1.  The Secret Behind Successful F&B Product Development – The Customer Andrew Spencer, Director Customer Insights DNC Todd Kaplan, Brand Director Mountain Dew

2. Being Focused on Customer adds Value

4. There are no new ideas… Innovation Overview …yet we are living in an era of perpetual innovation

5. Why do some succeed? Innovation Overview …and others fail?

6. Innovation Overview We know it isn’t as easy as... LANDING ON A KEY INSIGHT LETTING THE PROPOSITION SELL ITSELF GOING WHERE NOBODY ELSE IS HAVING A GREAT TASTING PRODUCT BEING FIRST GETTING A NEW LOOK

7. 1.KEY CONSUMER INSIGHT 2.PRODUCT DEVELOPMENT 3.PROPOSITION AND IMAGE 4.MARKETING PLAN 5.EXECUTION We will continue to learn, try new things, and evolve as we go through the innovation process at PepsiCo Looking at products that have done well, the stars have generally been aligned around 5 core elements… Innovation is HARD

8. 1) Unearthing a Key Insight Key Considerations: Know the consumer Understand the true need Understand the barriers Recognize the current landscape Opportunity exists to revive morning occasion at C-Stores 2 nd largest occasion Trips and $ per trip declining Millenials not satisfied with current morning offerings Millenials + Gen X make up more than half of morning occasion Hot Coffee and Juice account for more than half of occasions Millenials under-index on hot coffee and juice CSDs under-index on AM occasion

9. 2) Getting An Optimal Product Key Considerations: Taste Efficacy Ingredients Calories COGS Testing Kickstart Formula: Dew + 5% fruit juice Caffeine > Dew Vitamins C & B Mid-Calorie (80/can) 2 Flavors: Orange Citrus Fruit Punch

10. 3) Nailing the Proposition and Image Key Considerations: Cannibalization Occasion Package Type Package Size Brand Hierarchy Name Role of Ingredients Graphics Creating a Sub-Brand: Position around AM occasion Establish role of name / Dew Rigorous Consumer Testing Dew users significantly interested in trying KS Strong projected repeat Projected incremental to LRB and CSD category

11. 4) The Marketing Tidal Wave Key Considerations: Awareness Trial Creative Media Mix Timing PR Integrated Campaign: TV, OOH, Digital PR: Over 500MM+ earned media impressions March Madness Promo with ESPN Mike & Mike Integration Over 2MM+ samples Digital ‘Dawn Patrol’

12. 5) Executing with Excellence Key Considerations: Distribution Pricing Bundling On Shelf Execution Equipment Value System Focus Getting it on Shelf: Line Priced with 20oz Over 65 ASPs Multiple IRCs for trial Meal Deal Partnerships Right Equipment / Tools Precise System Communication

13. The Results Kickstart is the biggest PepsiCo beverage launch in the last 10 years! #1 LRB Category Innovation in 2013 Projected to reach over $180MM in Year 1 Achieved its distribution targets across all channels in first 2 weeks In C&G Kickstart dollar sales are bigger than Coke Zero 20oz and 6x bigger than Dr Pepper 10 Among highest repeat rates of any recent beverage launch – 48% vs. 32% avg 153 index to LRB, 137 CSD Highly Incremental: 85% incremental to TM Dew 75% incremental to PEP CSDs 43% incremental to CSDs 10% incremental to LRB

14. Kickstart your Night… …coming soon in 2014! Where do we go from here?

15. Questions

16.  DNC Tools for gathering Voice of the Customer data

17. Delaware North is investing in processes and systems to capture more VOC more efficiently Internal Integrating Multiple Sources - Primary Research - Social - POS - Insights and Trends Total Listening™ process provides us with 360⁰ degrees of gathering customer insights

18. Delaware North using community panel to talk directly with NHL fans 652 NHL Panel Members Understand challenges and problem areas Understand Site by Site what is missing Direct Feedback on Concepts, food preferences and local options Fast Flexible Focused Total Listening ™ Community Panel

19. Highly flexible tool to gather insights... “Transporting can be tricky, so I take that into consideration when purchasing my food. Food vendors on the first level, while they have a better variety of food, transporting to get the condiments or to find a place to sit can be tricky.” - Nashville Female STH What is most inconvenient about ordering or buying food/ beverage at the arena?

20. 360 Degrees of Customer Understanding Action What are the industry norms – are we missing anything? What does your knowledge and experience suggest? What this 360⁰ process might look like… Insight: Fans having an issue carrying food Followup: How is that effecting purchase behavior Insight: What do our partners know? Can we create some solutions? Action Create 3-5 key solutions based on insight and Voice of Customer? Followup: Get direct feedback using Community Panel Action: Using POS analytics we can test options and track success Action: Using Social Media we can track fan response or start a conversation about our innovative packaging

21. …and create innovative packaging that solves the problem and captures more of the budget

22. Two Andrew Spencers at DNC Andrew Spencer Contact: Andrew Spencer (Corp) aspence1@DNCINC.com 716 858 5127

23. Thank you very much Todd & Pepsi!