PepsiCo Earnings Call Insights: Americas Beverages, Tingyi Alliance
Bryan Spillane – Bank of America Merrill Lynch: Just a question on Americas Beverages, just want to understand the drag that you saw in the quarter in the non-carb portfolio relative to the inventory outage, I guess, on Gatorade and also calling some SKUs. Does that also continue into fourth quarter in 2013 or is that just a 3Q effect?
Indra K. Nooyi – Chairman and CEO: It’s a 3Q effect.
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Dara Mohsenian – Morgan Stanley: I was hoping for more detail on your progress so far with the Tingyi alliance and specifically I’m curious for how much progress you’ve made in terms of expanded distribution so far and how distribution expansion plays out going forward over the next few quarters.
Indra K. Nooyi – Chairman and CEO: So the Tingyi deal was closed in the early part of second quarter and through June, July and August, we went through the integration process. Starting sort of June, July, we started seeing the volumes pick up because the integration activities were completed. In September, we actually saw the CSD volumes grow 15%. Now, September is the first month in Q4, so it’s not in the Q3 numbers. We haven’t yet started to reap the benefits of the increased Tingyi manufacturing footprint because we haven’t yet put the (colorful) lines in the new Tingyi plants. So the benefit you are seeing now is just the benefits from our own brand equity and our focus back on the business now that the integration activities are over. On a reported number you saw volumes in EMEA up significantly. That’s because some of the juice volume that we have transitioned to Tingyi and everything got rebranded as Tropicana, so you start seeing an acceleration of our noncarbonated beverage business starting Q4 and going into 2013. As we have mentioned before, the alliance between PepsiCo and Tingyi creates the largest beverage company in China with a 1.5 to 1.6 relative market share versus the next largest competitor. Between us, we will basically cover the entire country and have over 70 plants between the two of us in China. So, I think going into 2013 and forward, this business is going to look very, very good.
A Closer Look: PepsiCo Earnings Cheat Sheet>>