PepsiCo Snacks Make Up for Sagging Beverage Sales

An uptick in volume from the snack portfolio helped offset decreases in the company’s drink lines.

February 16, 2018

PURCHASE, N.Y. – PepsiCo’s snack line has been pulling more of the weight for the company, as sales of beverages continue to drop, Bloomberg reports. As consumers stay away from sweet drinks, PepsiCo has relied more on its innovative Frito Lay business.

To compensate for a less-than-stellar sales overall, CEO Indra Nooyi announced this week that the company would slash at least $1 billion in yearly savings through downsizing jobs and other cost-cutting measures. The success with its snacks shows that Frito Lay has introduced new products while shoring up core brands.

But replicating that with its beverage side could be impossible, especially because PepsiCo put too much emphasis on newer beverages, CFO Hugh Johnston said. “We think that they’re still terrific ideas—they’re still tracking well. … But we can’t take our eye off the ball on the bigger brands,” he said.

The North American drink department will “see steady improvement over the next several quarters,” Johnston said. “And you’ll see us continue to move both marketing dollars and shelf space—whether it’s displays or coolers—behind the biggest brands of Pepsi and Gatorade and Mountain Dew.”

Overall, PepsiCo is looking to make healthier products. The company wants two-thirds of its beverage to have 100 calories per 12-ounce serving, which it plans to achieve by 2025. The company is also reducing saturated fat and sodium in its snacks. Last week, PepsiCo launched bubly, its new sparkling water brand.

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