Pepsi-Cola North America

Pepsi-Cola North America (PCNA) had an excellent year, as its long-standing strategic focus on building a broad portfolio of carbonated and non-carbonated beverages paid off once again.

With volume up 4%, revenue up 18% and operating profit up 13%, PCNA grew significantly faster than its largest competitor. In fact, PCNA gained share while our biggest competitor's share declined.

Innovation was a big driver of that growth. PCNA brought an array of exciting new products to the marketplace.

Much of the innovation focused on carbonated soft drinks. Pepsi Twist, which is Pepsi with a hint of lemon, helped spark growth in our very large and important cola business. Within 30 days of launching Pepsi Twist nationally, Pepsi bottlers had sold more than 10 million cases.

In its first full year on the market, lemon-lime Sierra Mist generated very healthy sales and, where it was available, drove significant growth in the lemon-lime category. Meanwhile, Mountain Dew Code Red, which turned up the heat in America's long-standing love affair with Mountain Dew, contributed to strong Mountain Dew growth of 6%.

While traditional carbonated soft drinks account for the bulk of our beverage volume, as consumers seek greater variety, our non-carbonated drinks have been growing very rapidly, with volume up more than 30% in 2001. It's not surprising. Over the last decade we have built the leading portfolio of non-carbonated drinks — including Aquafina bottled water, Lipton ready-to-drink teas, Frappuccino coffee drinks, Dole juices and drinks and SoBe beverages.

Aquafina, already the top-selling single-serve bottled water in the United States, grew about 45% in 2001. The launch of a new "rocket" shaped bottle helped drive U.S. growth of more than 20% in Lipton Iced Tea. And additional volume growth came from products under the Dole and SoBe brands.

PCNA's goal is to continue to be the fastest growing broad-based beverage company, as it innovates to build its portfolio. It kicked off 2002 with the launch of a new and improved Lipton Brisk ready-to-drink tea. And there are more exciting products on the way.

PCNA, working with Frito-Lay North America (FLNA), also added excitement with marketing programs in 27 urban centers across the United States. They included merchandising, promotions and advertising that captured the attention of African-American and Latino consumers. PCNA and FLNA activated more than 5,500 accounts and achieved volume gains of more than 25% in participating stores. Along the way, PepsiCo received several awards for multicultural advertising.

Worldwide Beverages continued -->