What's going on?
PepsiCo, maker of Pepsi (and co), reported its second-quarter results on Tuesday. Its food business gave the company a much-needed boost – the stock bubbled up by 4%.
What does this mean?
Pepsi beat expectations for the tenth quarter in a row, reporting better-than-anticipated revenue and profit. Its revenue and profit were both down last quarter (though less than in previous quarters) – so it looks like Pepsi’s doing something right.
Along with its fizzy rivals, Pepsi’s been contending with slumping soda sales – last year, soda consumption fell to a 32-year low (tweet this). The company’s been looking to its snacks business for help and it’s stepped up to the crunch: Pepsi’s Frito-Lay segment, which makes Cheetos and Doritos, increased profit in North America by 5%.
Why should I care?
For markets: Stiff competition in the world of soda.
Until Tuesday, Pepsi’s stock has been warm and flat this year – down 8% overall – but its rise might be the first step in an upward trend. The company’s been spending more on marketing its beverages in an attempt to halt the decline – but the benefits might not kick in for a while yet. On the other hand, the increased spending is likely to put pressure on Pepsi’s bottom line, and arch-nemesis Coca-Cola has also been splashing the cash on its beverage marketing – even more so than Pepsi. To add more mentos to the soda, Dr Pepper Snapple was recently acquired by Keurig, creating a monster dranx company for Pepsi to contend with.
For you, personally: Your choices matter.
Consumers are increasingly turning away from unhealthy food and drink (like soda) toward healthy options – and the market’s responding. Companies pushing sugary, fatty products are struggling and, consequently, are changing up their game plans. In May, Pepsi announced that it’s buying Bare Foods to fit into its suite of healthier products, and focusing on its more wholesome beverages – like its kombucha company, KeVita, which grew 66% in 2017.