PepsiCo says new products will soon boost customer demand
The Associated Press
PepsiCo expressed confidence Thursday that new products — including protein-infused Starbucks coffee, low-sugar Gatorade and Doritos with all-natural ingredients — will boost flagging consumer demand in the coming year.
Rapidly changing consumer preferences have dogged the maker of Frito-Lay snacks and Pepsi beverages. PepsiCo said Thursday that its food business revenue fell 3% in North America in the third quarter.
But PepsiCo Chairman and CEO Ramon Laguarta said Thursday that the company is moving quickly to cut underperforming products and reinvest in new ones, including a “NKD” line of Doritos and Cheetos with no artificial flavors or colors. Tostitos and Lay’s chips with no artificial dyes will soon be on sale in the U.S.
“Innovation is critical for us, and we’ve been working with a real sense of urgency on new platforms to capture segments of the market that are disproportionately growing,” Laguarta said during a conference call with investors.
PepsiCo is already seeing good results from innovation on the beverage side. Pepsi Zero Sugar saw double-digit net revenue growth in the July-September period, the company said, while Mountain Dew sales got a boost from new flavors like Summer Freeze and Dragon Fruit. PepsiCo said its North American beverage revenue rose 2% in the third quarter.
PepsiCo said its total revenue rose 2.6% to $23.94 billion in the July-September period. That was better than the $23.84 billion Wall Street was expecting, according to analysts polled by FactSet.
Net income fell 11% to $2.6 billion. Adjusted for one-time items, the company earned $2.29 per share. That also beat analysts’ forecasts of $2.26.
PepsiCo shares rose nearly 3% in afternoon trading.
Also on Thursday, PepsiCo named Walmart executive Steve Schmitt as its new chief financial officer. Schmitt was the CFO for Walmart’s U.S. division.
Current PepsiCo CFO Jamie Caulfield plans to retire on Nov. 10 after more than 30 years with the company. He will remain at PepsiCo until May 15 in an advisory role.