Responsible Marketing

PepsiCo has long been a promoter of responsible advertising to all consumers, shown for example through our adherence to the Consolidated ICC Code of Advertising and Marketing Communication Practice.

We further acknowledge that children, as a potentially vulnerable group of consumers, deserve greater attention.

PepsiCo has therefore joined a group of top global food and beverage manufacturers, in adopting a worldwide voluntary commitment to restrict our advertising and marketing to children only to those products which meet specific nutrition criteria intended to encourage the consumption of healthier food and beverage products.

This policy is currently being rolled out and will be fully implemented, at the latest, by the end of 2010. We will work with other industry players to ensure that monitoring and reporting processes are put in place to ensure and demonstrate continued compliance with this policy.

¹ Including Coca-Cola, General Mills, Grupo Bimbo, Kellogg's, Kraft, Mars, Nestle and Unilever
² This commitment establishes a minimum standard for all PepsiCo product and brand advertising and marketing around the world. It is not intended to replace existing commitments and/or regulatory obligations.
³ Any paid third-party advertising or marketing channels which may be widely assumed to have an audience (print, TV, cinema, internet site, etc) which is comprised of a majority of under 12s.
⁴ Nutrition criteria will be based on recognized and accepted scientific and nutrition principles. The exact criteria will be subject to a further communication by PepsiCo in 2009 and may differ around the world to take into account different dietary habits and nutrition requirements.

PepsiCo, Inc. is proud to be one of the first companies to commit as a participant in the Children's Food and Beverage Advertising Initiative (CFBAI). As an industry leader in the discussions of children's marketing, PepsiCo believes children are a special audience and takes particular care developing advertisements and evaluating programming that carries messages to children.

Through the company's major business units, which include Pepsi-Cola and Aquafina beverages, Frito-Lay snack foods, Quaker food products, Tropicana juices and Gatorade sports beverages, PepsiCo is continuously transforming its portfolio to meet consumer needs, including products chosen by young people. As part of that on-going transformation, PepsiCo has improved the nutritional profile of its flagship brands by changing to healthier oils, reducing sugar and sodium content, and expanding the range of products offered. In 2004, the Company launched its "Smart Spot" program. By 2006 these products represented over two-thirds of North American revenue growth. Smart Spot eligibility criteria, as well as other information regarding the Smart Spot program, may be viewed at www.smartspot.com.

In accordance with CARU guidelines, PepsiCo defines "advertising directed primarily to children under 12" based on an analysis of the following factors, no single one of which will be controlling:

• whether the content of the media (e.g., subject matter, format, characters and other advertising) is designed for children under 12
• whether the advertised product or service is intended for use by, or is of interest to children under 12
• where the media in which the advertising appears is promoted and advertised
• available projections, at the time the advertising is placed, of audience demographics (i.e. whether a majority of the audience is projected to be children under 12)
• for television programs, whether they are aired during what is generally understood to be children's programming

To continue its responsible leadership, PepsiCo pledges to incorporate the core principles of the CFBAI into its advertising primarily directed to children under 12 as fully described below (the "PepsiCo Pledge").

Through our bottling partners and third-party distributors in the Unites States, Pepsi-Cola North America (PCNA) is committed to offering schools a portfolio of low-calorie and nutritious beverage choices. This wide variety of products includes bottled waters, juices, sports drinks and no- or low-calorie carbonated soft drinks, juice-flavored drinks and iced teas. Schools decide which beverages are available, and where and when they are sold. Within this framework:

1. PCNA instructs our bottlers and third-party distributors to strictly comply with all applicable federal, state and local regulations, including where and when vending machines are placed and operated within schools.
2. PCNA encourages our bottlers and third-party distributors to work closely with parents, community leaders and school officials to ensure that only products that meet the following guidelines, which were set by the American Beverage Association and the Alliance for a Healthier Generation*, are offered to schools for sale to students through vending machines, á la carte lines and school stores.
3. PCNA encourages our bottlers and third-party distributors not to offer beverages marketed as energy drinks to schools below the College & University level.

* Alliance for a Healthier Generation is a national health advocacy group formed by the American Heart Association and the William J. Clinton Foundation.

Elementary School

• Water
• Milk and juice in 8-ounce servings or less, which meet the following criteria:
  • Fat-free or low-fat milk and nutritionally equivalent (per USDA) milk alternatives;
  • Fat-free or low-fat nutritionally equivalent flavored milk with no more than 150 calories per 8-ounce serving;
  • 100% juice with no added sweeteners, no more than 120 calories per 8-ounce serving and at least 10% of the recommended daily value (DV) for at least three micronutrients (e.g., calcium, vitamins, iron).

Middle School

Same as elementary school except that juice and milk meeting elementary school criteria may be available in 10-ounce servings.

As a practical matter, if middle school and high school students have common access to areas where beverages are sold on a common campus or in common buildings, then the school community has the option to adopt the high school standard.

High School

• Water
• No-calorie or low-calorie beverages with no more than 10 calories per 8-ounce serving (e.g., diet sodas, unsweetened teas, fitness waters, flavored waters, seltzers)
• Milk, light juice, juice and sports drinks in 12-ounce servings or less, which meet the following criteria:
  • Fat-free or low-fat milk and nutritionally equivalent (per USDA) milk alternatives;
  • Fat-free or low-fat nutritionally equivalent flavored milk with no more than 150 calories per 8-ounce serving;
  • 100% juice with no added sweeteners, no more than 120 calories per 8-ounce serving and at least 10% of the DV for at least three micronutrients; or
  • Light juices, sports drinks and other beverages with no more than 66 calories per 8-ounce serving.
• At least 50% of non-milk beverages must be water and no- or low calorie options (no more than 10 calories per 8-ounce serving).

PepsiCo Food Service (PFS) is committed to helping schools offer nutritious and lower-calorie snack choices to their students. By doing so, we can help parents and educators teach children healthy habits - in the calories they consume and the calories they burn.

Although we do not decide which snacks are available on school campuses - schools do - and we do not sell snack products directly to schools - food distributors, vending companies and other independent businesses do, we believe we can play an important role in helping students have access to nutritious and lower-calorie snack choices while at school. To this end, we have committed to the following:

1. Government Regulations
   We expect food distributors, vending companies and other independent businesses that sell our products to schools to abide by all federal, state and local regulations governing the sale of foods in schools.
2. Products Sold as Part of the National School Meal Program
   For products to be sold as part of the national school meal program, we expect distributors (and other independent businesses that sell to schools) to supply only products that meet U.S. Department of Agriculture requirements for this program.
3. Products Sold Outside the National School Meal Program ("Competitive Foods") For products to be sold outside the national school meal program, we will encourage schools to request and distributors (and other independent businesses that sell to schools) to supply only products that adhere to the following guidelines developed by the Alliance for a Healthier Generation (a joint initiative of the American Heart Association and the William J. Clinton Foundation).

Nutrition Guidelines for Competitive Foods

• No more than 35% of total calories from fat*
• No more than 10% of calories from saturated fat OR no more than 1 gram of saturated fat*
• 0 grams of trans fat
• No more than 35% sugar by weight
• No more than 230 milligrams of sodium
• No more than 100 calories OR if they contain at least 2 grams of fiber, or 5 grams protein, or at least 10% DV of Vitamin A, C, E, folate, calcium, magnesium, potassium, or iron, and no more than 150 calories in elementary schools, 180 calories in middles schools or 200 calories in high schools