PepsiCo is reducing reliance on colas for sales, says CEO Indra Nooyi
The maker of Frito-Lay snacks, Mountain Dew, Naked juices and Quaker Oats now gets less than 25% of its global sales from soda, Nooyi said. And she said just 12% of global sales comes from its namesake soda.business Updated: Apr 20, 2016 09:36 IST
PepsiCo CEO Indra Nooyi said on Monday the company is reshaping its product lineup to better reflect the growing interest in healthy eating and noted it has reduced its reliance on colas for sales.
The maker of Frito-Lay snacks, Mountain Dew, Naked juices and Quaker Oats now gets less than 25% of its global sales from soda, Nooyi said. And she said just 12% of global sales comes from its namesake soda.
Representatives for PepsiCo were unable to provide how those figures have changed in recent the years.
The remarks underscore PepsiCo’s recent shift in tone as the world’s biggest soda brands have been pressured by intensifying competition and a bad image for fuelling weight gain in markets such as the US.
With soda consumption continuing to decline domestically, PepsiCo and rival Coca-Cola have been trying to push up sales by weaning people off cheaper options like 2-litre bottles and toward single-serve options or snazzier mini cans and aluminium bottles that fetch more per ounce.
Another tactic is trying to give soda some hipster appeal, such as with PepsiCo’s recently introduced Caleb’s and 1893, which are positioned as “craft sodas.” The names are references to the invention of Pepsi by Caleb Bradham in 1893.
Even while trying to shore up its struggling soda business, however, Nooyi said during a call with analysts Monday that PepsiCo has been broadening its beverage portfolio to lessen the reliance on sodas for sales.
She said options like bottled water and unsweetened drinks, which PepsiCo tracks as “everyday nutrition,” account for 25%of sales. When adding products like diet sodas and snacks with reduced levels of sodium and saturated fat to those everyday nutrition products, she said “guilt free” products account for 45% of sales.
Nooyi also noted the sales growth of Reduced Fat Doritos, and their popularity in schools. The company did not immediately say if those would fall under the “guilt free” designation.
Nooyi’s remarks came Monday after PepsiCo said its sales and profit slipped in its first quarter, weighed down by an impairment charge and unfavorable currency exchange rates.
When excluding one-time items, PepsiCo managed to lift sales and profit despite the challenging economic conditions around the world. That included sales increases in its flagship North American snacks and beverages units, which each benefited from pricier products.
For the period ended March 19, PepsiCo said sales declined 3% to $11.86 billion, which was also shy of the $11.9 billion that analysts, according to Zacks Investment Research.
The Purchase, New York-based company earned $931 million, or 64 cents per share. A year earlier, it earned $1.22 billion, or 81 cents per share.
Stripping out an impairment charge, earnings were 89 cents per share in the latest quarter, topping the 81 cents analysts expected.
Going forward, PepsiCo anticipates 2016 adjusted earnings of $4.66 per share. Analysts polled by FactSet predict $4.70 per share.
Shares of PepsiCo edged down 9 cents to $103.68 in afternoon trading. Its shares are up more than 8 percent over the past year.