PepsiCo’s Top Food Processing Research Challenges Austin Kozman, Ph.D., P.E. Director – Open Innovation & Alliance Management April 30, 2015

PepsiCo Category Research Agenda PepsiCo Category Research Food Processing WANTS

Who We Are? Global Beverages Global Snacks Global Nutrition PepsiCo is a global food and beverage powerhouse. Our broad range of more than 3,000 delicious products offers consumers convenient, nutritious and affordable options in nearly every country around the world. Global Beverages Global Snacks Global Nutrition Performance Brands Scale People With over $66 billion in net revenue and more than 250,000 employees, we are among the largest food-and-beverage companies in the world. PepsiCo is the #1 Food and Beverage company in North America In Europe, we are #1 in juice, dairy, ready-to-drink tea, and savory snacks In Russia, we are the largest food and beverage business in the country and the market leader in dairy Our foods and beverages are consumed nearly 1 billion times each day nearly every country around the world. PepsiCo is made up of three global businesses – beverages, snacks and nutrition. Twenty-two of the brands in our portfolio – including Pepsi-Cola, Quaker Oats, Tropicana, Lay’s and Gatorade – generate more than $1 billion each in retail sales every year. More than $66 billion revenue 22 billion-dollar brands >200 countries & territories More than 250,000 employees

R&D Operating Model Breakthrough Reframe Refresh Discovery R&D Teams Transformational Science Discovery R&D Teams Breakthrough Functional R&D Teams Reframe New propositions (unique-to-market platforms) Business Impact (Return) New propositions (PEP-familiar platforms) Refresh Line extensions Region R&D Teams Business Complexity

Category Discovery R&D Teams Food & Beverage Ingredients Process Package Long Term Research (LTR) PepsiCo Advanced Research (PAR)

PepsiCo Category Research Agenda PepsiCo Category Research Food Processing WANTS

Focus on BIG Ideas focus primarily on the ideas that scored highest (top right quadrant for high challenge and high reward from group consensus in platform meetings)

Group Ideas into Opportunity Spaces Better Built: Built for Appearance Built for Texture Built for Taste & Flavor Built for Form Transform Distribution: Point of Sale At Home Applications Flexible Equipment Localization Holistic Sourcing: Managing Inputs (Ingredients) Repurpose and Reuse Robust Process Digital Efficiencies: Information Value Chain Operational Execution

Top WANTS New/unique dehydration technologies to food manufacturing (other than baking, frying, etc.) New Food Industry Manufacturing Processes (e.g. Injection Molding of Food) Waste to Worth (Value for Current Agricultural Waste Products: orange peels, oat hulls, corn bran, coconut husks, potato peels, potato starch, etc.) Advantaged and Differentiated Grain Milling Noninvasive potato defect and content characterization Minimally Processed Fruits & Vegetables (high moisture, i.e. > 20%, shelf stable snacks that make consumption of whole fruits and vegetables more palatable and fun) Chemical/Enzymatic Modification for Advantaged Food Products (e.g. a product that when chewed releases heat, enzymes to modify starch so finished product has a harder texture, etc.) Non-Oil Frying (alternative food grade fluid that has a flash point > 450 to 500°F) Edible adhesives that are activated with a low energy source or temperature “Simulated Mouth” - Quantitative tool to characterize texture of products Edible Moisture Barrier

Next Steps – Defining Unarticulated Needs Unarticulated Needs (WANTS)

Internal PepsiCo Capabilities Food Science Culinary Sensory Clinical Science Packaging Metabolomics Engineering Food Safety, Quality Chemistry/Physics Regulatory Statistics Agro Biology Nutrition Flavors

Questions? Austin Kozman austin.kozman@pepsico.com 972-334-4338