PepsiCo 2009 Annual Report

Dear Fellow Shareholders,

A Roman author said more than two millennia ago that anyone can steer the ship when the sea is calm. The true test of endurance and stamina, he went on, is to navigate through rough waters. Well, this year has seen some of the roughest possible waters. The economic tempest of 2008 turned into the perfect storm of 2009. Business was battered by volatile commodity costs, frozen credit markets, fluctuating currencies and negative GDP rates.

At PepsiCo, it seemed as if each day brought a new challenge. Every one of them tested the strength and capabilities of our organization. And I can declare with great pride that we passed the test of endurance and stamina wonderfully well. We are a company with great resilience. The ability of our associates to pull together has left me excited about our momentum from 2009 into 2010 and beyond.

I don't think this is due just to the ability of all the great people we have. I think our company is more than the sum of those considerable parts; we draw extra strength from the solid foundation of values and principles upon which PepsiCo is built.

The business community and government did a great deal of soul-searching in the midst of the challenging global economy, seeking to uncover the source of our world's financial problems and how best to share responsibility to address the situation. As debates raged on issues that are core to a vibrant, functioning marketplace, it became increasingly clear as the year went on that corporate ethics are inexorably linked to a healthy economy.

A former American president, Dwight Eisenhower, once said, "A people that values its privileges above its principles soon loses both." The same is true of a company, and the past 18 months have proved the wisdom of the remark.

Here at PepsiCo, we are fortunate to have embedded Performance with Purpose into our culture and fabric long before this current downturn. It is one of the fundamental factors that kept PepsiCo on the leading edge in 2009.

Our basic belief–that companies today must marry performance with ethical concerns–is resonating more than ever before. For consumers, this translates into receiving value, both economic and social, from trusted brands. For governments and the wider public, it translates into responsibility. This acknowledges that businesses have a responsibility to the communities in which they operate, to the consumers they serve and to the environment whose resources they use.

We provide great-tasting products, outstanding quality and supreme value to consumers worldwide, while maintaining an underpinning of integrity and responsibility. We have instilled this fundamental belief into all of our brands, including Quaker Oats, Tropicana, Sabritas, Walkers, Lay's, Gatorade and Pepsi-Cola, to name a few, to ensure we offer consumers a diverse portfolio of enjoyable and wholesome nutritious foods and beverages. We take seriously our responsibility to find innovative ways to use less energy, water and packaging, our responsibility to hire local people in the communities where we operate, create products designed for local tastes, and partner with local producers and suppliers. And, we have expanded our responsibility to partner with local governments and NGOs to address the growing twin problems of malnutrition and obesity acute to different parts of the world.

Performance with Purpose means that we will continue to bring together what is good for society and what is good for business. It encourages us to think globally while acting locally. It has helped us break into new regions and harness local products and talent to drive our growth. It drives our commitment to increase diversity in the workforce, enhancing our ability to recruit the brightest and most talented associates from around the world. And it helps keep us focused on staying strong over the long term so that we are well-prepared to capitalize on all growth opportunities. Most importantly, the promise of PepsiCo is to continue to generate solid value for our shareholders.