PepsiCo, Inc. reported first-quarter sales and profit above analysts’ estimates on Wednesday, boosted by higher demand for its snacks, sparkling water, and low-sugar sodas, sending its shares up by about 2%.
Beverage and packaged-food companies have been under pressure from changing consumer preferences, and Pepsi has responded by coming up with new recipes and using better ingredients for its snacks and sodas.
PepsiCo has also bolstered its product portfolio to attract customers by acquiring companies such as Bare chips/crisps and launching Pepsi Zero Sugar, Bubly sparkling water and Pure Leaf iced teas.
These moves helped the company post a 2.15% growth in sales in its North American beverages unit, while sales in its Frito-Lay snacks division rose by 5.5%.
Organic Sales Growth
Organic sales (a key metric that shows the health of Pepsi’s legacy brands and strips out impacts from currency fluctuations and acquisitions) rose by 5.2% – its highest quarterly growth rate in more than three years, the company reported.
Under chief executive officer Ramón Laguarta, who took over the top job less than six months ago, the company has laid out plans to spend more on advertising, boost its manufacturing capacities, improve its supply chain, and focus more on healthy snacks and beverages.
During the quarter, Pepsi launched new fruity flavours of Bubly sparkling water, Pure Leaf hibiscus herbal teas, and Gatorade Zero in Glacier Freeze and Berry flavours.
Making Progress
“We are equally pleased with the progress we are making on our ambitious agenda to invest, to build capabilities, strengthen our brands, and add capacity to grow,” Laguarta said in a statement.
PepsiCo reiterated its 2019 organic revenue growth of 4% and reported that it continued to expect a fall in core constant-currency earnings.
Net income attributable to the company rose by 5.2%, to $1.41 billion (€1.25 billion). Excluding one-time items, the company earned 97 cents (€0.86) per share.
Net revenue rose by 2.6%, to $12.88 billion (€11.4 billion). Analysts were expecting profit of 92 cents (€0.81) per share and revenue of $12.70 billion (€11.24 billion), according to IBES data from Refinitiv.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
