Bottler of the year Pepsi bottling ventures: PBV outperforms its benchmarks in a less-than-perfect year.(Cover story)(Company overview)

LAST YEAR PROVED TO BE ONE OF THE MOST DIFFICULT YEARS BOTTLERS HAVE FACED IN AWHILE. Instead of focusing on rising raw material costs, fuel prices and consumers' declining disposable income, Beverage Industry's 2009 Bottler of the Year, Pepsi Bottling Ventures (PBV), Raleigh, N.C., looks at what it can control in a difficult year, says Keith Reimer, PBV's president and chief executive officer.

"In that environment, what I look at now is: Are we growing faster than the categories that we compete in?" Reimer says. "Are we growing faster in those categories and the category overall? Are we growing faster than our competitors? And are we growing faster than our brethren in the Pepsi system? "Overall, I can say what I feel great about is that we've exceeded the system. We've outperformed the system not only this year, but over the last three years, we've grown at a rate of almost twice that of the overall system. We've grown share in almost all the categories that we compete in ... We continue to outperform the benchmarks, and I think we're doing a good job of executing in the areas that we can control."

In addition to improving performance in a less-than-perfect economy, PBV has made sustainability a key focus of how it operates, especially in the technology and equipment it has added as part of its recent $25 million expansion. The addition features a direct-blow-fill machine for bottling water, and is capable of producing lightweight bottles weighing 10.9 grams.

"I simplify it as 'How can we do more with less?'" Reimer says. "It's kind of an over-simplification. How can we continue to grow our business, but do it in a way that either costs less or handles more complexity at a lower cost, or leaves less of a carbon footprint on the environment? We got into this because we felt it was the right thing to do."

ADVANTAGE OF SCALE

PBV was born in 1999 as a joint venture between PepsiCo and Suntory Ltd., a $14 billion Japanese beverage company. PBV was established when Suntory's PepCom Industries combined with five PepsiCo-owned bottlers as part of PepsiCo's plan to consolidate its bottling network around a handful of anchor bottlers. At that time, PBV became the third-largest anchor bottler for Pepsi in the United States. Of the three anchors, PBV is the only limited-liability company, and therefore the only anchor not publically traded.

Suntory, which owns 65 percent of PBV, also has worldwide beverage interests that include liquor, beer and wine, and is the master franchisee for Pepsi in Japan. Suntory allows PBV to operate the business with a lot of autonomy. Reimer reports four times a year to a board of six individuals, four Suntory members and two from PepsiCo. In addition, three individuals from Suntory are positioned at PBV's headquarters to help with corporate planning and act as liaisons with Japan.

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