PepsiCo bets on vaccine-led reopenings for soda sales boost

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FILE PHOTO: Cases of Pepsi are shown for sale at a store in Carlsbad

By Nivedita Balu

(Reuters) – PepsiCo Inc on Thursday predicted an acceleration in organic revenue growth in the second quarter, betting on a boost to soda sales from the gradual reopening of restaurants and theaters following the speedy rollout of coronavirus vaccines.

The company, a pandemic winner, has been benefiting from homebound consumers stocking up their pantries with salty chips, sodas and oatmeal, and posted first-quarter revenue that beat Wall Street expectations.

But with COVID-19 restrictions starting to ease, Pepsi expects its North American beverage business, a unit that aggressively competes with Coca-Cola for market share, to “perform well” and the snack unit to “remain resilient.”

“We had been losing market share in the beverage space in the past… It’s getting better. We are gaining share right now,” Chief Financial Officer Hugh Johnston told Reuters.

Like other soda makers, PepsiCo lost some sales due to the closure of public venues due to the pandemic, but was able to cut back some losses as consumers bought drinks like bubly and Mountain Dew for their caffeine fix.

Pepsi has also been adding new energy drinks for health-conscious consumers who have adapted to a new active lifestyle and launched a hemp beverage in Europe.

Meanwhile, the company signaled uncertainty over demand for mutli-pack snacks as consumers start to return to offices and colleges.

“The consumer will show us more as we go along in the next, I would say, 6 to 9 months,” Chief Executive Officer Ramon Laguarta told analysts.

Sales of snacks under its Frito-Lay North America unit rose 4% in the first quarter, while those of sodas and other beverages rose 5% in North America.

That helped net revenue gain 6.8% to $14.82 billion, beating market expectation of $14.55 billion, according to IBES data from Refinitiv.

On an adjusted basis, Pepsi earned $1.21 per share, well above the expectation of $1.12. (This story corrects typographical error in first paragraph)

(Reporting by Nivedita Balu in Bengaluru; Editing by Arun Koyyur)

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