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A-Brands

PepsiCo Raises Full-Year Revenue Forecast

PepsiCo Inc has raised its full-year revenue forecast, as the easing of pandemic restrictions boosts demand for sodas at theatres and restaurants.

The company said it was expecting fiscal 2021 organic revenue to rise about 8%, compared with its prior forecast of a 6% increase.

The beverage giant reported year-to-date organic revenue growth of 8.4%, while net revenue increased by 13.2%

Chairman and CEO Ramon Laguarta, said, "Our strong year-to-date results demonstrate that the investments we have made towards becoming a Faster, Stronger, and Better company are working. To further complement and enhance our strategic framework, we recently introduced PepsiCo Positive (pep+), a fundamental end-to-end transformation of what we do and how we do it to create growth and shared value with sustainability and human capital at the centre.

"We are extremely pleased with the progress we are making on our strategic agenda, and remain committed to the investments in our people, supply chain, plants, go-to-market systems, and digitisation initiatives to build competitive advantages and win in the marketplace."

Quarterly Highlights

Sales in PepsiCo's North America Beverage unit, the company's largest business, rose 7% in the third quarter as a reopening economy and the lifting of COVID-19 capacity restrictions encouraged people to return to public venues and drink its sodas.

The company reported double-digit net revenue growth from beverage sales to food-service outlets.

Net revenue rose 11.6% to $20.19 billion in the third quarter ended 4 September, above analysts' estimates of $19.39 billion, according to IBES data from Refinitiv.

In Europe, the company's organic revenue increased by 8% in the latest quarter.

In August, PepsiCo Inc announced plans to sell its controlling stake in Tropicana, Naked and other juice brands in North America to private equity firm PAI Partners for $3.3 billion (€2.78 billion).

Price Rise

PepsiCo added that it would likely raise prices again early next year, as it looks to overcome ever increasing supply-chain challenges that include everything from a shortage of Gatorade bottles to a lack of truck drivers.

Chief financial officer Hugh Johnston told Reuters that PepsiCo had to 'scramble' to overcome a shortage of cans and Gatorade bottles in the last few months as demand for its beverages jumped at restaurants and theatres following the lifting of pandemic-induced restrictions.

PepsiCo has already raised prices of its sodas and snacks in recent weeks, echoing the strategy of broader packaged foods industry as rising raw material prices pinch profit margins.

"I do expect there will probably be some price increases in the first quarter of next year as well, as we fully absorb and lock down the impact of commodity inflation," Johnston said, adding that he expects most supply-chain disruptions to moderate by the end of 2021.

PepsiCo's UK business has also been hit by a shortage of truck drivers in post-Brexit Britain due to immigration rules and a loss of about a year of driver testing and training.

However, Johnston said he does not expect a shortage of PepsiCo products in supermarkets, saying the company should be in better shape by the end of the fourth quarter.

News by Reuters, additional reporting by ESM. For more A Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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