PepsiCo surges in Q2; food biz paves the way
(FinancialPress) — Centennial snack and fizzy drink maker PepsiCo released it‘s 2nd quarter results this week. The results led the way to a healthy and much needed 4% rise in the company‘s stock value.
Pepsi has been one of several pop manufacturers that have been going through a rough patch, affected by trend shifts towards healthier, more natural drinking habits. 2017 saw soda sales drop to a 32-year record low. That, in turn, made the company shift its efforts towards its snack business units – Frito-Lay; maker of Doritos and Cheetos. The business unit achieved a 5% profit increase in North America.
2017 has been a difficult year for PepsiCo. Company stock has dropped 8% over the current exercise, but the positive results and subsequent rise in share price might signal the beginning of an upward trend. Marketing spending for their beverage products has increased significantly, but results might take time to be tangible – and the extra spending will likely affect their bottom line for the next quarter.
Pepsi‘s arch-nemesis, Coca-Cola, has also upped its bet on marketing spending – by even more than the former. Adding in the recent acquisition of Dr. Pepper Snapple by Keurig, the market finds itself with an iron-hot trident of beverage behemoths aggressively competing to overtake the market.
A shifting landscape
The state of the market is a faithful reflection of consumers turning away from less nutritional beverage and food options towards healthier, more natural products. Companies that have historically commercialized fat and sugar-filled products have begun to shift in response to a market that no longer feels like they are getting catered to. Pepsi, for example, is in the process of acquiring Bare Foods to bring healthier products into its fold. The purchase brings kombucha company KeVita to PepsiCo‘s portfolio. KeVita grew 66% in 2017 alone.
What's your reaction?