The Rising Influence of Rising Affluence

[DewDiligence]

PEP and The Global Demographic Tailwind (from 4Q11 CC):

http://seekingalpha.com/article/355551-pepsico-s-ceo-discusses-q4-2011-results-earnings-call-transcript

Q: Eric R. Katzman (DB): I think you touched on the fact that emerging markets are in negative to mix, but if you're no longer doing as much M&A, I would assume that's no longer going to be as much of a drag.

A: Indra Nooyi (CEO): …right now, emerging markets and developing markets [are] about 35% of the revenue of PepsiCo. We think it'll get to 50% by the end of the decade… And it takes that long only because our developed markets business is also growing…

The good news is: in emerging and developing markets, once they get to a certain scale, their margins escalate quite fast. The best example is Sabritas in Mexico. It's a developing market. But if you look at the margins we get in our Sabritas business, it's very attractive. And so because we have scale, we are the largest salty-snack player there.

…we'll keep moving the emerging and developing markets up, get it to half-and-half and there should be even more skewed to emerging and developing markets based on the world population, but let's start with 50-50. And then, hopefully, sometime around 2015, the profit acceleration from emerging markets will start picking up even more because the investments to build scale now are returns from the scale investments.

I’ll have more to say on PEP’s new strategic plan when I’ve read through the recent PR’s and transcripts; in the meantime, if anyone has something to add, please chime in!