The popularity of snacks helped PepsiCo overcome its beverage issues.
PepsiCo, Inc. finished fiscal 2020 strongly thanks to stability in its global snacks and food business and acceleration in its worldwide beverage business, according to chairman and CEO Ramon L. Laguarta.
“Even in the face of challenging COVID-19 challenges, our results demonstrated the strength and resilience of our highly committed employees, diversified portfolio, agile supply chain and go-to-market systems, and strong marketplace execution,” Mr. Laguarta stated. “We are still dedicated to helping our communities, customers, and employees going ahead. Furthermore, we’ll keep our attention on gaining a competitive edge in the industry and making investments to advance our organization’s strength, speed, and quality.
For the fiscal year that concluded on December 26, 2020, PepsiCo’s net income was $7.12 billion, or $5.12 per share on common stock. This represents a 2.7% decrease from the $7.31 billion, or $5.20 per share, in the previous fiscal year. Adjusted net income was $7.69 billion, down from $7.78 billion the previous year, when restructuring and impairment costs, pension-related settlement payments, net tax advantages, and other items impacting comparability were excluded.
There was a 4.8% increase in net revenue to $70.37 billion from $67.16 billion.Net income for the fourth quarter rose 4.5% from $1.77 billion, or $1.26 per share, in the comparable period to $1.85 billion, or $1.33 per share. Net income for the most recent quarter was $2.04 billion on an adjusted basis, up from $2.035 billion in the same period last year.Advancement of net revenue8.8% to $22.46 billion from $20.64 billion.
The Frito-Lay North America business unit’s operating profit increased 1.6% from $5.26 billion in fiscal 2019 to $5.34 billion in fiscal 2020. Segment revenue rose from $17.08 billion to $18.19 billion, a 6.5% rise.
“Strong innovation, increased go-to-market investments, additional manufacturing capacity, investments in e-commerce, and an increase in advertising and marketing spend across the brand portfolio enabled Frito-Lay’s full-year 2020 results,” Mr. Laguarta stated. As a result, several of Frito’s well-known brands saw robust net revenue growth during the entire year, with Lays and Doritos experiencing mid-single digit growth, Ruffles experiencing high-single digit growth, and Tostitos and Cheetos experiencing double-digit growth.
Smaller, up-and-coming companies like Bare and Off The Eaten Path saw robust double-digit growth. Additionally, we successfully finished the purchase and integration of BFY Brands in 2020, which has expanded Frito-Lay’s production capabilities to offer more nutritious snacking choices for consumers.
“Friteo’s expansion was extensive in both the large format and e-commerce channels, and as consumer mobility started to rebound, sequential trends improved in the convenience and gas channel.”
While sales rose 10% to $2.74 billion from $2.48 billion, Quaker Foods North America’s operating profit jumped 23% to $669 million for the year.
“Our business gained market share for the entire year of 2020, and our growth has been driven by strong execution against the elevated demand needs for at-home breakfast and dinner occasions,” Mr. Laguarta stated. “Quaker’s performance for the fourth quarter and the entire year saw robust double-digit net revenue growth in light snacks, side dishes, and pancake mixes and syrup. Additionally, Quaker’s ready-to-eat and hot cereal division produced double-digit net revenue increase forthe full year.”
PepsiCo Beverages North America operating profit totaled $1.94 billion in fiscal 2020, down 11% from $2.18 billion a year ago. Segment revenue, meanwhile, grew 3.8% to $22.56 billion.
PepsiCo Beverages North America operating profit totaled $1.94 billion in fiscal 2020, down 11% from $2.18 billion a year ago. Segment revenue, meanwhile, grew 3.8% to $22.56 billion.
“Despite notable impacts from channel mix shifts that have significantly impacted the foodservice channel, PBNA’s net revenue growth was primarily driven by many of its larger brands,” Mr. Laguarta stated. Most remarkably, net revenue increased by double digits for brands like Starbucks and Bubbly, high single digits for Gatorade, and full-year growth for Lipton, Mountain Dew, and Tropicana.
Gatorade Zero is expected to generate over $1 billion in retail sales in 2020, while Pepsi Zero Sugar and Mountain Dew Zero Sugar together will generate over $750 million in estimated retail sales in 2020. Concurrently, we were able to maintain strong momentum on recent innovation platforms.
From the standpoint of channel mix, the year-round performance of the big format and e-commerce channels was stable, however the convenience and gas channel also posted good growth for the full year. However, given ongoing pandemic-related restrictions and complexities, the foodservice channel has continued to decline at a double-digit rate.”
PepsiCo Beverages North America operating profit totaled $1.94 billion in fiscal 2020, down 11% from $2.18 billion a year ago. Segment revenue, meanwhile, grew 3.8% to $22.56 billion.
During a conference call with analysts on February 11, Mr. Laguarta talked about PepsiCo’s ascent to prominence in the energy drink industry. According to Mr. Laguarta, PepsiCo’s first energy pillar, Rockstar, has been relaunched with updated formulations, packaging, and graphics to increase its market share in the energy sector.
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According to him, Mountain Dew, which will launch its first significant entry into the energy sector later this spring, will serve as a second pillar.
“We’re very happy with how the launch is going, with the product concept, with the support package, and with the customer support,” he stated. That sounds like a worthwhile event. That will be Mountain Dew’s initial step, and more will follow.as well from Mountain Dew into the energy space.”
Another key pillar is PepsiCo’s partnership with Starbucks, which Mr. Laguarta said is at an all-time high in terms of the relationship and the market performance.
“We continue to innovate on the kind of coffee energy, triple shots, double shots,” he said of the Starbucks partnership. “And we have some, I think, good ideas that I’m sure will make into the market shortly.”