PepsiCo restructures North American Pepsi-Cola business into two separate units: 1) bottling -- to be called "Pepsi Bottling Group" (PBG) -- run by Craig Weatherup, who is currently Pepsi's global chairman/CEO. PBG will be anchor bottler for Pepsi system including possible future off-shore expansions. 2) concentrate company, run by Phil Marineau, who is currently president/CEO Pepsi North America. Timing. PepsiCo says changes take place "immediately."

Report to Enrico. Weatherup and Marineau will report directly to PepsiCo chairman/CEO Roger Enrico, as will Pepsi International president/CEO Peter Thompson. Previously, Marineau and Thompson reported to Weatherup, who reported to Enrico. PepsiCo says separation of North American bottling and concentrate business will allow Pepsi "to compete more effectively (and) better serve its retail customers." PepsiCo adds move "would make it easier if PepsiCo decides to convert its bottling business to public ownership" as company has been weighing since August (BD 8/7/98). Pepsi's company-owned bottling business -- often referred to as Pepsi COBO -- handles 56.8% of Pepsi's US volume; COBO also operates in multiple markets outside US. COBO's revenues estimated at $7.2 bil for 1998; volume 1.9 bil cases; source: PaineWebber.

North American management. Bottling. Weatherup will run PBG, to be based in Somers, New York. Top management reporting to Weatherup: 1) Craig Jung, COO. Jung is currently president of Pepsi COBO North America; previously held multiple positions at Frito-Lay. 2) John Cahill, executive vp/CFO. Cahill is now CFO of Pepsi-Cola; formerly vp/treasurer of PepsiCo. Pepsi-Cola. Marineau will run Pepsi-Cola North America, which will be based at PepsiCo's headquarters in Purchase, New York. He has been CEO of Pepsi North America since last fall (BD 9/24/97). Marineau was formerly president of Quaker Oats.

Enrico. In letter to colleagues, Enrico says: 1) PepsiCo "making excellent progress in evaluating the feasibility of establishing our bottling business as a separate public company in which PepsiCo would hold a significant stake." Says, if PepsiCo decides to spin off stake in COBO, board action "would most likely occur later this year." 2) whether as separate company or 100%-owned by PepsiCo, "free-standing bottling unit will allow us to compete more effectively against a large anchor bottler." 3) Weatherup is "our most senior and experienced beverage executive ... Craig has led every part of our global soft drink business." 4) Marineau "is one of the most talented and experienced brand builders I know and in his brief tenure at Pepsi he has advanced our business significantly." 5) Thompson "has made great strides in restructuring and revitalizing our beverage business outside North America."

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