TABLE OF CONTENTS i

INTRODUCTION ii

FOCUS REPORT

THE U.S. BEVERAGE INDUSTRY CONFRONTS ECONOMIC CHALLENGES

The Economic Downturn pg..........1

• Overview pg..........1
• Effect on the Beverage Industry pg..........2

Economic Impact on Companies pg..........10

• Coca–Cola Company pg..........10
• PepsiCo pg..........11
• Other Companies pg..........13

Beverage Category Analysis pg..........17

• Carbonated Soft Drinks pg..........17
• Bottled Water pg..........20
• Fruit Beverages pg..........21
• Coffee pg..........22

Industry and Consumer Responses pg..........23

• M&A Slowdown pg..........23
• Private Label pg..........24
• Channel Shifting pg..........27
• Economy's Impact — Case Study pg..........28
• Summary pg..........30

Exhibits pg..........32

EXHIBIT

THE U.S. BEVERAGE INDUSTRY CONFRONTS ECONOMIC CHALLENGES

1 U.S. Beverage Market Actual and Projected Volume by Category 2007 — 2009 pg..........32

2 U.S. Beverage Market Actual and Projected Volume Share by Category 2007 — 2009 pg..........33

3 U.S. Beverage Market Actual and Projected Volume Change by Category 2007 — 2009 pg..........34

4 U.S. Beverage Market Actual and Projected Per Capita Consumption by Category 2007 — 2009 pg..........35

5 U.S. Beverage Market Actual and Projected Retail Dollar Sales by Category 2007 — 2009 pg..........36

6 U.S. Beverage Market Actual and Projected Retail Dollar Sales Share by Category 2007 — 2009 pg..........37

7 U.S. Beverage Market Actual and Projected Retail Dollar Sales Change by Category 2007 — 2009 pg..........38

8 U.S. Beverage Market Actual and Projected Retail Price Per Gallon by Category 2007 — 2009 pg..........39