PepsiCo to form new bottling unit; Foss will serve as CEO

In anticipation of the previously announced mergers with its two largest bottlers, The Pepsi Bottling Group (PBG) and PepsiAmericas (PAS), PepsiCo on October 5 announced plans to form a new entity comprising the bottling businesses, effective upon closing of the mergers. The new unit will be called PepsiCo Bottling North America (PBNA).

Eric J. Foss, current chairman and CEO of PBG, the world's largest bottler of PepsiCo beverages, will become CEO of the new bottling unit, reporting to PepsiCo chairman and CEO Indra Nooyi.

PBNA will comprise all current PBG and PAS operations in the United States, Canada and Mexico, and will account for about three-quarters of the volume of PepsiCo's North American bottling system, with independent franchisees accounting for the rest. It will focus on integrating the two bottling businesses into a lean, nimble and highly-efficient organization. PBNA will be separate from the brand-oriented PepsiCo Americas Beverages (PAB) unit, which will continue to oversee independent bottlers and Gatorade and Tropicana operations. The separation will allow greater focus for both units and enable PBNA to continue producing and distributing "allied brands" not owned by PepsiCo.

Current PBG and PAS operations in Europe and Russia will be managed by PepsiCo Europe when the mergers are completed.

"This structure will provide two very important benefits," Nooyi said. "It will allow us to continue the critically important work we began last year to refresh our core soft drink brands. At the same time, it will enable us to maintain the operating focus we need to capture the strategic opportunity created by our bottler mergers, particularly in North America."

"This new beverage model will strengthen our position in the global beverage marketplace through a powerful combination of scale, speed, flexibility and efficiency," Nooyi said.

In naming Foss to lead PBNA, PepsiCo is engaging one of the beverage industry's most experienced executives. "Eric is an extraordinarily talented executive with tremendous knowledge of and love for the bottling business," Nooyi said. "We are fortunate to have him lead this new unit."

"I am extremely excited to lead the new bottling entity," said Foss. "Our focus will be to create a bigger, stronger and faster organization that can better serve our customers and accelerate our growth in North America. I am eager to work with the talented people across PAS, PBG and PepsiCo to reenergize our beverage business, drive profitable growth for our customers and sustain a high performance and compelling environment for our people. It is great to re-join the PepsiCo team, and I look forward to accelerating our potential to become a more unified and integrated beverage system."

In order to facilitate a smooth integration of the bottling businesses, PepsiCo will establish a special advisory board. Among its members will be: Eric Foss; Indra Nooyi; Robert Pohlad, chairman and CEO, PepsiAmericas; and Craig Weatherup, founding chairman and CEO of The Pepsi Bottling Group, who retired in 2003. Prior to his PBG tenure, Weatherup served as CEO of The Pepsi-Cola Company and president of PepsiCo.

"This advisory board, as well as Eric's leadership of PBNA, brings stability, strong leadership and valuable continuity as we work to bring the businesses together seamlessly and smoothly," Nooyi said.

Upon completion of the mergers, which require regulatory and shareholder approval, PepsiCo will have five direct reports to Chairman and CEO Indra K. Nooyi from an operating standpoint. In addition to Eric Foss of PBNA, they will include Massimo d'Amore, PepsiCo Americas Beverages CEO (PAB), John Compton, PepsiCo Americas Foods CEO (PAF); Saad Abdul-Latif, PepsiCo Asia, Middle East and Africa CEO (AMEA); and Zein Abdalla, PepsiCo Europe CEO.