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Pepsi Co’s Frito-Lay division announces recycled packaging initiative

BY Allison Cerra

PURCHASE, N.Y. Frito-Lay North America, a division of PepsiCo, today announced a new partnership with TerraCycle, an upcycling company that will take used packaging from Frito-Lay snack products and turn them into affordable, quality goods. Through this joint program, consumers and local community groups can earn money by collecting the used packaging, and at the same time, redirect packaging from landfills.

Over the past few years, the company’s packaging initiatives have made some significant strides. This includes reducing the amount of plastic in packaging by 10% and over the last five years eliminating 12 million pounds of materials used to make the snack bags. Earlier this month, the company announced that in 2010 its SunChips brand will be introducing a fully compostable bag made from plant-based renewable material. Marking the company’s latest effort, Frito-Lay will be the first snack food company to fund the collection and upcycling of its used packaging.

“Consumers interact everyday with our company and our brands through packaging,” said Gannon Jones, vice president, portfolio marketing, Frito-Lay North America. “The TerraCycle program builds on our existing efforts to minimize the impact of packaging, while also engaging and rewarding our consumers for being part of the solution.”

The company is asking consumers to form Chip Bag Brigades; for every bag a brigade collects and sends to TerraCycle, Frito-Lay will donate two cents to their charity of choice. Initially, there will be 1,000 collection sites and more are expected to be added during the year. The goal of the program is to engage at least 150,000 people and divert more than 5 million bags from landfills. Consumers can learn more about forming Chip Bag Brigades at www.fritolay.com/terracycle.

The packaging from all the company’s popular brands, such as Lay’s potato chips, Doritos and Tostitos tortilla chips and Cheetos cheese flavored snacks, will be used to make quality, affordable products such as purses, pencil cases and tote bags, which will be available at major retailers like Walmart by late 2009.

This packaging innovation is in line with the commitment by PepsiCo, Frito-Lay’s parent, to reduce the company’s impact on the environment through water, energy and packaging initiatives.

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Dr Pepper Snapple Group reports 37% jump in EPS for Q1

BY Allison Cerra

PLANO, Texas Dr Pepper Snapple Group reported a 37% increase in earnings per share for its first quarter 2009, the company announced Wednesday.

The company reported first quarter 2009 earnings of $0.52 per share, compared with earnings of $0.38 per share in the prior-year period. Excluding net gains related to the Hansen contract termination settlement and the sale of certain distribution rights in the current year period, as well as restructuring charges in the prior year period, the company earned $0.37 per share compared with $0.40 per share in 2008.

For the first quarter, reported net sales declined 3%. Excluding the loss of Hansen product distribution and on a currency neutral basis, net sales increased 4% on 6% sales volume growth and solid pricing actions. Net sales growth was negatively impacted by a higher mix of carbonated soft drink concentrates and value juices. Segment operating profit, as adjusted, increased 18% reflecting lower commodity and fuel costs, operating benefits from higher volumes and a strong cost control focus. Reported income from operations was $265 million, including $62 million of net pre-tax gains related to certain distribution agreement changes.

“While the U.S. economy remains weak, consumer sentiment appears to be improving and we’re continuing to see a shift in purchase habits toward CSDs and other value offerings,” said Dr Pepper Snapple president and CEO Larry Young. “Our portfolio of CSDs and value juices performed extremely well in the quarter led by strong gains in Crush distribution and Hawaiian Punch and solid Dr Pepper and Core 4 growth. Pressure remains at the premium end of the portfolio, especially with Snapple. We’re confident, however, that recent product and package changes coupled with strong marketing programs will return this brand to growth toward the end of this year.”

Young added, “As we look ahead, we see a North America beverage industry that will be markedly different, yet has the potential to reignite category growth. For DPS, this presents a unique opportunity to build upon our already strong growth prospects. This will require even greater attention to revenue, cost and productivity management and ongoing investments in our brands to ensure we capture our fair share of the growth.”

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PepsiCo files suit against PBG and its board

BY Allison Cerra

PURCHASE, N.Y. PepsiCo announced Monday that it has filed suit in Delaware against the Pepsi Bottling Group and its directors.

The suit alleges that the defendants intentionally failed to provide notice of a recent PBG Board meeting to the PBG directors affiliated with PepsiCo. At that meeting, the directors in attendance claim to have adopted a “poison pill,” implemented certain new executive compensation arrangements and purported to amend the PBG bylaws in ways PepsiCo believes are detrimental to its rights as a shareholder. Because of the lack of notice and consideration by the full Board, PepsiCo alleges those actions by the board at the meeting are invalid.

PepsiCo further alleges that PBG and its Board breached their fiduciary duties to PBG shareholders by adopting the poison pill because it restricts PepsiCo’s rights as a PBG shareholder and constitutes an unreasonable and disproportionate response to PepsiCo’s constructive proposal. The suit seeks declaratory and injunctive relief.

On April 19, 2009, PepsiCo made a proposal to acquire all of the outstanding shares of common stock that it does not already own in its two largest anchor bottlers, PBG and PepsiAmericas, at a value of $29.50 per share for PBG and $23.27 per share for PAS. PepsiCo currently owns 33% of the outstanding shares of PBG and 43% of the outstanding shares of PAS.

On May 4, 2009, PBG announced that its Board had rejected PepsiCo’s proposal. In addition, PBG also announced that its Board had approved adoption of a shareholder rights plan, commonly referred to as a “poison pill,” as well as retention arrangements for certain key employees and amendments to PBG’s bylaws regarding notice and informational requirements for shareholder actions.

PepsiCo reiterates its belief that its offers are full and fair and in the best interests of PBG, PAS and their respective shareholders.

For more information about PepsiCo’s proposal with respect to PBG and PAS, please access our website at http://www.transactioninfo.com/pepsico.

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