Pepsico and the healthy food movement : The Chips are up , but there ain't no Sugar high !

Got a metaphorical high looking at the latest numbers ( Q2) from Pepsico - there was much less sugar to get a literal one :)

The fizzy drink and snack food company Pepsico had a good Q2 - while that sounds great for investors ( and they were- beating estimates for revenues (2Qtr Revenues : $16.1 bn. vs $ 16.04 est) and EPS (Qtr EPS. $1.61 vs $1.52 est)) , it’s not the best of news if you were one of those waging a war on junk food. But times are changing. What has been interesting to cull from the company’s latest numbers is the fact that “sugary/ fatty foods” are not bringing in the money as much as it used to as slowly but surely the eating and drinking public become cognisant of what they put into their bodies and how it impacts their health. 

Soda sales in general ( across makers) have been plunging and have hit its lowest in 32 years. Much of the crunch in Pepsico’s numbers has come from two businesses - their chips which are up 4% ( Frito Lays ) and growth in their international business especially the European Sub Saharan Africa geographic ( 20% of revenues) which is up 7%. North American beverage sales have been in the negative since the last four quarters. (PS: wake up rest of the world!?)

It is really heartening to note whats playing out on the ground. There are definitive trends in consumer choices which are moving away from “sugary colas”/ unhealthy drinks and when such choices begin to hurt numbers , it good to see companies take corrective action to serve better food and drink. For Pepsico -sales of better beverages like Lifewtr and Lemon Lemon soda have hurt the sales name sake sale of Pepsi and other soda’s that the company sells. 

Pepsi is also set to acquire Bare Foods - a baked fruit and vegetable snack maker ( watch out you cheesy Doritos and Cheetos - you could be next to face the consumer wrath ! )and has been broadening its offering of beverages to include healthier options like KeVita Kombucha ( Coca Cola does the better beverage bit with its offering of Zico Coconut water amongst others ).

With a stated vision to have two thirds of its global beverage portfolio to contain less than 100 calories by 2025…Pepsico and hopefully other snack and soda companies are moving in the right direction.

https://www.bloomberg.com/news/articles/2018-07-10/pepsi-grapples-with-fickle-consumer-cutting-back-sugar-not-salt