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International public company

Km 29 National Rd., Bo Tunasan, Muntinlupa City, Manila, , Philippines

()63 02 850 7901, 63 02 850 7910 fax, http://www.pepsi.com
Primary SIC: Bottled & Canned Soft Drinks, Primary NAICS: Soft Drink Manufacturing
Description: Manufacturing: Manufacture and distribution of soft drinks.

Business Description:

Pepsi-Cola Products Philippines Inc. The Company's principal activities are

manufacturing a range of carbonated and non-carbonated beverages and distributing to
retail outlets throughout the Philippines. Products includes cola and flavored carbonated
beverages, including low-calorie derivatives, as well as juices, ice teas, sports drinks and
energy drinks. Brands includes Pepsi, Diet Pepsi, Pepsi Max, 7Up, Diet 7Up, Mountain
Dew, Gatorade, Lipton Iced Tea, Tropicana, Propel and Sting.

Pepsi-Cola Philippines profit falls

amid soaring inflation, typhoons

PEPSI-COLA Products Philippines Inc. said it profit fell by nearly a quarter for its fiscal
year ending-June, blaming the decline on soaring inflation and typhoons that took their
toll on its sales.

In an annual report submitted to the Philippine Stock Exchange, the soft drink maker said
its profit dropped by 24 percent to P760.70 million from last year’s P1 billion.

Pepsi’s fiscal year starts on May and ends in June.

The soft drink maker said the decline in margins can be attributed to adverse weather
conditions during the company’s peak selling months, as well as tighter competition in
the market place.

Among its rivals in the non-carbonated beverages segment are Coca-Cola Co., San
Miguel Corp., Universal Robina Corp., Zesto Corp., among others. In the carbonated
drinks segment, Pepsi’s competitors include Coca Cola, Asiawide Refreshments Corp.
and Asia Brewery.

“Our sales and profitability are affected by the overall performance of the Philippine
economy, the natural seasonality of our sales, the competitive environment of the
beverage market in the Philippines, our pricing strategy as well as any changes in our cost
structures, among other factors,” Pepsi said.

In addition, the record inflation rate brought about by the oil and food price hikes
increased freight and power costs with a multiplier effect on materials and other costs, the
company said.
The high inflation of 9.6 percent and 11.4 percent in May and June, respectively,
coincided with the company’s peak season.

During the period, the Philippine economy slowed to 4.6 percent from 8.3 percent last
year. In addition, consumer spending slackened to 3.4 percent from 5.6 percent a year

“Lower disposable income of the Philippine population normally leads to a general fall in
demand for our beverage products,” Pepsi said.

The company also said its sales volume is also affected by the weather, generally being
higher in the hot, dry months from March through June and lower during the wet
monsoon months of July through October.

Pepsi, which had its market debut on February, reported a gross profit of P4.12 billion
from last year’s P4.16 billion.

“Our revenues were driven by revenue growth in [non-carbonated beverages] by 20

percent on account of 29-percent volume growth in keeping with the increasing consumer
preference for beverages associated with health and wellness,” the company said.

It also said it is in the process of completing its expansion in Cebu as well as in San

Besides its soft-drink products, Pepsi manufactures and distributes Gatorade, Lipton Iced
Tea, Tropicana, Propel and Sting.

The company has 11 production plants nationwide and distributes products through 101
warehouses and 100 sales offices. Its third party distribution network distributes to
296,000 outlets, including supermarkets, restaurants, bars and small grocery stores.
-- Darwin G. Amojelar

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