Frito-Lay North America

Frito-Lay North America (FLNA), our largest operating division, continued to build its record of outstanding performance.

FLNA posted healthy growth on virtually every key measure. Volume increased 3%. Revenue grew 6%. And operating profit rose 10%.

FLNA exemplifies the consistency we strive for at PepsiCo. The fourth quarter of 2001 marked the division's 12th consecutive quarter of reported double-digit profit growth and its 16th consecutive quarter of market share growth.

It's not surprising. As big and successful as FLNA is, it remains a lean and powerful growth machine.

FLNA's remarkable 15,000-route direct store delivery system gets our fresh and fragile products to market with amazing speed and efficiency. It reaches nearly half a million retail outlets weekly, including supermarkets, club stores, convenience stores and dozens of other points of sale. And each year FLNA's distribution system grows, adding nearly 200 routes in 2001.

Year after year, FLNA uses innovation to build and enhance its portfolio of powerful brands, which includes 8 of the 10 biggest-selling salty snacks in U.S. supermarkets. In 2001 growth was led by several of our core brands: Lay's, Doritos, Cheetos and Fritos. New products were a big factor behind that growth. Among them: Lay's Bistro Gourmet potato chips, Cheetos Mystery Colorz snacks, Doritos Extremes tortilla chips and Fritos Flavor Twists corn snacks.

FLNA also took a giant step in its strategy to grow beyond traditional salty snacks. After the merger with Quaker, FLNA created a unit totally dedicated to opportunities in the broader $50 billion market for convenient foods. It combines Frito-Lay's businesses of cookies, crackers, nuts, meat snacks and Cracker Jack treats with Quaker's business of granola bars, fruit and oatmeal bars, energy bars and rice snacks. This unit, which already generates nearly $1 billion in revenues, represents a very important and exciting new growth platform.

Behind the scenes, FLNA made progress in productivity efforts designed to reduce costs and drive growth. A multiyear reconfiguration of the FLNA distribution system is lowering delivery costs and enabling our trucks to carry nearly twice as many different items. That will allow us to continue adding innovative products to our portfolio for many years without distribution constraints.

Worldwide Snacks continued -->