PepsiCo: people having breakfast and snacking more

Lay's Crisps
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Less cola, more breakfast and crisps: PepsiCo clearly sees different behaviour during the corona crisis. As a result, Coca-Cola's rival has had a better quarter.

 

Homeworkers snack all day

PepsiCo surprises friend and foe with better quarterly results than expected: organic sales increased by 7.9% while growth of 3.6% was forecast. Net sales in the first quarter amounted to 13.9 billion dollar (12.8 billion euros).

 

The growth is due to the diversified offer of the multinational. Indeed, panic buying by consumers at the start of the corona outbreak caused crisps sales (Frito Lay department plus 7%) and breakfast products (Quaker also sold 7% more) to increase considerably more than previously estimated.

 

"There are real changes in consumption, particularly in two areas. Number one is breakfast at home. Second, people work at home and tend to graze more during the day. So we've seen a real increase in snacking. As a result, that demand is sustaining. The beverage industry is more challenging in that regard because the out-of-home channels have shut down," says CFO Hugh Johnston to Reuters.

 

PepsiCo goes for energy drinks

Rival Coca-Cola recently had to admit strong declines, especially since April. This is because the soft drink group generates about 40% of its turnover in the out-of-home channel, compared to an estimated 10% at PepsiCo. Nevertheless, PepsiCo also warns of a tougher second quarter as restaurants, theatres and sports venues remain closed. The group expects an organic decline in turnover of between 1 and 5%.

 

The company cancels its annual forecast, but still plans to pay out 5.5 billion dollar (5 billion euros) in dividends and buy back 2 billion dollar (1.8 billion euros) of its own shares this fiscal year. PepsiCo also announced a new North American distribution agreement with Bang Energy Beverages, while a few weeks ago the group bought Rockstar Energy Beverages for 3.85 billion dollar (3.54 billion euros).