And, as our stock chart suggests, investors noticed. More and more recognized that PepsiCo's performance puts it among the world's top consumer products companies. More important, they recognized that PepsiCo is well positioned to continue posting healthy, consistent results. That's crucial. At PepsiCo, we aspire to be among the best of the best - the companies that deliver solid, dependable growth every year. That's the ambitious destination we've chosen. And we're well on our way. Today PepsiCo is highly disciplined and sharply focused, with so many great things going for us: We're in the industry sweet spot: convenient foods and beverages. The trend is clear and global. Time-pressed consumers want great-tasting foods and drinks that are convenient to buy and consume. They spend hundreds of billions of dollars a year on these products, and that's growing. With decades of experience selling and creating great-tasting convenient foods and beverages, we're well-equipped to succeed. We hold strong market positions. As the world's #1 salty snack company, the world's #2 refreshment beverage company and the world's #1 maker and marketer of branded juices, we operate from a position of strength. And our marketplace experience, technical expertise and innovation capabilities reflect our market leadership. We own big, "growable" brands. Our brands have the ability to connect with consumers almost anywhere in the world. Today 15 of our brands generate retail sales of more than $500 million each, including 11 that generate more than $1 billion each. And since there's practically no limit to how much of our products you can eat or drink, there's also no real limit on our growth opportunity. We have powerful distribution systems. One key to selling non-essential impulse products is making them widely available and fun to buy. There we have a big advantage. Most of our sales are through our own direct store distribution (DSD) systems, where we actually take the products to stores and put them on the shelf. Our systems reach hundreds of thousands of outlets, from the tiniest bodega to the mightiest club store - and they get bigger each year. Unlike many competitors, our DSD systems give us the ability to merchandise our products for maximum appeal to consumers. We benefit from an increasingly global portfolio. We already have a strong position in many markets around the globe. In snacks, for example, we are the leader in 30 countries. In beverages, we're either number one or number two in some 60 markets. So the appeal of our products has been widely demonstrated. Yet virtually every one of our markets offers the opportunity for dramatic growth. We help our retail customers make lots of money. As retailers continue merging to gain scale and improve efficiency, they look for products that provide clear, measurable benefits to their bottom line. Ours do - on a grand scale. Among big U.S. retailers, for example, PepsiCo is the #1 contributor to their sales growth and the #1 contributor to their profit growth. Perhaps that's why in Progressive Grocer's annual ProGro awards, Pepsi-Cola and Frito-Lay each earned the top spot in their respective categories. New Platforms for Growth Add it all up and we could probably generate respectable results for years. But we want to do even better. So we are also adding new platforms for growth - that strengthen our portfolio and enhance our vitally important innovation capabilities. For example, in January 2001 we acquired a majority of the South Beach Beverage Company, whose SoBe line of drinks adds to the Pepsi-Cola portfolio some of the fastest-growing brands in the fastest-growing segment of the industry, non-carbonated beverages. We also began or completed several snack transactions that vault Frito-Lay to the top of the salty snack market in three more countries. They also give us the scale to operate more efficiently and grow the salty snack category. But without question the biggest step we've taken to ensure a bright future of growth for PepsiCo is our planned merger with The Quaker Oats Company, which we expect to complete in the second quarter of 2001. The merger will make PepsiCo an even more effective competitor in the expanding market for convenient foods and beverages. It will add two very powerful brands to our portfolio, Gatorade and Quaker, and create new opportunities for every PepsiCo division. The combined enterprise will rank among the world's five largest consumer product companies. (Click here for more details.) A Wealth of Talent There's another reason I am confident PepsiCo will achieve its goal: our people. We have a wealth of talent across this corporation. It starts with our exceptional frontline team, the people out there serving our customers 365 days a year, and it extends to our corporate staff. To me, that says we have not only big opportunities, but the skills, experience, dedication and intellectual horsepower to make the most of them. Nowhere is that strength more evident than in the people who will lead PepsiCo into the 21st century. This year, Steve Reinemund, our president and chief operating officer, will succeed me as chairman of the board and chief executive officer. Chief Financial Officer Indra Nooyi will add the role of PepsiCo president and will be nominated for election to our board of directors. I'm a big fan of Steve and Indra, and I'm not alone. BusinessWeek magazine recently said that together they may be one of the most powerful management teams in Corporate America. I know they are. In 16 years at PepsiCo, Steve has proven to be an exceptional leader. He sees opportunities others miss, and he can rally a team to seize them. He certainly proved that at Pizza Hut, where he built the world's largest pizza delivery business from scratch. As head of Frito-Lay, he took one of the most successful food companies on Earth and made it even better. And as PepsiCo president and chief operating officer, he has been a prime mover in our delivering healthy, consistent earnings while building a foundation for the future. Indra is outstanding in her own right. She joined PepsiCo seven years ago as senior vice president of strategic planning and is a principal architect of the highly focused corporation you see today. She has been at the forefront of all our big financial transactions. And over the last year, she has distinguished herself as chief financial officer. When Steve and Indra move up, I'll become a PepsiCo vice chairman. At the time of the merger, Bob Morrison, Quaker's chairman, president and chief executive officer, will join our board, also with the title of vice chairman. Bob and I intend to help ensure that the merger of our companies fulfills its great promise. Three Outstanding Directors Speaking of promise fulfilled, let me pay tribute to one of our great leaders, Karl von der Heyden. After a distinguished career that included six years at PepsiCo and culminated as co-chairman and chief executive officer of RJR Nabisco, Karl rejoined PepsiCo as chief financial officer and vice chairman of our board in 1996. He signed on for "about a year" - and stayed until January 2001. I'm delighted that he did. Karl has been a true friend to PepsiCo and a great resource for me. He played a crucial role in revitalizing this corporation. From all of us at PepsiCo, I want to say thanks and best wishes. Let me also thank two other outstanding PepsiCo directors, Roy Vagelos and Arnold Weber, who retired in May 2000. Roy had served on our board eight years and Arnie, 22. In that time they provided invaluable counsel and guidance to me, my predecessors and scores of other PepsiCo senior managers. I thank them immensely for their wisdom and support. As I think about what the future holds for PepsiCo, I am very optimistic. We are in the heart of a growing consumer market rich with opportunity. We have strong, global brands, powerful distribution systems and vast financial resources. Most of all, we have a team of bright, highly motivated people with the skills, experience and commitment to make the most of the opportunity before us. Roger Enrico Chairman of the Board and Chief Executive Officer <-- back