PepsiCo earnings beat expectations

PepsiCo’s third quarter earnings have topped analyst expectations. The beverage giant recorded a net revenue increase of 4.3 per cent to $17.19 billion. Meanwhile, organic revenue also grew 4.3 per cent during the quarter.

PepsiCo now expects its organic revenue growth to meet or exceed its previous objective of 4 per cent growth for the full year.

“We’re very pleased with our results for the third quarter,” said Ramon Laguarta, PepsiCo’s chief executive. “Our top priorities entering 2019 were to accelerate our full year rate of organic revenue growth and to position the business for sustained future growth, and we have good evidence that we’ve made solid progress on both fronts.”

Laguarta explained that investments made in innovation, marketing and consumer insights and manufacturing have paid off across the brand’s portfolio. For example, he noted that PepsiCo’s North America business has benefited from “improved local market focus and execution driven by our streamlined field structure, increased go-to-market capacity and significant stepped up advertising support and innovation”.

According to PepsiCo, its Lifewtr brand and flavoured bottled water range, Propel, saw double digit revenue growth, while Pure Leaf Tea and Starbucks recorded high single digit growth.

Meanwhile, Gatorade and Bolt24 – PepsiCo’s new functional beverage – have both been particularly successful. Gatorade Zero has recorded more than $0.5 billion in retail sales since its launch in May 2018.

Despite ongoing macroeconomic volatility in certain markets, PepsiCo’s international divisions delivered solid organic revenue growth in the third quarter. Organic revenue in its developing and emerging markets increased 7 per cent. According to Laguarta: “This included double-digit growth in Mexico, Saudi Arabia, China, Turkey and Pakistan and high single-digit growth in India, Egypt, Poland and Colombia.”

“Becoming faster is about winning in the marketplace, being more consumer-centric and accelerated investment for top line growth,” Laguarta added. “For example, we’ve increased our investment in advertising and marketing by 12 per cent year-to-date. This investment spans across many of our big brands and geographies as well as support for innovation and emerging brands, which we will continue to develop over time.”

In addition, Laguarta used PepsiCo’s Q3 results to emphasise the company’s commitment to sustainability. “We want all of our stakeholders to know that advancing to sustainability and being a more purposeful company will play an essential role in PepsiCo’s future,” he said.

PepsiCo recently published its 2018 sustainability report and has committed to reducing 35 per cent of virgin plastic content across its beverage brands by 2025, driven by increased use of recycled content and alternative packaging materials.