global FS sales (manufacturer)

Cafes & Bars Clubs/Bars

Govt & Military

Kiosks & Food courts

Catering & Social Services

A platform to build both revenue and brand equity

Drives Beverage & Snack Adoption

Unique Access to tough-toreach consumers

Drives Brand visibility and equity

ON PREMISE CHANNEL LEADERS

T&L Retail Caf/Bar FSR

Led by key accounts who will drive growth

Global QSR key accounts expanding rapidly

Top 5 Global QSRs contributes 85% of growth

Outlet growth of 20% per annum

Travel & Lodging growth through new development

Room nights set to double over next 5 years

Market leaders strengthening their share of T&L

TAJ and ITC to contribute to significant portion of the total growth

Rapid growth through Cinemas

Number of multiplex screens to double by 2018

Cinemas dominated by key players

Channels provide different benefits to PepsiCo

*size of the bubble indicates volume

And gives us new opportunities to grow for Food Service

75% 76% 54%

An example of how we can make the most of the channel opportunity

Differentiated portfolio based on location/occasion within Lodging channel

CSD 150ml Cans

Trop Tetra 200ml

Lays Stax - Minis

Introduce high end coolers to drive i mpulse purchase

Quaker Inst. Oats

Represents up to 60% of total Beverage s a les

Source: US Travel & Lodging Fact book 2012

The way to think about this opportunity: 3 Lenses

2. KEY INSIGHTS & TRENDS

Global trends show high potential for India

Annual Per Cap Trips

Drivers of Beverage Adoption*

121 40 Total FS QSR 26

Grocery Super Club

Huge Eating Out potential in India

Supported by key indicators already evident in India

Consumers are more emotionally connected here

Emotional Framework Decision Maker

Afternoon-Evening and social gatherings are a natural affinity for LRB

WHEN LRB consumption mostly during non-meal occasions

10-15% post dinner too

Our core consumer for this opportunity is

Some key insights about our core consumer

2. Self as a Project Need to help build social & evolving identity

Im a Rapper, Social Media Expert, Lyricist, Musician Harshit, Roadies Introduction