PepsiCo is selling more of its snacks and drinks around the world, even as the maker of Frito-Lay, Tropicana and Quaker Oats is still trying to figure out how to sell more soda in the United States.
The company today reported a first-quarter profit that beat Wall Street expectations as it saw strong growth in emerging markets and benefited from a lower tax rate.
PepsiCo’s North American snacks unit also saw gains, with premium offerings such as Stacy’s pita chips and Sabra hummus performing particularly well. As such, PepsiCo said it was confident it could raise prices in the year ahead without scaring off customers.
For its beverage unit in the Americas, however, the revenue was flat as price hikes offset a drop in volume. Soft drink volume declined in the mid-single digits.
“The cola category continues to be a challenge,” Indra Nooyi, CEO noted in a conference call with investors.
The company is struggling to win back the market share from Coca-Cola Co. at a time when Americans are cutting back on soda in favour of water, sports drinks and bottled teas.
PepsiCo offers a variety of drinks in all those categories, including Aquafina, Gatorade and Lipton, but Nooyi noted that “any growth we achieve in one area takes from another area where we compete” and added that the company was still working on the “reinvention” of its soft drinks.
The remark was in part, a reference to the company’s work on a natural sweetener mix for sodas that PepsiCo hopes will let it reduce sugar content without sacrificing taste. Nooyi has said the innovation could “potentially alter the trajectory of our cola business in a meaningful way”.
For the quarter, the company said global snacks volume rose 4 per cent and beverage volume rose 3 per cent.
Despite its better-than-expected results, PepsiCo stood by its forecast that core profit would grow 7 per cent for the full year, following a year in which it slashed costs but spent more on marketing its biggest brands.
PepsiCo Inc. earned $1.08 billion, or 69 cents per share, for the three months ended March 23. That’s down from $1.13 billion, or 71 cents per share, a year earlier.
Revenue rose 1 per cent to $12.58 billion, beating analysts’ prediction of $12.54 billion.