PepsiCo

“Further, we must maintain mutually beneficial relationships with our key customers to compete effectively. A change in the business conditions (financial or otherwise) of any of our key customers, even if unrelated to us, a significant reduction in sales to any key customer, or the loss of any of our key customers has adversely affected and can continue to adversely affect our business.”

Annual report 2025A · The company itself

“Beverages(a) Convenient Foods Beverages(a) Convenient Foods Beverages(a) Convenient Foods North America 51 % 49 % 50 % 50 % 50 % 50 % International (b) 31 % 69 % 29 % 71 % 29 % 71 % PepsiCo 42 % 58 % 42 % 58 % 41 % 59 % (a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and EMEA segments, is 36% of our consolidated net revenue in 2025 and 35% of our consolidated net revenue in both 2024 and 2023.”

Annual report 2025A · The company itself

“PepsiCo Foods North America Either independently or in conjunction with third parties, PFNA makes, markets, distributes and sells convenient foods, which include cereals, chips, dips, granola bars, oatmeal, pasta, rice and syrups and mixes under various brands including Cheetos, Doritos, Fritos, Lay’s, Pearl Milling Company, Quaker, Ruffles and Tostitos. PFNA’s products are sold to independent distributors and retailers.”

Annual report 2025A · The company itself

“PepsiCo Beverages North America Either independently or in conjunction with third parties, PBNA makes, markets and sells beverage concentrates, fountain syrups and finished goods under various beverage brands including Aquafina, Bubly, Diet Mountain Dew, Diet Pepsi, Gatorade, Gatorade Zero, Mountain Dew, Mountain Dew Baja Blast, Pepsi, Pepsi Wild Cherry, Pepsi Zero Sugar and Propel. PBNA operates its own bottling plants and distribution facilities and sells branded finished goods directly to independent distributors and retailers.”

Annual report 2025A · The company itself

“Our Customers Our customers include wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, among others.”

Annual report 2025A · The company itself

“In 2025, sales to Walmart Inc. (Walmart) and its affiliates, including Sam’s Club (Sam’s), represented approximately 14% of our consolidated net revenue, with sales reported across all of our segments, including concentrate sales to our independent bottlers, which were used in finished goods sold by them to Walmart.”

Annual report 2025A · The company itself

“Our products compete against products of international beverage and convenient food companies that, like us, operate in multiple geographies, as well as regional, local and private label and economy brand manufacturers and other competitors, including smaller companies developing and selling micro brands directly to consumers through e-commerce platforms or through retailers focused on locally sourced products.”

Annual report 2025A · The company itself

“Our business will be adversely affected if we are unable to maintain and develop successful relationships with e-commerce retailers and hard discounters, while also maintaining relationships with our key customers operating in traditional retail channels (many of whom are also focused on increasing their e-commerce sales). Our business can be adversely affected if e-commerce channels and hard discounters take significant additional market share away from traditional retailers or we fail to find ways to create increasingly better digital tools and capabilities for our retail customers to enable them to grow their businesses.”

Annual report 2025A · The company itself

“Our beverage and convenient food products compete primarily on the basis of brand recognition and loyalty, taste, price, value, quality, product variety, innovation, distribution, shelf space, advertising, marketing and promotional activity (including digital), packaging, convenience, service and the ability to anticipate and effectively respond to consumer preferences and trends, including increased consumer focus on health and wellness and sustainability and the continued acceleration of e-commerce and other methods of distributing and purchasing products.”

Annual report 2025A · The company itself

“The retail landscape continues to evolve, including continued growth in e-commerce channels and hard discounters.”

Annual report 2025A · The company itself

“Retail Landscape Our industry continues to be affected by disruption of the retail landscape, including the continued growth in sales through e-commerce websites and mobile commerce applications, including through subscription services, the integration of physical and digital operations among retailers and the international expansion of hard discounters. We have seen and expect to continue to see a further shift to e-commerce, online-to-offline and other online purchasing by consumers.”

Annual report 2025A · The company itself

“In addition, our business can be adversely affected if we are unable to profitably expand direct-to-consumer e-commerce capabilities.”

Annual report 2025A · The company itself

“Our business will be adversely affected if we are unable to maintain and develop successful relationships with e-commerce retailers and hard discounters, while also maintaining relationships with our key customers operating in traditional retail channels (many of whom are also focused on increasing their e-commerce sales). Our business can be adversely affected if e-commerce channels and hard discounters take significant additional market share away from traditional retailers or we fail to find ways to create increasingly better digital tools and capabilities for our retail customers to enable them to grow their businesses.”

Annual report 2025A · The company itself

“Certain jurisdictions have either imposed, or are considering imposing, new or increased taxes on the manufacture, distribution or sale of our products, ingredients or substances contained in, or attributes of, our products or commodities used in the production of our products. These taxes vary in scope and form: some apply to all beverages, including non-caloric beverages, while others apply only to beverages with a caloric sweetener (e.g., sugar).”

Annual report 2025A · The company itself

“In addition, certain jurisdictions in which our snack products are sold have either imposed or are considering imposing, new or increased taxes on the manufacture, distribution or sale of certain of our snack products as a result of ingredients (such as sugar, sodium or saturated fat) contained in our products.”

Annual report 2025A · The company itself

“Imposition of Taxes and Regulations on our Products Certain jurisdictions in which our products are made, manufactured, distributed or sold have either imposed, or are considering imposing, new or increased taxes or regulations on the manufacture, distribution or sale of our products or their packaging, ingredients or substances contained in, or attributes of, our products or their packaging, commodities used in the production of our products or their packaging or the recyclability or recoverability of our packaging. These taxes and regulations vary in scope and form. For example, some taxes apply to all beverages, including non-caloric beverages, while others apply only to beverages with a caloric sweetener (e.g., sugar).”

Annual report 2025A · The company itself

“In addition, failure to successfully complete or manage strategic transactions may impede our efforts to shift our portfolio to include new products that are less affected by the impact of ingredient-based taxes or other regulatory actions or scrutiny.”

Annual report 2025A · The company itself

“When input prices increase unexpectedly or significantly, we may be unwilling or unable to increase our product prices or unable to effectively hedge against price increases to offset these increased costs without suffering reduced volume, revenue, margins and operating results.”

Annual report 2025A · The company itself

“Under difficult economic conditions, consumers may seek to reduce discretionary spending by forgoing purchases of our products or shifting toward lower-priced products offered by other companies, including private-label brands, which has impacted and could continue to impact consumer demand for our products.”

Annual report 2025A · The company itself

“Our products compete against products of international beverage and convenient food companies that, like us, operate in multiple geographies, as well as regional, local and private label and economy brand manufacturers and other competitors, including smaller companies developing and selling micro brands directly to consumers through e-commerce platforms or through retailers focused on locally sourced products.”

Annual report 2025A · The company itself

“The loss of this customer would have a material adverse effect on our PFNA and PBNA segments.”

Annual report 2025A · The company itself

“We regularly review our portfolio of businesses and evaluate potential acquisitions, joint ventures, distribution agreements, divestitures, refranchisings and other strategic transactions. The success of these transactions is dependent upon, among other things, our ability to realize the full extent of the expected returns, benefits, cost savings or synergies as a result of a transaction, within the anticipated time frame, or at all; and receipt of necessary consents, clearances and approvals.”

Annual report 2025A · The company itself

“Any inability to compete effectively can adversely affect our business.”

Annual report 2025A · The company itself

“Our key packaging materials include plastic resin, including polyethylene terephthalate (PET), polyethylene and polypropylene used for plastic beverage bottles and film packaging for convenient foods, aluminum, glass, closures, cardboard and paperboard cartons.”

Annual report 2025A · The company itself

“Laws and regulations related to the use or disposal of plastics or other packaging materials can adversely affect our business and financial performance. We rely on diverse packaging solutions to safely deliver products to our customers and consumers. Certain of our products are sold in packaging designed to be recyclable, commercially compostable, biodegradable or reusable.”

Annual report 2025A · The company itself

“We are a leading global beverage and convenient food company with a complementary portfolio of brands, including Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker and SodaStream.”

Annual report 2025A · The company itself

“In addition, the rapid evolution and increased adoption of artificial intelligence technologies may increase our cybersecurity risks, including generative artificial intelligence augmenting threat actors’ technological sophistication to enhance existing or create new malware.”

Annual report 2025A · The company itself

“Any inability on our part to anticipate or react to changes in consumer preferences and trends, or make the right strategic investments to do so, including investments in artificial intelligence and data analytics to understand consumer trends, can lead to reduced demand for our products, lead to inventory write-offs or erode our competitive and financial position, thereby adversely affecting our business.”

Annual report 2025A · The company itself

“Our products compete primarily on the basis of brand recognition and loyalty, taste, price, value, quality, product variety, innovation, distribution, shelf space and preferable shelf placement, advertising, marketing and promotional activity, packaging, convenience, service and the ability to anticipate and effectively respond to consumer preferences and trends.”

Annual report 2025A · The company itself

“Any unplanned turnover, sustained labor shortage or unsuccessful implementation of our succession plans to backfill current leadership positions, including the Chief Executive Officer, or failure to attract, develop and maintain a highly skilled workforce, including with key capabilities such as e-commerce and digital marketing, artificial intelligence and data analytic skills, can deplete our institutional knowledge base, erode our competitive advantage or result in increased costs due to increased competition for employees, higher employee turnover or increased employee benefit costs.”

Annual report 2025A · The company itself

“Our future growth depends, in part, on our ability to continue to reduce costs and improve efficiencies, including digitalization of our operations, our multi-year phased implementation of shared business service organizational models and organizational restructuring. We continue to identify and implement productivity and restructuring initiatives that we believe will position our business for long-term sustainable growth, including certain commercial and financial priorities to improve our marketplace competitiveness and financial performance announced during 2025, by allowing us to achieve a lower cost structure, improve decision-making and operate more efficiently.”

Annual report 2025A · The company itself

“We possess intellectual property rights that are important to our business, including ingredient formulas, trademarks, copyrights, patents, business processes and other trade secrets. The laws of various jurisdictions in which we operate have differing levels of protection of intellectual property. Our competitive position and the value of our products and brands can be reduced and our business adversely affected if we fail to obtain or adequately protect our intellectual property, including our ingredient formulas, or if there is a change in law that limits or removes the current legal protections afforded our intellectual property.”

Annual report 2025A · The company itself

“We are a leading global beverage and convenient food company with a complementary portfolio of brands, including Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker and SodaStream.”

Annual report 2025A · The company itself

“PBNA also, either independently or in conjunction with third parties, makes, markets, distributes and sells ready-to-drink tea and coffee products through joint ventures with Unilever (under the Lipton brand name) and Starbucks, respectively.”

Annual report 2025A · The company itself

“We sell a wide variety of beverages and convenient foods in more than 200 countries and territories and the profile of the products we sell, the amount of revenue attributable to such products and the type of packaging used vary by jurisdiction.”

Annual report 2025A · The company itself

“Beverages(a) Convenient Foods Beverages(a) Convenient Foods Beverages(a) Convenient Foods North America 51 % 49 % 50 % 50 % 50 % 50 % International (b) 31 % 69 % 29 % 71 % 29 % 71 % PepsiCo 42 % 58 % 42 % 58 % 41 % 59 % (a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and EMEA segments, is 36% of our consolidated net revenue in 2025 and 35% of our consolidated net revenue in both 2024 and 2023.”

Annual report 2025A · The company itself

“Generally, our finished goods beverage operations produce higher net revenue, but lower operating margins as compared to concentrate sold to authorized bottling partners for the manufacture of finished goods beverages.”

Annual report 2025A · The company itself

“Our products compete primarily on the basis of brand recognition and loyalty, taste, price, value, quality, product variety, innovation, distribution, shelf space and preferable shelf placement, advertising, marketing and promotional activity, packaging, convenience, service and the ability to anticipate and effectively respond to consumer preferences and trends.”

Annual report 2025A · The company itself

“Any unplanned turnover, sustained labor shortage or unsuccessful implementation of our succession plans to backfill current leadership positions, including the Chief Executive Officer, or failure to attract, develop and maintain a highly skilled workforce, including with key capabilities such as e-commerce and digital marketing, artificial intelligence and data analytic skills, can deplete our institutional knowledge base, erode our competitive advantage or result in increased costs due to increased competition for employees, higher employee turnover or increased employee benefit costs.”

Annual report 2025A · The company itself

“Our future growth depends, in part, on our ability to continue to reduce costs and improve efficiencies, including digitalization of our operations, our multi-year phased implementation of shared business service organizational models and organizational restructuring. We continue to identify and implement productivity and restructuring initiatives that we believe will position our business for long-term sustainable growth, including certain commercial and financial priorities to improve our marketplace competitiveness and financial performance announced during 2025, by allowing us to achieve a lower cost structure, improve decision-making and operate more efficiently.”

Annual report 2025A · The company itself

“Restructuring and Impairment Charges 2019 Multi-Year Productivity Plan The 2019 Productivity Plan leverages new technology and business models to further simplify, harmonize and automate processes; re-engineers our go-to-market and information systems, including deploying the right automation for each market; and simplifies our organization and optimizes our manufacturing and supply chain footprint. To build on the successful implementation of the 2019 Productivity Plan, in 2024, we further expanded and extended the plan through the end of 2030 to take advantage of additional opportunities within the initiatives described above.”

Annual report 2025A · The company itself

“We sell a wide variety of beverages and convenient foods in more than 200 countries and territories and the profile of the products we sell, the amount of revenue attributable to such products and the type of packaging used vary by jurisdiction.”

Annual report 2025A · The company itself

“Convenient food volume includes volume sold by us and our noncontrolled affiliates of convenient food products bearing company-owned or licensed trademarks.”

Annual report 2025A · The company itself

“Beverages(a) Convenient Foods Beverages(a) Convenient Foods Beverages(a) Convenient Foods North America 51 % 49 % 50 % 50 % 50 % 50 % International (b) 31 % 69 % 29 % 71 % 29 % 71 % PepsiCo 42 % 58 % 42 % 58 % 41 % 59 % (a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and EMEA segments, is 36% of our consolidated net revenue in 2025 and 35% of our consolidated net revenue in both 2024 and 2023.”

Annual report 2025A · The company itself

“In the United States, PBNA acts as the exclusive distributor for small-format and foodservice customers with chilled direct-store-delivery (DSD) for the portfolio of brands owned by Tropicana Beverages Group (TBG).”

Annual report 2025A · The company itself

“Our Customers Our customers include wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, among others.”

Annual report 2025A · The company itself

“Restructuring and Impairment Charges 2019 Multi-Year Productivity Plan The 2019 Productivity Plan leverages new technology and business models to further simplify, harmonize and automate processes; re-engineers our go-to-market and information systems, including deploying the right automation for each market; and simplifies our organization and optimizes our manufacturing and supply chain footprint. To build on the successful implementation of the 2019 Productivity Plan, in 2024, we further expanded and extended the plan through the end of 2030 to take advantage of additional opportunities within the initiatives described above.”

Annual report 2025A · The company itself

“International Beverages Franchise IB Franchise makes, markets and sells beverage concentrates to authorized and independent bottlers under various beverage brands including 7UP, Aquafina, Gatorade, Mirinda, Mountain Dew, Pepsi, Pepsi Black, Pepsi Zero Sugar, and Sting Energy.”

Annual report 2025A · The company itself

“Our Customers Our customers include wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, among others.”

Annual report 2025A · The company itself

“The prices we pay for such items are subject to fluctuation, and we manage this risk through the use of fixed-price contracts and purchase orders, pricing agreements and derivative instruments, including swaps and futures.”

Annual report 2025A · The company itself

“During 2025, we continued to experience volatility in our commodity, packaging and other input costs that may continue into fiscal 2026.”

Annual report 2025A · The company itself

“We continued to experience volatility in our commodity, packaging and transportation costs during 2025, which may continue.”

Annual report 2025A · The company itself

“Many of the jurisdictions in which our products are sold have experienced and could continue to experience uncertain or unfavorable economic conditions, such as high inflation and adverse changes in interest rates, tax laws or tax rates and new, expanded or retaliatory tariffs, including as a result of geopolitical events and tensions.”

Annual report 2025A · The company itself

“We estimate and reserve for our expected credit loss exposure based on our experience with past due accounts and collectibility, write-off history, the aging of accounts receivable, our analysis of customer data, and forward-looking information (including the expected impact of a high interest rate and inflationary cost environment), leveraging estimates of creditworthiness and projections of default and recovery rates for certain of our customers.”

Annual report 2025A · The company itself

“Estimated fair value is determined using discounted cash flows and requires an analysis of several estimates including future cash flows or income consistent with management’s strategic business plans, annual sales growth rates, perpetuity growth assumptions and the selection of assumptions underlying a discount rate (weighted-average cost of capital) based on market data available at the time. Significant management judgment is necessary to estimate the impact of competitive operating, macroeconomic and other factors (including those related to volatile geopolitical conditions and a high interest rate and inflationary cost environment) to estimate future levels of sales, operating profit or cash flows.”

Annual report 2025A · The company itself

“Additionally, the business and economic uncertainty resulting from volatile geopolitical conditions and changes in the interest rate and inflationary cost environment have made such estimates and assumptions more difficult to calculate.”

Annual report 2025A · The company itself

“Pandemics, epidemics or other disease outbreaks and geopolitical events and tensions, wars and other military conflicts have also impacted and could continue to impact consumer preferences and demand for our products, including negative consumer sentiment toward non-local products.”

Annual report 2025A · The company itself

“In addition, our business operations, including our supply chain, are subject to disruption by geopolitical events and tensions, wars and other military conflicts, natural disasters, pandemics, epidemics or other events beyond 11 Table of Contents our control that could negatively impact product availability and decrease demand for our products if our crisis management plans do not effectively mitigate these issues.”

Annual report 2025A · The company itself

“Many of the raw materials and supplies used in the production of our products are sourced from countries experiencing war or other military conflict, acts of terrorism, civil unrest, political instability or unfavorable economic conditions.”

Annual report 2025A · The company itself

“As with other global companies, we are regularly subject to cyberattacks and other cyber incidents, including the types of attacks and incidents described above.”

Annual report 2025A · The company itself

“During the periods presented in this report, volatile economic, political, social and geopolitical conditions, civil unrest and wars and other military conflicts, acts of terrorism and natural disasters and other catastrophic events in certain markets in which our products are made, manufactured, distributed or sold, including in Argentina, Brazil, China, Mexico, the Middle East (including Egypt), Russia, Turkey and Ukraine, continue to result in challenging operating environments and have resulted in and could continue to result in changes in how we operate in certain of these markets. Debt and credit issues, currency controls or fluctuations, sanctions and export controls in certain of these international markets (including restrictions on the transfer of funds to and from certain markets) have also continued to impact our operations in certain of these international markets.”

Annual report 2025A · The company itself

“In addition, our business operations, including our supply chain, are subject to disruption by geopolitical events and tensions, wars and other military conflicts, natural disasters, pandemics, epidemics or other events beyond 11 Table of Contents our control that could negatively impact product availability and decrease demand for our products if our crisis management plans do not effectively mitigate these issues.”

Annual report 2025A · The company itself

“Natural disasters and extreme weather conditions also pose physical risks to our facilities and those of our suppliers, which could impair our production capabilities and disrupt our supply chain.”

Annual report 2025A · The company itself

“Climate change or measures to address climate change and other sustainability matters can negatively affect our business or damage our reputation. Climate change may increase the frequency or severity of natural disasters and other extreme weather conditions, including rising temperatures and drought. Natural disasters and extreme weather conditions could pose physical risks to our facilities, impair our production capabilities, disrupt our supply chain or impact demand for our products.”

Annual report 2025A · The company itself

“Such conditions have resulted in and could continue to result in exchange rate fluctuation, limitations on access to credit markets and other corporate banking services, including working capital facilities, volatility in global stock markets and global economic uncertainty and heightened risk to employee safety, any of which can adversely affect our business.”

Annual report 2025A · The company itself

“Because our consolidated financial statements are presented in U.S. dollars, the financial statements of our subsidiaries outside the United States, where the functional currency is other than the U.S. dollar, are translated into U.S. dollars. Given our global operations, we also pay for the ingredients, raw materials and commodities used in our business in numerous currencies. Fluctuations in exchange rates, including as a result of inflation, central bank monetary policies, currency controls or other currency exchange restrictions or geopolitical instability have had, and could continue to have, an adverse impact on our financial performance.”

Annual report 2025A · The company itself

“Foreign Exchange Our operations outside of the United States generated 44% of our consolidated net revenue in 2025, with Mexico, Russia, Canada, China, the United Kingdom, Brazil and South Africa, collectively, comprising 25% of our consolidated net revenue in 2025. As a result, we are exposed to foreign exchange risks in the international markets in which our products are made, manufactured, distributed or sold.”

Annual report 2025A · The company itself

“Our business has in the past and could in the future be negatively affected by security incidents, systems disruptions or shutdowns or degraded systems performance. These incidents or disruptions may be caused by cyberattacks and other cyber incidents, network or power outages, software, equipment or telecommunications failures, the unintentional or malicious actions of employees or contractors, natural disasters, fires or other catastrophic events.”

Annual report 2025A · The company itself

“In addition, the rapid evolution and increased adoption of artificial intelligence technologies may increase our cybersecurity risks, including generative artificial intelligence augmenting threat actors’ technological sophistication to enhance existing or create new malware.”

Annual report 2025A · The company itself

“If we do not allocate and effectively manage the resources necessary to continue building and maintaining our information technology infrastructure, or if we fail to timely identify or appropriately respond to cyberattacks or other cyber incidents, our business has been and can continue to be adversely affected, which has resulted in and can continue to result in some or all of the following: transaction errors, processing inefficiencies, inability to access our data or systems, lost revenues or other costs resulting from disruptions or shutdowns of offices, plants, warehouses, distribution centers or other facilities, compromises of personal data, confidential information, intellectual property or other sensitive data, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to our reputation or a negative impact on employee morale and the loss of current or potential customers.”

Annual report 2025A · The company itself

“Ingredients and Other Supplies The principal ingredients we use in our beverage and convenient food products are acesulfame potassium, aspartame, cocoa products, corn, corn sweeteners, flavorings, flour, juice concentrates, nuts, oats, potatoes, raw milk, rice, seasonings, sucralose, sugar, vegetable and essential oils, and wheat.”

Annual report 2025A · The company itself

“In addition, climate change or other weather-related disruptions to our supply chain may also have a negative effect on agricultural production resulting in decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as potatoes, sugar cane, corn, wheat, rice, oats, oranges and other commodities.”

Annual report 2025A · The company itself

“These commodity derivatives include agricultural products, energy and metals. Commodity derivatives that do not qualify for hedge accounting treatment are marked to market each period with the resulting gains and losses recorded in corporate unallocated expenses as either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.”

Annual report 2025A · The company itself

“We are also subject to national and local environmental laws in the United States and in foreign countries in which we do business, including laws related to water consumption and treatment, wastewater discharge and air emissions. In the United States, we are subject to the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act and other federal, state and local laws and regulations regarding handling, storage, release and disposal of wastes generated onsite and sent to third-party owned and operated offsite licensed facilities.”

Annual report 2025A · The company itself

“Lack of available water of acceptable quality, actions by governmental and non-governmental organizations, investors, customers and consumers on water scarcity and increasing pressure to conserve and replenish water in areas of scarcity and stress, including due to the effects of climate change, can lead to: supply chain disruption; adverse effects on our operations or the operations of our business partners; higher compliance costs; increased capital expenditures (including investments in the development of technologies to enhance water efficiency and reduce consumption); higher production costs, including less favorable pricing for water; the interruption or cessation of operations at, or relocation of, our facilities or the facilities of our business partners; failure to achieve our goals relating to water use; perception of our failure to act responsibly with respect to water use or to effectively respond to legal or regulatory requirements concerning water scarcity; or damage to our reputation, any of which can adversely affect our business.”

Annual report 2025A · The company itself

“We and our business partners use water in the manufacturing of our products. Water is also essential to the production of the raw materials needed in our manufacturing process.”

Annual report 2025A · The company itself

“Fuel, electricity and natural gas are also important commodities for our businesses due to their use in our and our business partners’ 4 Table of Contents facilities and the vehicles delivering our products.”

Annual report 2025A · The company itself

“These commodity derivatives include agricultural products, energy and metals. Commodity derivatives that do not qualify for hedge accounting treatment are marked to market each period with the resulting gains and losses recorded in corporate unallocated expenses as either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.”

Annual report 2025A · The company itself

“Fuel, electricity and natural gas are also important commodities for our businesses due to their use in our and our business partners’ 4 Table of Contents facilities and the vehicles delivering our products.”

Annual report 2025A · The company itself

“These commodity derivatives include agricultural products, energy and metals. Commodity derivatives that do not qualify for hedge accounting treatment are marked to market each period with the resulting gains and losses recorded in corporate unallocated expenses as either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.”

Annual report 2025A · The company itself

“Ingredients and Other Supplies The principal ingredients we use in our beverage and convenient food products are acesulfame potassium, aspartame, cocoa products, corn, corn sweeteners, flavorings, flour, juice concentrates, nuts, oats, potatoes, raw milk, rice, seasonings, sucralose, sugar, vegetable and essential oils, and wheat.”

Annual report 2025A · The company itself

“In addition, climate change or other weather-related disruptions to our supply chain may also have a negative effect on agricultural production resulting in decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as potatoes, sugar cane, corn, wheat, rice, oats, oranges and other commodities.”

Annual report 2025A · The company itself

“In addition, the imposition of tariffs (including U.S. tariffs imposed or threatened to be imposed on China, the European Union, Canada and Mexico and other countries and any tariffs imposed by such countries) have impacted and could continue to impact our supply chain resulting in increased input costs, including the cost of certain raw materials and packaging.”

Annual report 2025A · The company itself

“Many of the jurisdictions in which our products are sold have experienced and could continue to experience uncertain or unfavorable economic conditions, such as high inflation and adverse changes in interest rates, tax laws or tax rates and new, expanded or retaliatory tariffs, including as a result of geopolitical events and tensions.”

Annual report 2025A · The company itself

“Our key packaging materials include plastic resin, including polyethylene terephthalate (PET), polyethylene and polypropylene used for plastic beverage bottles and film packaging for convenient foods, aluminum, glass, closures, cardboard and paperboard cartons.”

Annual report 2025A · The company itself

“Our beverage and convenient food products compete primarily on the basis of brand recognition and loyalty, taste, price, value, quality, product variety, innovation, distribution, shelf space, advertising, marketing and promotional activity (including digital), packaging, convenience, service and the ability to anticipate and effectively respond to consumer preferences and trends, including increased consumer focus on health and wellness and sustainability and the continued acceleration of e-commerce and other methods of distributing and purchasing products.”

Annual report 2025A · The company itself

“Numerous countries, including European Union member states, have enacted or are expected to enact legislation incorporating the Organization for Economic Co-operation and Development (OECD) model rules for a global minimum tax rate of 15% with widespread implementation expected by the end of 2026. As the legislation becomes effective in countries in which we do business, our taxes will increase and negatively impact our provision for income taxes.”

Annual report 2025A · The company itself

“Fuel, electricity and natural gas are also important commodities for our businesses due to their use in our and our business partners’ 4 Table of Contents facilities and the vehicles delivering our products.”

Annual report 2025A · The company itself

“Certain jurisdictions have either imposed or are considering imposing regulations designed to increase recycling rates, encourage waste reduction, restrict the sale of products utilizing certain packaging or to carry warnings about the environmental impact of plastic packaging. These regulations vary in scope and form from deposit return systems designed to incentivize the return of beverage containers, to extended producer responsibility policies and even restrictions or bans on the use of certain types of packaging, including single-use plastics and packaging containing per- and polyfluoroalkyl substances (PFAS).”

Annual report 2025A · The company itself

“Our key packaging materials include plastic resin, including polyethylene terephthalate (PET), polyethylene and polypropylene used for plastic beverage bottles and film packaging for convenient foods, aluminum, glass, closures, cardboard and paperboard cartons.”

Annual report 2025A · The company itself

“Distribution Costs Distribution costs, including the costs of shipping and handling activities, which include certain merchandising activities, are reported as selling, general and administrative expenses. Shipping and handling expenses were $16.7 billion in 2025, $16.0 billion in 2024 and $15.4 billion in 2023.”

Annual report 2025A · The company itself

“Many of the jurisdictions in which our products are sold have experienced and could continue to experience uncertain or unfavorable economic conditions, such as high inflation and adverse changes in interest rates, tax laws or tax rates and new, expanded or retaliatory tariffs, including as a result of geopolitical events and tensions.”

Annual report 2025A · The company itself

“We estimate and reserve for our expected credit loss exposure based on our experience with past due accounts and collectibility, write-off history, the aging of accounts receivable, our analysis of customer data, and forward-looking information (including the expected impact of a high interest rate and inflationary cost environment), leveraging estimates of creditworthiness and projections of default and recovery rates for certain of our customers.”

Annual report 2025A · The company itself

“Estimated fair value is determined using discounted cash flows and requires an analysis of several estimates including future cash flows or income consistent with management’s strategic business plans, annual sales growth rates, perpetuity growth assumptions and the selection of assumptions underlying a discount rate (weighted-average cost of capital) based on market data available at the time. Significant management judgment is necessary to estimate the impact of competitive operating, macroeconomic and other factors (including those related to volatile geopolitical conditions and a high interest rate and inflationary cost environment) to estimate future levels of sales, operating profit or cash flows.”

Annual report 2025A · The company itself

“Additionally, the business and economic uncertainty resulting from volatile geopolitical conditions and changes in the interest rate and inflationary cost environment have made such estimates and assumptions more difficult to calculate.”

Annual report 2025A · The company itself

“In addition, continuing concern over environmental, social and governance matters, including climate change, is expected to continue to result in new or increased legal and regulatory requirements (in or outside of the United States) to reduce emissions to mitigate the potential effects of greenhouse gases, to limit or impose additional costs on commercial water use due to local water scarcity concerns or to expand mandatory reporting of certain environmental, social and governance metrics.”

Annual report 2025A · The company itself

“This increased focus may result in new or increased legal and regulatory requirements, such as potential carbon pricing programs or revised product labeling requirements or other regulatory measures, which could, along with initiatives to meet our sustainability goals, continue to result in significant increased costs and require additional investments in facilities and equipment.”

Annual report 2025A · The company itself

“Certain jurisdictions have either imposed, or are considering imposing, product labeling or warning requirements or other limitations on the marketing or sale of certain of our products as a result of ingredients or substances contained in such products or packaging materials, processes used to make the ingredients or products, the audience to whom products are marketed or the location in which the products are sold. These types of provisions have, among other things, required that we highlight perceived concerns about a product, warn consumers to avoid consumption of certain ingredients or substances present in our products, restrict the age of consumers to whom products are marketed or sold, limit the location in which our products may be available or discontinue the use of certain ingredients.”

Annual report 2025A · The company itself

“Lack of progress or failure to properly report on our goals with respect to reducing our impact on the environment or perception of a failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change and other sustainability matters, including the use of single-use plastics, has led and could continue to lead to adverse publicity, reduced demand for our products, damage to our reputation, an increased risk of litigation, regulatory proceedings, inquiries or investigations, which have adversely affected our business.”

Annual report 2025A · The company itself

“We depend on information systems and technology, including public websites and cloud-based services, for many activities important to our business, including communications within our company, interfacing with customers and consumers; ordering and managing inventory; managing and operating our facilities; protecting confidential information, including personal data we collect; maintaining accurate financial records and complying with regulatory, financial reporting, legal and tax requirements.”

Annual report 2025A · The company itself

“We rely on third-party service providers, including software and cloud data service providers, for certain areas of our business, including procurement, supply chain, manufacturing, distribution, information technology support services and administrative functions (such as payroll processing, health and benefit plan administration and certain finance and accounting functions).”

Annual report 2025A · The company itself

“Also, there is continued focus in many jurisdictions in which our products are made, manufactured, distributed or sold regarding environmental policies relating to climate change, biodiversity loss, deforestation, regulating greenhouse gas emissions, energy policies and sustainability, including single-use plastics.”

Annual report 2025A · The company itself

“In this changing retail landscape, retailers and buying groups are shifting traditional value propositions, removing our products or otherwise reducing shelf space allocated to our products and focusing on introducing and developing private-label brands.”

Annual report 2025A · The company itself

“Many of our employees and employees of third parties that are involved in the manufacturing, production or distribution of our products are covered by collective bargaining agreements, and other employees may seek to be covered by collective bargaining agreements. Strikes or work stoppages or other business interruptions have occurred and may occur in the future if we or the third parties that are involved in the manufacturing, production and distribution of our products are unable to renew, or enter into new, collective bargaining agreements on satisfactory terms and can impair manufacturing and distribution of our products or the ingredients, raw materials or commodities used in our products, interrupt product supply, lead to a loss of sales, increase our costs or otherwise affect our ability to fully implement future operational changes to enhance our efficiency or to adapt to changing business needs or strategy, all of which can adversely affect our business.”

Annual report 2025A · The company itself

“Advertising and other marketing activities, reported as selling, general and administrative expenses, totaled $5.4 billion in 2025, $5.9 billion in 2024 and $5.7 billion in 2023, including advertising expenses of $3.4 billion in 2025, $3.9 billion in 2024 and $3.8 billion in 2023.”

Annual report 2025A · The company itself

“Asia Pacific Foods Either independently or in conjunction with third parties, Asia Pacific Foods makes, markets, distributes and sells a number of convenient food brands including BaiCaoWei, Cheetos, Doritos, Kurkure, Lay’s, Quaker and Smith’s, through consolidated businesses, as well as through noncontrolled affiliates.”

Annual report 2025A · The company itself

“Our business can be adversely affected if we are unable to grow in developing and emerging markets. Our success depends in part on our ability to grow our business in developing and emerging markets. There can be no assurance that our products will be accepted or be successful in any particular developing or emerging market, due to competition, price, cultural differences, consumer preferences, regulation, method of distribution or otherwise.”

Annual report 2025A · The company itself

“Asia Pacific Foods Either independently or in conjunction with third parties, Asia Pacific Foods makes, markets, distributes and sells a number of convenient food brands including BaiCaoWei, Cheetos, Doritos, Kurkure, Lay’s, Quaker and Smith’s, through consolidated businesses, as well as through noncontrolled affiliates.”

Annual report 2025A · The company itself

“Europe, Middle East and Africa Either independently or in conjunction with third parties, EMEA makes, markets, distributes and sells a number of convenient food brands including Cheetos, Chipsy, Doritos, Lay’s, Quaker, Sasko, Spekko, Walkers and White Star through consolidated businesses, as well as through noncontrolled affiliates.”

Annual report 2025A · The company itself

“Latin America Foods Either independently or in conjunction with third parties, LatAm Foods makes, markets, distributes and sells a number of convenient food brands including Cheetos, Doritos, Emperador, Lay’s, Marias Gamesa, Quaker, Ruffles, Sabritas, Saladitas Gamesa and Tostitos.”

Annual report 2025A · The company itself

“These commodity derivatives include agricultural products, energy and metals. Commodity derivatives that do not qualify for hedge accounting treatment are marked to market each period with the resulting gains and losses recorded in corporate unallocated expenses as either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.”

Annual report 2025A · The company itself