PepsiCo, one of the packaged food industry’s strongest performers, delivered another earnings beat, helped by increased sales of higher-margin healthier foods.
For the second quarter, PepsiCo earned $1.50 a share, an 11% gain on a year ago, while revenue climbed 2% to $15.71 billion. Analysts had predicted earnings of $1.39 on revenue of $15.59 billion.
“The power and durability of our brand and product portfolios, strong marketplace execution, and the balance of our geographic footprint enabled us to deliver strong operating results in the midst of pockets of macroeconomic challenges and increasingly dynamic retail and consumer landscapes,” CEO Indra Nooyi said in a news release.
As Reuters reports, the results reflect increased sales of higher-margin healthier foods such as baked chips, with revenue from PepsiCo’s North American Frito-Lay business rising 3% in the quarter. More than 45% of net revenue comes from these “guilt-free” products, which appeal to an increasingly wellness-focused population with a deepening distaste for soda.
U.S. soda sales as a whole have fallen for 12 straight years, according to Beverage Digest, an industry trade publication.
“Demand for [PepsiCo] snacks was boosted by the launch of premium products such as Lay’s Poppables — chips that have relatively less sugar content,” Reuters said. “Poppables cost more as well: a 5-ounce pack sells for $2.48 on Walmart.com versus a 10-ounce pack of Lay’s Classic chips that sells for $2.50.”
PepsiCo’s North America beverage sales rose 2% in the quarter as higher prices offset flat volume. The company “continues to develop the non-soda part of its portfolio, including the recent introduction of new products like a premium bottled water, LIFEWTR, and the new Quaker Overnight Oats,” USA Today noted.
Nooyi said in an earnings call that the company met its expectations for the quarter but must continue to innovate.
“We have a can-do spirit with a must-do result,” she said. “The business is very different than it was five years ago and we expect it to be very different five years from now.”