PepsiCo Benefits From Health Focus As More Americans Ditch Soda
PepsiCo, Inc., the maker of Mountain Dew and Cheetos, is getting a boost from its resolution to shape up.
The food giant now generates 45% of its revenue from so-called 'guilt-free' products, which include lower-calorie drinks and snacks with grains, fruits and vegetables. With customers attempting to eat healthier, especially in North America, the company is seeing the shift show up on its bottom line.
PepsiCo posted earnings of $1.20 a share in the fourth quarter, excluding some items, topping the $1.16 estimated by analysts. Sales gained 5%, to $19.5 billion, in the period, matching estimates.
Efforts by chief executive officer Indra Nooyi to release new and revamped products is helping the company cope with an industry-wide slump in sugary beverages. Per-capita soda consumption fell to a three-decade low in 2015, according to Beverage Digest, a trade publication, putting more emphasis on products like Sabra hummus and Naked juices.
The shares gained as much as 0.5%, to $107.50, in early trading, after the results were released. The stock has climbed 2.2% this year.
Still, the company’s 2017 earnings forecast was a bit light of estimates. PepsiCo predicted $5.09 a share, missing the $5.15 predicted by analysts. Nooyi also warned of “continued macroeconomic challenges” ahead.
Nooyi looks to take the health kick further in the future. In October, the company pledged to reduce its reliance on sugar, salt and saturated fat. At least two thirds of the company’s volume will have no more than 100 calories from added sugars per 12-ounce serving by 2025.
PepsiCo’s bottom line has also been helped by Nooyi’s cost-cutting push, which has cut about $1 billion a year since 2012.