PepsiCo Says It May Beat Growth Target, Helped by Frito-Lay

(Bloomberg) -- PepsiCo Inc. said it expects to meet or exceed its full-year revenue growth target after sales and earnings beat expectations in the latest quarter, helped by strength in Frito-Lay snack foods.

  • Third-quarter sales of $17.2 billion were ahead of analysts’ estimate of $16.9 billion. Earnings per share, excluding some items, amounted to $1.56, which also topped expectations.

Key Insights

  • Frito-Lay has helped the company navigate a broader decline in soda, with brands like Ruffles chips, Cheetos and Doritos dominating the salty-snack aisle. Frito-Lay North America posted 5.5% organic revenue growth in the quarter, boosted by volume gains.
  • Sales were up in the key North American beverage unit, which has faced pressure as consumers cut down on sugary soda and competitors flood stores with a host of new options. The Gatorade brand, which has struggled, posted mid-single-digit revenue growth, helped by the sugar-free Gatorade Zero product.
  • PepsiCo has put money back into the business, increasing marketing spending this year to fend off rival Coca-Cola Co. That’s helped boost brands like Bubly, the sparkling water the company launched last year that has quickly taken market share.

Market Reaction

  • Pepsi shares rose 3.3% in early trading. They had gained 21% this year through Wednesday’s close, outpacing the 15% gain for the S&P 500 index.

Get More

  • Read the statement here.

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