Beverages and snack report organic growth in Q2 for PepsiCo

Published Date : Jul 31, 2014

PepsiCo, the popular snacks and beverages manufacturer posted a growth of 0.5% in its net revenue of Q2. The company’s organic revenue rose by 3.6% during the same period. The rise was in line with the expectations of snacks contributing beyond half the net sales.

The snacks division which constitutes about 60% of Pepsico’s valuation grew by 5% for the snacks, organically. The non-sparkling drinks such as energy drinks, teas, coffee, and other health related drinks showed steady growth in this period owing to rising health awareness and low penetration levels.

On the downside the carbonated drinks’ sales dropped for the ninth consecutive year due to negative perception of these drinks.

The sales volume for sparkling drinks in North America continued to drop by 2%. The decline is seen as a result of shift in perception about CSDs. As the general sentiment is to avoid unhealthy drinks is growing, the soda sales dropped by 3.2% year-on-year to about 13 billion gallons in 2013.

The snacks division, Frito-Lay North America saved the face with 2% growth this quarter. Last year, this division generated net sales of 21%, and it is expected to outpace the beverage segment in the coming year too. The core currency operating profit for Frito-Lay North America also rose by 5% in Q2. This growth is a result of productivity savings plan by the company and gains out of nAccording to PepsiCo’s five-year productivity savings plan (2015-2019), the company plans to save USD 1 billion every year by running its manufacturing units at optimum levels and making its organization systems efficient and simple.