Filed by The Quaker Oats Company
                           Pursuant to Rule 425 under the Securities Act of 1933

                                        Subject Company: The Quaker Oats Company
                                                  Commission File No.: 001-00012



PepsiCo and Quaker Oats will file a proxy statement/prospectus and other
relevant documents concerning the proposed merger transaction with the SEC.
INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. You will be able to obtain the documents free of
charge at the website maintained by the SEC at www.sec.gov. In addition, you may
obtain documents filed with the SEC by PepsiCo free of charge by requesting them
in writing from PepsiCo, Inc., 700 Anderson Hill Road, Purchase, New York 10577,
Attention: Secretary, or by telephone at (914) 253-2000. You may obtain
documents filed with the SEC by Quaker Oats free of charge by requesting them in
writing from The Quaker Oats Company, 321 North Clark Street, Chicago, Illinois
60610, Attention: Corporate Secretary, or by telephone at (312) 222-7111.

PepsiCo and Quaker Oats, and their respective directors and executive officers,
may be deemed to be participants in the solicitation of proxies from the
stockholders of PepsiCo and Quaker Oats in connection with the merger.
Information about the directors and executive officers of PepsiCo and their
ownership of PepsiCo shares is set forth in the proxy statement for PepsiCo's
2000 annual meeting of shareholders. Information about the directors and
executive officers of Quaker Oats and their ownership of Quaker Oats stock is
set forth in the proxy statement for Quaker's 2000 annual meeting of
stockholders. Investors may obtain additional information regarding the
interests of such participants by reading the proxy statement/prospectus when
its becomes available.



The following press release was disseminated on December 4, 2000:

                             NEWS FROM PEPSICO, INC.
      Purchase, New York     Telephone 914-253-2725     www.pepsico.com

Contact:    Richard M. Detwiler, Jr.
            Vice President, Public Relations
            or
            Mark Dollins at The Quaker Oats Company
            312-222-7399

PEPSICO TO ACQUIRE THE QUAKER OATS COMPANY
- ------------------------------------------

ACQUISITION CREATES BIG GROWTH OPPORTUNITIES AND
SYNERGIES ACROSS SNACK AND BEVERAGE PORTFOLIO;
COMBINATION ALSO TO ACCELERATE LEADERSHIP CHANGES

PURCHASE, NY and CHICAGO, IL, Dec. 4 -- PepsiCo, Inc. and The Quaker Oats
Company said today they have reached an agreement for PepsiCo to acquire Quaker
in a tax-free transaction which features PepsiCo exchanging 2.3 shares of its
stock for each share of Quaker, up to a maximum value of $105 for each Quaker
share. There is no guaranteed price protection or "collar." However, if the
value to Quaker shareholders falls below $92 per share, there is a provision for
Quaker to exit the deal without penalty.

The addition of Quaker is expected to be accretive to PepsiCo's earnings per
share in the first full year and thereafter. The acquisition will immediately
improve PepsiCo's return on invested capital by 200 basis points. The addition
of Quaker will also enhance PepsiCo's ongoing sales and profit growth rates. The
transaction will be accounted for as a pooling of interests and is expected to
close in the first half of next year, subject to approval by PepsiCo and Quaker
shareholders and expiration of the Hart-Scott-Rodino Antitrust waiting period
and other customary approvals. PepsiCo also said the stock transaction would
require the issuance of approximately 315 million new shares to Quaker
shareholders.

"This will be a truly outstanding combination," said Roger A. Enrico, PepsiCo
Chairman and Chief Executive Officer. "Bringing together Quaker and PepsiCo
creates a wealth of exciting growth opportunities as well as important cost and
selling synergies. It is also very consistent with our sharp focus on convenient
food and beverages."

Quaker Chairman Robert S. Morrison said, "Over the last three years, The Quaker
Oats Company has outpaced the growth of the U.S. food and beverage industry.
It's a testament to our strong brands, talented people and operating
effectiveness. Combining with the world-renowned PepsiCo organization will
unleash the tremendous global growth potential of the Gatorade brand and
leverage the strengths of our foods business."

Roger Enrico also announced today that the PepsiCo board has accepted his
recommendation to make several management changes when the transaction closes.

"As this deal got closer to becoming a reality, our focus shifted to
implementation and that's all about leadership, which is another great asset
that PepsiCo and Quaker share," Enrico said. "Bob Morrison and the entire Quaker
management team have done an outstanding job and we are looking forward to
welcoming them to PepsiCo."

"Thinking about Bob's role led me to reconsider my role and that of Steve
Reinemund, our President and Chief Operating Officer, who we'd already decided
would succeed me as CEO and Chairman," Enrico continued. "It became clear that
Bob and I should share the same priorities -- working closely with Steve to
ensure that PepsiCo stays on the steady course we've engineered over the last
four years, and that the Quaker integration is quickly accretive from the top
line to the bottom line and from a cash flow and people standpoint."

"That led me to recommend several important moves to the Board, which they
intend to make when the deal is completed. Bob Morrison and I will become Vice
Chairmen, and Steve Reinemund will become Chairman and CEO. In addition,
PepsiCo's Chief Financial Officer, Indra Nooyi, will become President at that
time, while retaining her Chief Financial Officer responsibilities."

"My commitment to PepsiCo is exactly the same and my timing has not changed,"
said Enrico. "Steve and I will continue working together closely as we have been
this past year, sharing responsibilities for leading and running the company.
Bob will join us in that partnership and we both look forward to working with
him." Morrison, who will be nominated for election to the Board, will continue
to serve as Chairman, President and CEO of Quaker when it becomes part of
PepsiCo. Quaker will continue to be operated out of Chicago with Morrison's
current leadership team.

In her new role as President and CEO, Nooyi will also be nominated for election
to the Board. She will be responsible for corporate staff functions, including
legal, human resources and corporate communications, in addition to her current
CFO duties overseeing finance, strategic planning, mergers and acquisitions,
information technology, advanced technologies and procurement. "Indra's
contributions to PepsiCo have been enormous and she will make a great
President," said Enrico. "She is a terrific addition to our world-class board
and her perspective will be invaluable."

The acquisition of Quaker provides PepsiCo with several key strategic and
economic benefits:

o  Quakers powerful Gatorade brand, the world's number one sports drink, will
   make PepsiCo the clear leader in non-carbonated beverages, the fastest
   growing sector of the beverage industry. Additionally, leveraging the much
   larger scale of Gatorade's vast warehouse distribution system will enable
   PepsiCo's Tropicana juice unit to gain the scale it needs to make its ambient
   juice brands stronger and more profitable.

o  Quaker's rapidly expanding snack business -- including granola bars, rice
   snacks and fruit and oatmeal bars -- is highly complementary to PepsiCo's
   Frito-Lay unit, the world leader in salty snacks. The Quaker brand will
   extend PepsiCo's reach into morning on-the-go meal occasions, snacks aimed at
   kids and grain-based snacks. Distributing Quaker's snacks through Frito-Lay's
   vast distribution system will create very substantial growth opportunities
   both in the U.S. and internationally.

o  Quaker's highly profitable non-snack food business (with leading brands like
   Quaker Oatmeal, Life and Cap'n Crunch cereals, Rice a Roni and Aunt Jemima
   syrup) generates hundreds of millions of dollars in cash, and through
   increased innovation and efficiencies can continue to provide steady profit
   growth and substantial free cash flow.

Combining PepsiCo and Quaker will create a company with an exceptionally strong
position in the rapidly growing market for convenient foods and beverages. The
combined company, which will retain the PepsiCo name, will have pro forma
revenues of $25 billion. Its expected market capitalization of more than $80
billion will place it among the world's five largest consumer products
companies.

Merrill Lynch served as advisor to PepsiCo, Inc. and Goldman Sachs served as
lead advisor to Quaker Oats. JP Morgan also served as an advisor to Quaker Oats.

PepsiCo will hold a presentation for investors regarding the transaction that
will be available via webcast and telephone at 9:00 a.m. (Eastern Standard Time)
today. Investors interested in accessing the webcast may do so through PepsiCo's
website (www.PepsiCo.com) or directly at
www.vcall.com/NASApp/Vcall/EventPage?ID=57020. Investors interested in listening
to the presentation by telephone should call 1-800-946-0719, the reservation
number required for the call is 496950. The presentation will be repeated for
those interested in listening later.

Safe Harbor Statement
- ---------------------

This release contains certain "forward-looking" statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are based
on management's current expectation and are naturally subject to uncertainty and
changes in circumstances. Actual results may vary materially from the
expectations contained herein. The forward-looking statements contained herein
include statements about future financial operating results and benefits of the
pending merger between PepsiCo, Inc. and The Quaker Oats Company. Factors that
could cause actual results to differ materially from those described herein
include: the inability to obtain shareholder or regulatory approvals; actions of
the U.S., foreign and local governments; the inability to successfully integrate
the businesses of PepsiCo, Inc. and The Quaker Oats Company; costs related to
the merger; the inability to achieve cost-cutting synergies resulting from the
merger; changing consumer or marketplace trends: and the general economic
environment. Neither PepsiCo, Inc. nor The Quaker Oats Company is under any
obligation to (and expressly disclaims any such obligation to) update or alter
its forward-looking statements, whether as a result of new information, future
events, or otherwise.

We urge investors to read the Proxy Statement/Prospectus and any other relevant
documents that PepsiCo, Inc. and The Quaker Oats Company have filed and will
file with the Securities and Exchange Commission because they contain important
information.

                                     # # # #


The following materials are presented by Bob Morrison to The Quaker Oats Company
employees:

                         [The Quaker Oats Company Logo]

                                                                December 4, 2000

Fellow Quaker Employees:

I want to share with you an exciting development. Quaker's Board of Directors
has approved an agreement to merge with PepsiCo--a transaction that would
provide tremendous growth opportunities for our brands and our people. After
shareholder and regulatory approvals, Quaker shareholders will receive an
exchange of 2.3 shares of PepsiCo stock, for each share of Quaker stock they
own. The exchange ratio is subject to adjustment such that the value to be
received per Quaker share will not exceed $105.

Combining our brands, our people and our will-to-win with PepsiCo's scale, its
resources and its infrastructure will allow us to unlock the tremendous growth
potential of our Gatorade brand and leverage the strength of our foods business,
giving us greater scale and efficiency in all parts of the world. The new,
combined entity will have sales nearing $25 billion, with leading positions
across many beverage and food categories. Much like Quaker, PepsiCo has a strong
history of building and growing its brands, including Frito-Lay, Tropicana and
of course Pepsi and Mountain Dew. With PepsiCo's established infrastructure in
more than 190 countries and territories, this merger will move Quaker from being
a multi-regional company, to being a part of a truly international organization.

PepsiCo's intent is to keep our headquarters in Chicago and to merge our talent
and expertise in marketing, manufacturing and sales with its existing
organization. They are looking to complement our capabilities with their strong
up-and-down-the-street distribution, food service and vending capabilities
around the world. I will stay on as Chairman and CEO of Quaker and join
PepsiCo's board of directors as Vice Chairman. Our business leaders will
continue in their roles.

I know on a personal level that this announcement raises many questions. We'll
try to keep you informed of up-to-the-minute details as this transaction
progresses. Please understand that it will likely take several months before we
have shareholder approval and before we are able to finally close the deal. In
this context, it will be absolutely critical that we keep our eye on the ball.
ensuring a strong finish to this year and a strong start to the year 2001. Our
goal is to enter this merger with momentum to highlight the strengths of our
brands and our people.

PepsiCo's next Chairman and Chief Executive Officer, Steve Reinemund, plans to
be in Chicago Tuesday to host a Town Hall meeting with me at the Chicago
Marriott on Michigan Avenue at 9:30 a.m. We will teleconference and videotape
that meeting so that all Quaker employees can hear about our vision for combined
future growth.

We're hosting a joint presentation to the financial community this morning at
8:00 a.m. (CST). It can be accessed at that time and also referenced later on
our website http://www.quakeroats.com. You also can call for a replay recording
of the presentation after 11:00 a.m. (CST) by dialing 888-203-1112 in the U.S.,
or by dialing: 719-457-0820 for international callers. The reservation number is
496950.

This is a new beginning for The Quaker Oats Company. The accelerated growth
opportunities this merger brings will give us a future that is brighter than
ever, enhanced by the scale and opportunities of our new, combined international
organization.

                                       Sincerely,


                                       /s/ Bob Morrison


MERGER FACT SHEET

TERMS OF MERGER AGREEMENT:

PepsiCo, Inc. and The Quaker Oats Company have reached an agreement to merge in
a tax-free, stock-for-stock transaction. The transaction will be accounted for
as a pooling of interests.

Shareholders of Quaker will receive 2.3 shares of PepsiCo stock (PEP) for each
share of Quaker stock (OAT) that they own, subject to adjustment as described
below.

TIMING:

We hope to complete the merger in the second quarter of 2001. The transaction is
subject to the approval of the shareholders of both PepsiCo and Quaker, is
subject to the expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act, and domestic and international regulatory review.
The SEC also has to approve the pooling treatment.

ADDITIONAL TERMS AND CONDITIONS:

o  The transaction is capped as follows: If PEP's market price is greater than
   $45.65 per share, the exchange ratio will be adjusted downward to provide an
   exchange ratio which, when multiplied by PEP's market price, will be equal to
   $105 per OAT share.

o  Quaker has the right to walk away from the agreement without a penalty if
   PEP's market price is less than $40 per share, or the equivalent of $92 per
   OAT share. However, Quaker cannot walk away if the exchange ratio is adjusted
   upward as follows: $92 divided by PEP's market price.

o  If Quaker were to enter a new agreement with a third party, Quaker is
   required to pay a $420 million break-up fee.

o  Quaker will grant PepsiCo a 19.9% stock option with an exercise price of $95
   per share. The profit on this option is capped at $460 million dollars, less
   any amount paid pursuant to the break up fee.

BENEFITS OF MERGER:

o It offers an immediate and attractive premium on OAT shares.

o  And for shareholders who take a longer-term view, there is an opportunity to
   participate in one of the strongest growth stories in food and beverage. The
   combination of Quaker and PepsiCo has the potential to create significant
   long-term value for OAT shareholders by providing opportunities for enhanced
   sales and earnings growth, over time.

o The deal brings together great brands from both companies.

o  The deal provides greater growth prospects for Quaker brands by offering the
   synergies of greater scale in purchasing, manufacturing, selling and
   distribution--domestically and internationally.

EMPLOYEE QUESTIONS
- ------------------

RATIONALE FOR MERGER:
- ---------------------

WHAT ARE THE BENEFITS/SYNERGIES OF THIS MERGER?

o  From a shareholder standpoint, this merger delivers significant value. To
   give you an example, under the terms of the transaction, using PepsiCo's
   closing stock price on December 1, 2000, shareholders would have received
   approximate returns as follows:

   o  From beginning of the year 2000 = 48% return

   o  End of first quarter = 60% return

   o  End of second quarter = 30% return

   o  End of third quarter = 23% return

   o  Since 11/1/00 = 19% return

o  From a Company standpoint, we'll become part of a premier consumer products
   company--one of the top five in the world--with very strong prospects for
   continued future growth.

o  This combination will give us greater scale with customers and suppliers
   (such as purchasing of P.E.T., sweeteners, corrugated, advertising, etc.)

o  This combination will give us greater distribution opportunities--such as
   opportunities to get Quaker products into up-and-down the street, vending,
   and on-premise/food service channels.

o  According to PepsiCo, by leveraging the much larger scale of Gatorade's
   powerful warehouse distribution system, PepsiCo's Tropicana juice unit will
   gain the scale it needs to make its ambient (shelf-stable) juice brands
   stronger and more profitable.

   Distributing Quakers snacks through Frito-Lay's vast distribution system
   will create very substantial growth opportunities both in the U.S. and
   internationally. (PepsiCo's annual report indicates that Frito-Lay
   distribution reaches 470,000 retail outlets in North America--and that it
   can put a new product through its system in a matter of weeks.)

o  This combination could give us greater scale/efficiency in hot-fill
   manufacturing with the opportunity to leverage our expertise to products such
   as Tropicana, SoBe, Starbuck's Frappuchino and Lipton Teas.

o  This combination gives us potentially greater international reach. PepsiCo
   operates in 190 countries and territories around the world.

o  This combination will create an entity with greater resources--to fund new
   ideas, expansions and potential acquisitions.

WHAT ARE THE ANTICIPATED SAVINGS OF BLENDING THE TWO COMPANIES?

The merger is driven by growth opportunities. PepsiCo has not yet fully
quantified what they believe the cost synergies to be. As the deal is finalized,
they will likely determine cost, procurement, advertising, operating,
administrative overhead and manufacturing synergies that may exist.

QUAKER OPERATIONS:

WHAT HAS PEPSICO SAID ABOUT ITS PLANS FOR QUAKER?

PepsiCo intends to merge our talent and expertise in marketing, manufacturing
and sales with its existing organization. They've said that PepsiCo and Quaker
are very compatible in that both are builders of leading brands, both have
achieved successful turnarounds in recent years, and both place a high value on
world-class talent.

We don't have all of the answers today, but we will try to get answers quickly
and communicate decisions to everyone. But, in the near term, it's business and
processes as usual. That's why the most important thing everyone can do is to
continue to execute the operating plans we have in place.

DO OUR PLANS TO PROTECT EMPLOYEES APPLY?

If shareholders approve this transaction, it will trigger what is called a
"change in control" at that time. Many Quaker benefit plans include provisions
to protect employees in the event of a change of control. Employees should
consult their benefits handbook for details.

WILL I HAVE A JOB WITH PEPSICO?

We don't have specific answers today. Again, PepsiCo has indicated its intent to
keep operations based in Chicago and places a great emphasis on retaining the
talent that drives our businesses across our Company. At this time, we do not
have all of the specifics. For the near term, it is business and processes as
usual for everyone. Bob Morrison and the senior management team will stay in
place. Once the transaction is complete, they're expected to operate Quaker as a
division of PepsiCo.

WHAT IS THE DIFFERENCE BETWEEN PEPSI AND PEPSICO?

PepsiCo is the parent company of Frito-Lay, Pepsi-cola and Tropicana. The Quaker
Oats Company will become another division of PepsiCo.

WHAT DO I TELL NEW HIRES/PEOPLE WHO HAVE NOT STARTED YET, BUT HAVE ACCEPTED
OFFERS?

Those offers are still valid and we'll be conducting business as usual.

DO WE CONTINUE TO WORK ON...?

o  North American Cereals Manufacturing Study (NAMS) consolidation

o  Integrated Business Solutions (IBS) implementation

o  Non-Traditional Purchasing (NTP) program

o  Cost Management Process (CMP) programs

o  Qnet upgrade

o  Self-managed Travel Dept. (on-line booking tool, ARC system)

o  Recruiting

Yes, to all of the above.

ONCE THE MERGER IS COMPLETE, WHO WILL MANAGE THE QUAKER BUSINESSES?

PepsiCo's intention is to utilize Quaker's strong management team. Bob Morrison
will continue as Quaker's Chairman, president and CEO, and join the Pepsi Board
as Vice Chairman. Our business leaders are expected to continue in their roles
as well.

DOES THIS IN ANY WAY CHANGE QUAKER'S PLANS TO CLOSE THE ST. JOSEPH AND
SHIREMANSTOWN PLANTS?

No. We are proceeding with  implementation  of decisions coming from our North
American Cereals Manufacturing study.

WILL THE CHICAGO HEADQUARTERS OFFICE STILL BE RELOCATED TO MONROE STREET?

It is PepsiCo's intention to continue to run the Quaker business as a separate
division from Chicago. At this point, this includes the move to 555 W. Monroe.

TRANSACTION
- -----------

EXPECTED DATES OF FINALIZATION?

We hope to complete the transaction in the second quarter of 2001. In the
meantime, PepsiCo and Quaker shareholders will be asked to approve the
transaction, and regulators will be asked to approve the deal as well.

Until these approvals are complete, we will continue to operate independently as
The Quaker Oats Company.

WHEN WILL WE KNOW THE EXACT VALUE OF THE DEAL?

The total value will be determined at the time the transaction closes. We expect
that closing will be sometime in the second quarter of 2001 after shareholder
and regulatory approval is received.

COMPENSATION
- ------------

DO WE DO 2000 PMP'S? ARE THE VIP AND MIB PROGRAMS STILL IN PLACE?

Yes. It is very important that employees continue to get the feedback they need
and expect.

WILL RECEIVE OUR 2001 ESOP AWARD?

Yes.

WILL ELIGIBLE MANAGERS STILL RECEIVE THEIR 2001 OPTION AWARD IN MARCH?

No. We understand that PepsiCo will address long-term compensation plans after
the transaction closes.

WILL ELIGIBLE MANAGERS HAVE THE OPTION TO INVEST IN IIP?

No. We understand that PepsiCo will address long-term compensation plans after
the transaction closes.

WHAT HAPPENS TO QUAKER STOCK OPTIONS? VESTED? UNVESTED?

All options vest upon "change in control," as do IIP shares.

ARE WE STILL ELIGIBLE FOR BONUSES FOR WORK DONE IN 2000?

Yes--and you're also eligible for bonuses under Quaker's plans in 2001 until the
date the transaction closes. That's why it's important to continue delivering
strong results and running our businesses and processes as usual.

LEARNING MORE/FUTURE COMMUNICATIONS
- -----------------------------------

HOW WILL WE LEARN MORE ABOUT THE MERGER?

Corporate Communications will continue to send updates via Mid-Day and Qnet as
more information becomes available. The Company also will work with management
to facilitate face-to-face meetings with employees.

WHAT DO I DO IF I HAVE QUESTIONS?

Employees can send any questions to the Mid-Day News mailbox. Please understand
it will probably take a little time to get answers.


MID DAY

WE ALL WANT ANSWERS TODAY, BUT THIS WILL TAKE SOME TIME...

Whether today's news excites you, energizes you, puzzles you or scares you,
chances are you're still wondering how long it will take to get answers to
questions about how this proposed change affects you personally.

For many parts of our business, this merger represents exciting new
opportunities. PepsiCo's intent is to keep Quaker headquartered in Chicago as a
separate division headed by Bob Morrison as Chairman, president and CEO. It also
intends to retain the talent that's driving Quaker's businesses -- both foods
and beverages. This merger gives us the opportunity to unlock the tremendous
growth potential of Gatorade, and leverage the strengths of our food business.
The synergies of this combined organization are expected to lead us to greater
profitable growth, over time.

Pending shareholder acceptance and regulatory approvals, we expect that the
merger will be completed sometime in the first half of 2001.

It's Quaker's intention to run our businesses as usual. We're still pursuing the
goals of our 2000 and 2001 operating plans. To keep our stock price, as well as
PepsiCo's stock price, healthy, we have got to stay focused on delivering strong
results.

Our benefit plans -- including recent selections in the Quakerflex enrollment
plan -- still apply.

Additional questions can be sent to the "Mid-Day News" mailbox.

TOWN HALL TOPICS MEETING SCHEDULED FOR TUESDAY MORNING...

Quaker Oats CEO Bob Morrison and PepsiCo President and COO Steve Reinemund
jointly will host a special Town Hall Topics Meeting at 9:30 a.m., Tuesday, Dec.
5. The meeting will take place in the Grand Ballroom at the Chicago Marriott
Hotel downtown, 541 N. Rush St. (click here for directions and a map). Employees
must bring their Quaker IDs to the meeting in order to be admitted. Security
will be checking identifications. Employees should enter the hotel through the
Rush Street entrance. The meeting will be teleconferenced to Quaker field
locations were possible. Videotapes of the meeting will be sent to locations
outside the Tower later in the week.


                         [The Quaker Oats Company Logo]

                                                                December 4, 2000

QUAKER CUSTOMER ORGANIZATION:

The Quaker Oats Company and PepsiCo today announced an agreement to merge Quaker
with PepsiCo, a deal in which each share of Quaker stock will be exchanged for
2.3 shares of Pepsi. (That exchange ratio is subject to adjustment, such that
the value an closing cannot exceed $105 per Quaker share--a provision known as a
"cap".)

This is exciting news for Quaker. Our strong brands, combined with PepsiCo's
scale and extended reach -- domestically and internationally -- will help us to
unlock the tremendous growth potential of Gatorade and leverage the strengths of
our food business. The synergies of this combined organization should lead us to
greater long-term profitable growth.

Pending shareholder acceptance and regulatory review, we expect that the merger
will be complete sometime in the second quarter of 2001. PepsiCo's intent is to
operate Quaker as a separate division with our headquarters remaining in
Chicago. More details an transition plans will be made available as soon as
decisions are finalized.

I am sure you have questions about what this means for you personally and the
Customer Organization. For the near term, it is business as usual for the people
and processes we have in place. Looking a bit further ahead, we have already
begun working with Pepsi management to assess options for the future.

While our infrastructure may not be exactly the same as it is today. Pepsi
intends to keep our warehouse-delivery system for Gatorade and is very
interested in -- and has a high value for -- our foods business. They've
acknowledged the strength of our brand positions and our focus on healthy
grain-based foods, which complement their strong, leading brand positions.

I intend to visit all CBCs in the near future to answer all your questions. In
the meantime, stay focused on our priorities. We are off to a great Gatorade
2001 Season-Sell. KEEP IT UP!

This is a new beginning for Quaker. We're closing a 100-year chapter as an
independent company, and opening the next with a future that is brighter than
ever.

                                  Best Regards,

                                   TERRY MOHR
                              SENIOR VICE PRESIDENT
                          QUAKER CUSTOMER ORGANIZATION


Quaker Field Leadership:

            Your IMMEDIATE attention is needed!

            Quaker today issued a joint press release announcing plans to merge
with PepsiCo. Via e-mail, you should have already received a letter from Bob
Morrison.

            SPECIFICALLY, WE NEED YOUR COMMUNICATIONS HELP IN TWO AREAS:

            1) EMPLOYEE COMMUNICATIONS: We ask that you review the attached
information and make it available as you deem appropriate at your locations.
This information will be available through Qnet, so you may want to think
specifically about employees at your facility who do not have access to Qnet or
electronic communications. The same is true for the letter from Bob Morrison to
all Quaker employees.

            2) LOCAL FACILITY MEDIA QUERIES: It is likely that local media will
call you for a comment. The attached key messages and Q&A series are designed to
help you handle these calls. As you know from experience, reporters will try to
get you to speculate, predict, or comment on the merger itself, so it's
important to stick to facts that are indicated in the information provided. Any
inquiries that go beyond the key messages provided in the attached document
should be directed to our corporate spokespeople -- as they have been briefed by
management on how to respond. And, of course, please keep in mind that there is
no such thing as an "off the record" comment. Mark Dollins is available at Tower
extension 7399, and Allison Harmon is available at extension 6914.

Your cooperation is appreciated.

We will keep you posted as more information becomes available.

Corporate Communications


The following materials are from a conference call with Bob Morrison on
December 4, 2000:

Thank you, Roger.

My comments will be brief.

I simply want all of you who are listening--analysts, shareholders, the business
press and our employees--to know that I'm really thrilled with the prospect of
combining Quaker Oats with PepsiCo.

o  First of all, this merger is a wonderful thing for our shareholders.

   For the three-years through Oct. 31 of this year -just two days before
   takeover rumors hit the press -- Quaker shareholders have seen an average
   annual total return of nearly 22 percent, a return that far outdistances the
   performance of any of our peers over that period.

   At Friday's close, the anticipated Pepsi deal will provide a premium of
   nearly 20 percent on top of the October 31 price.

   Clearly, this represents an extremely attractive immediate return.

                                     (PAUSE)

   But, of even greater importance to those shareholders who take a longer-term
   view, there is an opportunity here to participate in one of the most dramatic
   growth stories in food and beverage history.

   Many of you are sadly aware that, in recent times, mergers, in our industry
   or others, often bring together one struggling company with another--or, at
   best, one struggling company with one that's performing well.

   This merger is unusual, if not unique, in that it is combining two companies
   that are both firing on all cylinders--leading their industries in every
   respect.

   This combination presents the prospects of a truly awesome growth story and,
   therefore, impressive future returns for our shareholders, over time.

                                     (PAUSE)

o  This merger is also wonderful for our employees.

   Quaker employees are winners. This merger will provide them with an
   order-of-magnitude increase in the resources available to keep on winning in
   the marketplace.

   The merger will also provide them with an opportunity to grow, on a personal
   level, in a company long known for identifying and developing a diverse group
   of strong leaders.

   Our employees will thrive in this environment and will see greater career
   growth possibilities than were possible in a stand-alone Quaker Oats company.

                                     (PAUSE)

I'm genuinely excited to join Roger, Steve and Indra as a part of the PepsiCo
leadership team.

I firmly believe we're going to do great things together.

                                     ###


The following materials are presented by Bob Morrison on December 4, 2000:

Hello, this is Bob Morrison:

By now many of you have read today's reports on Quaker's plans to merge with
PepsiCo. This is exciting news for both organizations.

Combining our brands, our people and our will-to-win with Pepsi's allows us to
unlock the tremendous growth potential of Gatorade, and leverage the strengths
of our food business. The synergies of this combined organization will lead us
to accelerated profitable growth.

As a five-billion-dollar company, we've been winning in the marketplace. As part
of a 25 billion-dollar company, I'm confident that we can deliver even stronger
performance. Pepsi shares our passion for brands, innovation and world-class
talent. This is apparent in their brands - Frito-Lay, Tropicana and --of
course-- the Pepsi brand.

I'm pleased to tell you that Pepsi's intent is to keep our operations here in
Chicago, utilizing our existing supply chain, marketing and sales organizations.
I will stay on as Chairman and CEO of Quaker and join PepsiCo's board of
directors as Vice Chairman.

We'll have more details in the coming days. On Tuesday morning, Steve Reinemund
- -- Pepsi's President and Chief Operating Officer-- and I will host a Town Hall
at 9:30 at the Chicago Marriott ballroom.

For now, stay focused on finishing the year 2000 as strongly as we began it. We
want to get off to a strong start in 2001 -- a year which will prove to be the
most exciting in our Company's history. See you tomorrow.



The following material is a letter from Bob Morrison on December 4, 2000, to
The Quaker Oats Company shareholders:

                                                                December 4, 2000

Dear Quaker Shareholders:

Today, The Quaker Oats Company and PepsiCo, Inc. announced exciting plans to
merge to create one of the top five consumer packaged goods companies in the
world.

Combining our brands, our people and our will-to-win with PepsiCo's scale,
resources and infrastructure will allow us to unlock the tremendous growth
potential of Gatorade and leverage the strengths of our foods business, giving
us greater scale and efficiency in many parts of the world. The new, combined
entity will have sales of around $25 billion, with leading positions across many
beverage and food categories.

Much like Quaker, PepsiCo has a strong history of building and growing its
brands, including Frito-Lay, Tropicana and, of course, Pepsi and Mountain Dew.
With PepsiCo's established infrastructure in more than 190 countries and
territories, this merger will move Quaker from being a multi-regional company,
to being a part of a truly international organization.

The attached press release provides additional information about the
transaction. A Proxy Statement/Prospectus relating to the merger will soon be
filed with the Securities and Exchange Commission. Once approved, it will be
mailed to you for your consideration and vote.

We look forward to communicating future updates on the transaction.

                                    Sincerely,

                                    Robert S. Morrison
                                    Chairman, President and CEO