spin off of PepsiCo's bottling operations would remove billions of dollars of debt from PepsiCo's balance sheet. With this restructuring, returns would significantly improve. Coca-Cola did the same thing a decade ago, separating its bottling operations into a publicly owned company. This allows management to focus on marketing its brands and selling high-margin soft-drink concentrate. The public believes if Enrico could make his company look like Coca-Cola, he would.PepsiCo's chairman believes the business will flourish with two separate and distinct management and corporate structures. PepsiCo, Inc. will consist of two core businesses: Frito-Lay Co., the world's largest maker of salty snacks; and Pepsi-Cola Company, the worlds second largest beverage company. In 1998, PepsiCo acquired Tropicana Products Inc., the worlds most successful juice company, which gives PepsiCo lots of growth potential. Pending shareholders approval, in 1999 they plan to combine certain PepsiCo owned bottling operations in the United States and Central Europe with Whitman Corporation (the largest independent Pepsi bottler). This will allow them to devote all of their attention to marketing and brand building.Currently, PepsiCo's principle divisions are Pepsi-Cola Co., Frito-Lay Co., Pepsi Bottling Group, and Tropicana Products, Inc. PepsiCo now offers a broader portfolio of strong brands to offer the retail customer and this will strengthen their ability to achieve consistent earnings growth. Future plans are to reduce debt by using proceeds expected from the bottling transactions. With the restructuring, PepsiCo's main objective is to make a much stronger and more competitive business for the long run. The strategy has generated billions of dollars in cash. This abundance in cash has allowed the company to do two important things: spend aggressively to reinvigorate sales momentum and deliver solid earnings per share growth. (PepsiCo, Inc. Letter...
