Dear Fellow Stakeholders,
By any standard, this is an inspiring paragraph to read in an annual report: "To ensure a continuing climate in which it can prosper, the modern company . . . must take an active role in civic, cultural and community programs. While results in this area are less tangible and harder to measure than sales or profits, they are no less important."
The idea that ethics and growth are connected is a broadly shared understanding in today's business world. But these words appeared in the PepsiCo Annual Report back in 1968—just three years after the Pepsi-Cola Company and the Frito-Lay Company merged to form PepsiCo. It is a testament to how long we have treasured the belief that corporate capabilities and corporate character are not just integrated, but inseparable. Back then, it led PepsiCo to become early corporate leaders on everything from civil rights to scholarships to recycling, while growing our beloved brands in markets around the world.
Today, PepsiCo is a $60 billion global food and beverage powerhouse offering consumers a wide range of choices. Our global beverage business is large and highly profitable, with brands that stand for quality and are respected household names—including Pepsi and Diet Pepsi, Pepsi Max, Mountain Dew, Sierra Mist, Gatorade, Lipton Iced Tea and popular local brands such as Mirinda in Europe and Nimbooz in India. Meanwhile, our global snack business is driven by equally iconic and delicious brands, such as Lay's, Ruffles, Doritos, Fritos, Cheetos, Walkers in the U.K., Fandangos in Brazil and Gamesa in Mexico. And nested within our snack and beverage businesses is a nutrition business focused on fruit, vegetables, grains and dairy, that is nearly $13 billion and growing.
As the world's second-largest food and beverage business, our ability to have a positive impact on the world is vast. We believe that building a healthier future for people and our planet is good for PepsiCo's financial success and good for the world. This is the cornerstone of our Performance with Purpose mission: that our long-term profitable growth (our Performance) is linked intrinsically to our ability to deliver on our social and environmental objectives (our Purpose).
From a business standpoint, this is about both the short term and the long term, today and tomorrow. On one hand, Performance with Purpose has helped PepsiCo be competitive and profitable today: in 2010 alone, our net revenue grew by 33 percent* and our core division operating profit rose 23 percent*—both on a constant currency basis—which enabled us to return $8 billion to our shareholders. On the other hand, Performance with Purpose keeps us ahead of the global challenges shaping our industry—which are articulated in the pages that follow—setting us up for market leadership and profitable growth into the next decade.
As this report demonstrates through four case studies, Performance with Purpose is not a stand-alone initiative. Instead, our sustainability goals, across the four planks—Performance, Human, Environmental and Talent sustainability—are woven into the fabric of our brands, guiding how they do business, while generating significant sourcing, operational and consumer impacts that improve both our top and bottom lines.
We've made progress. As you will see, in some areas, we have made more progress than others—but we are moving in the right direction. Based on what we have learned in this challenging process, we are also determining how to best focus our efforts, in order to have the greatest impact. As with any complex initiative, it's important to be flexible and responsive to a changing world. As part of this learning process, we are working to create better measurements to track our progress; invest in long-term research and development to expand our innovation; and build new partnerships to help achieve our Performance with Purpose goals.
The Promise of PepsiCo it is not about altruism. It is not about environmentalism. It is, instead, about enlightened self interest: we believe these are the benchmarks that PepsiCo must meet to succeed in today's economy while ensuring, as we said in 1968, a continuing climate in which PepsiCo can prosper.
John Kennedy once said that "the problems of the world cannot possibly be solved by skeptics whose horizons are limited by the obvious realities. We need people who can dream of things that never were." I look forward to working together, building together and dreaming together in the days ahead to build an even bigger and better PepsiCo.
Indra K. Nooyi Chairman and Chief Executive Officer
* Core results and core results on a constant currency basis are non-GAAP measures that exclude certain items. To find a reconciliation to the most directly comparable financial measures in accordance with GAAP, please see page 108 in our 2010 Annual Report .
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