Operations

Organized into three business units, as follows:

(1) PepsiCo Americas Foods (PAF), which includes Frito-Lay North America (FLNA), Quaker Foods North America
(QFNA) and all of our Latin American food and snack businesses (LAF), including our Sabritas and Gamesa
businesses in Mexico;

(2) PepsiCo Americas Beverages (PAB), which includes PepsiCo Beverages North America and all of our Latin
American beverage businesses; and

(3) PepsiCo International (PI), which includes all PepsiCo businesses in Europe and all PepsiCo businesses in Asia,
Middle East and Africa (AMEA).

The three business units are comprised of six reportable segments (referred to as divisions), as follows:

� FLNA,

� QFNA,

� LAF,

� PAB,

� Europe, and

� AMEA.

Frito-Lay North America

Either independently or through contract manufacturers, FLNA makes, markets, sells and distributes branded snack
foods. These foods include Lay's potato chips, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla
chips, branded dips, Fritos corn chips, Ruffles potato chips, Quaker Chewy granola bars and SunChips multigrain
snacks. FLNA branded products are sold to independent distributors and retailers. In addition, FLNA's joint venture
with Strauss Group makes, markets, sells and distributes Sabra refrigerated dips.

Quaker Foods North America

Either independently or through contract manufacturers, QFNA makes, markets and sells cereals, rice, pasta and
other branded products. QFNA's products include Quaker oatmeal, Aunt Jemima mixes and syrups, Cap'n Crunch
cereal, Quaker grits, Life cereal, Rice-A-Roni, Pasta Roni and Near East side dishes. These branded products are
sold to independent distributors and retailers.

Latin America Foods

Either independently or through contract manufacturers, LAF makes, markets and sells a number of snack food
brands including Gamesa, Doritos, Cheetos, Ruffles, Lay's and Sabritas, as well as many Quaker-brand cereals and
snacks. These branded products are sold to independent distributors and retailers.

PepsiCo Americas Beverages

Either independently or through contract manufacturers, PAB makes, markets and sells beverage concentrates,
fountain syrups and finished goods, under various beverage brands including Pepsi, Mountain Dew, Gatorade, 7UP
(outside the U.S.), Tropicana Pure Premium, Sierra Mist, Mirinda, Mug, Propel, Manzanita Sol, Tropicana juice
drinks, SoBe Lifewater, Dole, Amp Energy, Paso de los Toros, Naked juice and Izze. PAB also, either independently
or through contract manufacturers, makes, markets and sells ready-to-drink tea, coffee and water products through
joint ventures with Unilever (under the Lipton brand name) and Starbucks. In addition, PAB licenses the Aquafina
water brand to its bottlers and markets this brand. PAB sells concentrate and finished goods for some of these
brands to authorized bottlers, and some of these branded finished goods are sold directly by us to independent
distributors and retailers. The bottlers sell brands as finished goods to independent distributors and retailers. PAB's
volume reflects sales to its independent distributors and retailers, as well as the sales of beverages bearing
trademarks that bottlers have reported as sold to independent distributors and retailers. BCS and CSE are not
necessarily equal during any given period due to seasonality, timing of product launches, product mix, bottler
inventory practices and other factors.

Europe

Either independently or through contract manufacturers, Europe makes, markets and sells a number of leading snack
foods including Lay's, Walkers, Doritos, Cheetos and Ruffles, as well as many Quaker-brand cereals and snacks,
through consolidated businesses as well as through non controlled affiliates. Europe also, either independently or
through contract manufacturers, makes, markets and sells beverage concentrates, fountain syrups and finished
goods under various beverage brands including Pepsi, 7UP and Tropicana. These brands are sold to authorized
bottlers, independent distributors and retailers. In certain markets, however, Europe operates its own bottling plants
and distribution facilities. In addition, Europe licenses the Aquafina water brand to certain of its authorized bottlers.
Europe also, either independently or through contract manufacturers, makes, markets and sells ready-to-drink tea
products through an international joint venture with Unilever (under the Lipton brand name).

Asia, Middle East & Africa

AMEA makes, markets and sells a number of leading snack food brands including Lay's, Kurkure, Chipsy, Doritos,
Smith's, Cheetos, Red Rock Deli and Ruffles, through consolidated businesses as well as through noncontrolled
affiliates. Further, either independently or through contract manufacturers, AMEA makes, markets and sells many
Quaker-brand cereals and snacks. AMEA also makes, markets and sells beverage concentrates, fountain syrups and
finished goods, under various beverage brands including Pepsi, Mirinda, 7UP and Mountain Dew. These brands are
sold to authorized bottlers, independent distributors and retailers. However, in certain markets, AMEA operates its
own bottling plants and distribution facilities. In addition, AMEA licenses the Aquafina water brand to certain of its
authorized bottlers. AMEA also, either independently or through contract manufacturers, makes, markets and sells
ready-to-drink tea products through an international joint venture with Unilever (under the Lipton brand name). AMEA
reports two measures of volume.

Authorized bottlers and independent distributors, including foodservice distributors and retailers are the cutomers..
our bottlers exclusive contracts to sell and manufacture certain beverage products bearing our trademarks within a
specific geographic area. These arrangements provide us with the right to charge our bottlers for concentrate,
finished goods and Aquafina royalties and specify the manufacturing process required for product quality.

Retail Sales

Since products are not directly sold to customers, company relies on and provide financial incentives to customers
to assist in the distribution and promotion of products. For independent distributors and retailers, these incentives
include volume-based rebates, product placement fees, promotions and displays. For bottlers, these incentives are
referred to as bottler funding and are negotiated annually with each bottler to support a variety of trade and consumer
programs, such as consumer incentives, advertising support, new product support, and vending and cooler
equipment placement. Consumer incentives include coupons, pricing discounts and promotions, and other
promotional offers. Advertising support is directed at advertising programs and supporting bottler media. New product
support includes targeted consumer and retailer incentives and direct marketplace support, such as point-of-purchase
materials, product placement fees, media and advertising. Vending and cooler equipment placement programs
support the acquisition and placement of vending machines and cooler equipment. The nature and type of programs
vary annually.

Retail consolidation and the current economic environment continue to increase the importance of major customers.
In 2009, sales to Wal-Mart (including Sam's) represented approximately 13% of our total net revenue. Top five retail
customers represented approximately 33% of our 2009 North American net revenue, with Wal-Mart (including Sam's)
representing approximately 19%. These percentages include concentrate sales to bottlers which are used in finished
goods sold by them to these retailers.

Distribution Network

Products are brought to market through DSD, customer warehouse and foodservice and vending distribution
networks. The distribution system used depends on customer needs, product characteristics and local trade
practices.

Direct-Store-Delivery

Bottlers and distributors operate DSD systems that deliver snacks and beverages directly to retail stores where the
products are merchandised by our employees or our bottlers. DSD enables to merchandise with maximum visibility
and appeal. DSD is especially well-suited to products that are restocked often and respond to in-store promotion and
merchandising.

Customer Warehouse

Some of products are delivered from our manufacturing plants and warehouses to customer warehouses and retail
stores. These less costly systems generally work best for products that are less fragile and perishable, have lower
turnover, and are less likely to be impulse purchases.

Foodservice and Vending

Foodservice and vending sales force distributes snacks, foods and beverages to third-party foodservice and vending
distributors and operators.Foodservice and vending sales force also distributes certain beverages through bottlers.
This distribution system supplies our products to restaurants, businesses, schools, stadiums and similar locations.