PepsiCo Reports First Volume Growth in North American Food in More Than Two Years

PepsiCo reported its first quarter earnings today (April 16), showing an increase of 2% in volume in its North American food business for the first time in more than two years, according to reports. The beverage side of the business didn’t fare as well on volume, however, posting a 2.5% decline.

Gains on the food side of the business were attributed to PepsiCo’s move earlier this year to cut prices on several of its Frito-Lay snack brands, such as Doritos, Lay’s and Tostitos, among others, by as much as 15%. The price cuts resulted in more shelf space from retailers, reports said.

“We feel good about where we are at this at this point in the journey,” CEO Ramon Laguarta said on the company’s earnings conference call, cited by the CNBC report. “Still, in the process of all the shelf resets and launching the innovation — I would say by the end of Q2, we’d probably be almost completed in that process. But the early reads are quite exciting.”

On the flip side, higher prices in the beverages division hurt volumes, as mentioned above. In response, the company will “restage” its Gatorade brand, planning to market the product as hydration solutions to non-athletes, start to remove artificial colors and release a lower-sugar variety.

Overall company earnings and revenue for the quarter topped analyst expectations, with the company reporting $19.44 billion in revenue (analysts expected $18.94 billion). Q1 net income was $2.33 billion, up from $1.83 billion a year ago, while net sales jumped 8.5% to $19.44 billion, benefitting from the Poppi acquisition, new distribution of Celsius Holdings’ Alani Nu product (Celsius acquired the brand and is distributed by PepsiCo) and the divestiture of Rockstar.

Internationally, PepsiCo’s business continues to grow quickly, the report noted, with 9% volume growth in both the Asia Pacific food division as well as the Europe, Middle East and Africa food division.