PepsiCo Inc. (NYSE:PEP) is a global manufacturer, distributor, and marketer of food and beverages, owning many well-known brands including Pepsi, Frito-Lay, Tropicana, Gatorade, and Quaker Oats. PepsiCo operates in over 200 countries, with its largest markets in North America and the United Kingdom. In 2009, the company's revenues were $43.23 billion with net income of $5.95 billion.
Unlike its major competitor, the Coca-Cola Company (KO), the majority of PepsiCo's revenues do not come from carbonated soft drinks. In fact, beverages account for less than 50% of total revenue. Additionally, over 60% of PepsiCo's beverage sales come from its key noncarbonated brands like Gatorade and Tropicana. PepsiCo's diverse portfolio can mitigate the impact of poor conditions in any one of its markets. Strong demand growth in international markets -- the company serves 86% of the world's population and international sales account for 48% of revenue -- is helping to offset a sluggish domestic market and provided the company with opportunities for continued expansion. 
PepsiCo is highly exposed to raw materials costs. Prices for the most important input materials, aluminum, PET plastic, corn, sugar, and juice concentrates fluctuate widely. For example, aluminum prices have fallen nearly 60% from their 2008 highs of $1.50/pound to less than $0.90/pound. PepsiCo has benefitted from lower input prices after the collapse of the commodities super spike of 2008.
1 Company Overview
1.1 Quarterly Earnings
1.3 Operating Segments
2 Trends & Forces
2.1 PepsiCo Must Survive a US Slowdown While Capturing International Growth 2.2 Commodity Costs are Pressuring Margins
2.2.1 Pepsi Must Face a Declining Demand for Carbonated Soft Drinks 2.2.2 The Dollar Affects International Performance
3.2 Snacks and Convenient Foods
3.3 Coke vs. Pepsi
3.3.1 Global Footprint
3.3.2 Diversified Product Offering
On April 20, 2009, PepsiCo made an offer to acquire its two largest bottlers, Pepsi Bottling Group (PBG) and Whitman (PAS), for $6 billion in a combined cash and stock deal. The deal was turned down, forcing PepsiCo to make a sweetened $7.8 billion offer on August 4, 2009. PepsiCo hopes to streamline manufacturing and distribution through the acquisitions, allowing it to bring new products to market more quickly and efficiently. The company expects to gain full control of 80% of its North American market and increase pre-tax profit by $300 million, increasing eps by $.15. The deal adds $4 billion in debt to PepsiCo's balance sheet. According to PepsiCo CEO Indra Nooyi, the acquisition is necessary to consolidate profit as there is not enough total profit in the North American beverage industry to support investments in several different companies. The acquisition closed on March 1, 2010.
With the purchase of Pepsi Bottling Group (PBG) and Whitman (PAS) in 2010, company executives have said that it will lead to increased joint marketing that will bundle the...