PEPSI’S PUSH – CORPORATE

Things are definitely looking up at PerpsiCo.

A year ago, new CEO Ramon Languarta took over and laid out an ambitious plan to ramp up the company’s investments in advertising, technology and supply chains (ref WSJ).  Pepsi reported this week that organic revenue (that is, revenue minus acquisitions and currency impacts) rose 4.3% from a year earlier, for the third quarter of the year.  And Pepsi says that they expect to exceed their earlier target of 4% growth for their first full year after the changes.  Part of the growth is due to doing business differently.  For example, by including a zero-sugar Gatorade in their offerings – which has surpassed half a billion dollars of retail sales since it was introduced in May.  In addition, the company has made a good effort to remove artificial flavors from its Quaker Foods, such as oatmeals and snacks, which also seems to be paying off, with improved sales of 1% thus far in the year, compared to a 2% define in 2018.  In admitting that the company wouldn’t be doing away with Doritos and Mountain Dew, Laguarta has said, “We’re seeing the consumer going after functionality, health and wellness, but also going after indulgence – the decision we’ve made is to give the customer maximum choice.”  In meeting that objective, the company has increased its spending on marketing and advertising by 12% so far this year.  We agree with the WSJ’s assessment that “investing to keep up with the customers’ tastes in today’s highly fluid market is the right call.”  We are reminded that those companies that have failed to do so, like Kraft Heinz, have paid a steep price.  Our good wishes to Pepsi for their continued success in “getting it right” with the proper positioning of “all those moving parts.”

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