Q&A – Annual Shareholders' Meeting 2022

Below are responses to questions submitted by shareholders during PepsiCo, Inc.’s 2022 Annual Shareholders’ Meeting that we were unable to answer due to time. In a few cases, we have consolidated multiple questions on the same topic, made minor edits for clarity and/or corrected typos. We have excluded questions that violate our Rules of Conduct of the meeting and have not included comments and statements (positive or negative) where no actual questions were asked. Our responses to these questions, including any forward-looking statements, are as of the date of the meeting (May 4, 2022) and we do not undertake any obligation to update any such statements which are subject to risks and uncertainties (for additional information please refer to our most recent filings with the Securities and Exchange Commission).


Q – How is the company dealing with inflation? Thank you.

A – As we navigate through this more complex and volatile environment, we will stay laser-focused on controlling what we can, including: actively monitoring mobility, channel mix and demand elasticity trends;  implementing additional revenue management actions; and sharpening our holistic cost management efforts.

In the face of inflation, our first move is to look internally to find opportunities to drive productivity and we’ve leaned into that even further this year -- identifying areas of waste, leveraging digital solutions and shared services more than ever. We also look for revenue management opportunities, whether it's the way that we are merchandising product in store, packaging mix or shallowing out promotions or pricing.


Q – Do you see consistent increases in snacking and are you able to tell if customers are eating more at home? How are you conducting R&D with snacking?

A – We have been seeing consumer consumption trends shift toward smaller meals and snacking over the past few years and we expect these trends to continue.

COVID-19 has significantly shifted consumer behavior. We continue to see at-home consumption, and entertaining more at home – with products like our multipacks being popular. We also know consumers are looking more and more for convenience and we are meeting consumers where they are.

From an R&D perspective, we are focused on offering consumer choice and expanding our positive nutrition options. We are all about consumer-centricity as we continue to innovate across existing brands and expand our offerings to meet evolving consumer needs.


Q – Will reducing salt and sugar in products negatively impact the taste and satisfaction with products?

A – PepsiCo has been on a sugar and sodium reduction journey for more than 10 years, providing consumers with more choices without sacrificing taste.

Our R&D team consistently delivers product reformulations and new product offerings that meet our sugar and sodium reduction guidelines while meeting or exceeding our rigorous consumer satisfaction testing. 

The best evidence of that is in our business results. For example, in the zero-sugar space, our Pepsi Zero Sugar, Mountain Dew Zero Sugar, Gatorade Zero and bubly products delivered in aggregate more than $2.0 billion in estimated retail sales in 2021.


Q – The Carpenter Pension Funds as long-term shareholders appreciate the Audit Committee's work to oversee the quality and independence of KPMG's audit work. The US SEC has proposed extensive new climate disclosures including in audited financial statements. If adopted, the disclosures will expand the oversight roles of audit committees generally, which raises a concern. As climate related disclosures takes the form of demanding regulatory requirements, how will the Audit Committee's role evolve to effectively handle these expanding responsibilities?

A – As noted in the question, these rules are still in the proposal stage, and we are in the process of evaluating them and the roles of our Audit Committee and Sustainability Diversity and Public Policy Committee in overseeing compliance. We are proud of our strong track record on ESG disclosure and will comply with all required disclosures once the rules are finalized.


Q – Big Box retailers reported large negative comps in select businesses last year, primarily Gatorade & Starbucks Frappuccino, due to Pepsi supply constraints. Could you please provide an update on the elasticity of this business and our strategy to mitigate this risk going forward?

A – Our Gatorade and Starbucks Ready-to-drink (RTD) businesses in North America posted double-digit net revenue growth in 2021 and mitigated the ongoing impact of supply chain disruptions as best possible.

Elasticities remain within the band of our expectations.  While we cannot discuss the details of our supply chain strategies for competitive reasons, we are diligently continuing to work with our vendors and suppliers to ensure that we can satisfy the demand needs of customers and consumers. 


Q – Are director retirements expected in the next year? Where have the successful director nominations come from in the last 5-years? Have any of the board committees named a new chairman in the last year?

A – No director retirements are currently expected under our existing Board retirement policy. Successful director candidates have come from a variety of sources, including director referrals and external director recruiting firms.

In terms of new committee chairs, last year Darren Walker took over as the chair of the Sustainability Diversity and Public Policy committee and Bob Pohlad assumed the role of chair of the Nominating and Corporate Governance Committee.