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    PepsiCo Forms New Bottling Unit

    New company will account for three-fourths of Pepsi' North American volume.

    PURCHASE, N.Y. -- Anticipating the previously announced mergers with its two largest bottlers, The Pepsi Bottling Group (PBG) and PepsiAmericas (PAS), PepsiCo is forming a new entity comprising the bottling businesses effective upon closing of the mergers. The new unit will be called PepsiCo Bottling North America (PBNA).

    Eric J. Foss, current chairman and CEO of PBG, the world's largest bottler of PepsiCo beverages, will become CEO of the new bottling unit, reporting to PepsiCo Chairman and CEO Indra Nooyi.

    PBNA will include all current PBG and PAS operations in the United States, Canada and Mexico, and will account for approximately three-quarters of the volume of PepsiCo's North American bottling system, with independent franchisees accounting for the rest, the company said in a statement.

    The bottling firm will be separate from the brand-oriented PepsiCo Americas Beverages (PAB) unit, which will continue to oversee independent bottlers, plus Gatorade and Tropicana operations. The separation will allow greater focus for both units and enable PBNA to continue producing and distributing "allied brands" not owned by PepsiCo, the company said.

    Current PBG and PAS operations in Europe and Russia will be managed by PepsiCo Europe when the mergers are completed.

    "This structure will provide two very important benefits," Nooyi said. "It will allow us to continue the critically important work we began last year to refresh our core soft drink brands. At the same time, it will enable us to maintain the operating focus we need to capture the strategic opportunity created by our bottler mergers, particularly in North America."

    She added: "This new beverage model will strengthen our position in the global beverage marketplace through a powerful combination of scale, speed, flexibility and efficiency."

    To facilitate a smooth integration of the bottling businesses, PepsiCo is establishing a special advisory board. Among its members: Foss; Nooyi; Robert Pohlad, chairman and CEO, PepsiAmericas; and Craig Weatherup, founding chairman and CEO of The Pepsi Bottling Group, who retired in 2003. Prior to his PBG tenure, Weatherup served as CEO of The Pepsi-Cola Co. and president of PepsiCo.

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