May 4, 2020
The company experienced an increased sales in snack categories with consumers making breakfast and snacks during the lockdown under stay-at-home orders. Lockdown gave a surge in sales of snacks, oatmeal, chips and Aunt Jemima pancakes.
PepsiCo informed that surging demand for Lays and Doritos would only partially shake business in the second quarter from coronavirus lockdowns that have shuttered restaurants, cafes, theaters, auditorium and sports venues down were key for its soda sales.
The company experienced an increased sales in snack categories with consumers making breakfast and snacks during the lockdown under stay-at-home orders. Lockdown gave a surge in sales of snacks, oatmeal, chips and Aunt Jemima pancakes.
Pepsico’s beverage business is not faring as well under the rough times to strangle the coronavirus, and the company ditched its full year forecast and predicted second-quarter sales would further decline at a low and single digit rate graph-wise.
The similar situation is faced by Pepsico’s rival Coca-Cola. As per their data, volumes has fallen 25% globally at the start of April.
Pepsico’s finance head, Hugh Johnston said that Coca-Cola has a larger part of the market and Pepsico is less exposed and has had a hit the hardest by the lockdowns.
“Compared to our biggest competitor in beverages, they clearly have higher market share in away from home channels- restaurants, movie theaters and the like,” Johnston told Reuters.
Analysts at Jefferies estimate about 40% of Coca-Cola’s volumes are sold through channels other than retail stores, compared with only about 10% for Pepsi.
Still, demand for sodas at grocery stores is also starting to taper off after an initial phase of stockpiling at the beginning of the health crisis, Johnston said.
As per records available, PepsiCo’s net revenue rose 7.7% to $13.9 billion in the quarter ended March 21, beating analysts’ estimates of $13.21 billion, also helped by a massive advertising campaign during the Super Bowl. Organic sales of snacks under its Frito-Lay North America unit rose 7% in the quarter.
PepsiCo also added that it is still expecting to pay $5.5 billion in dividends and buy back shares worth $2 billion this fiscal year, gesturing financial stability at a time when several blue-chip firms have suspended shareholder returns to preserve cash during the pandemic.
Over uncertainty related to the pandemic, the company ditched its full year forecast. PepsiCo also announced a new North America distribution agreement with Bang Energy drinks recently, only a few weeks after striking a deal of $3.85 billion to buy Rockstar Energy Beverages.