PepsiCo registers strong financial performance, driven by increased demand amid pandemic

Credit: Shutterstock

PepsiCo beat forecasts to achieve solid quarter three results, despite the ongoing pandemic. It’s Frito Lay division was a key driver of growth.

Overall net revenue rose more than 5% to $18.09bn in the third quarter ended September 5, beating analysts’ expectations of $17.23bn, according to IBES data from Refinitiv. Net income in the three months to September 5 was $2.29bn, or $1.65 per share, up from $2.1bn last year.

Lockdowns have led to increased snacking, driving sales

PepsiCo’s Frito-Lay North America division, which produces Doritos, Lays and other popular snacks, saw sales rise 7% to $4.4bn in the third quarter. Revenue for PepsiCo’s North American beverage division climbed 6% to $5.96bn, bouncing back from a decline of 7% in the previous quarter.

Despite the financial impact of Covid-19 on many consumers, at home consumption has remained strong over the duration of the pandemic. Demand for PepsiCo’s Tostitos, Cheetos and Doritos from households across North America, has bolstered sales in the Frito-Lay division.

PepsiCo CEO Ramon Laguarta also noted that the Quaker range, based around porridge and other oat-based products, had increased penetration ‘massively’ during the crisis, driven by consumers staying at home and having more time to prepare the products.

Higher priced multi-packs have also been a hit during the lockdown, as whole families have remained at home, where they are more likely to snack.

Soda sales have also recovered after being hit

Although the snack segment benefited from the stay-at-home policy, the beverage segment has grappled with a drop in sales, as the grab and go market had almost disappeared. However, as lockdowns have begun to ease, beverage sales have increased.

Higher demand for Starbucks branded iced coffee, as well as low calorie versions of Gatorade and Mountain Dew have helped boost revenue of PepsiCo’s North America beverage business by 6%.

PepsiCo’s realignment of spending has been a success

In April, 2020 the company decided that non-essential advertising would lose out to product investment for the foreseeable future, as PepsiCo aimed to boost its financial performance in 2020. PepsiCo announced it would instead focus on improving its value market share by forming a committee to lead the recent re-planning of its brands.

PepsiCo outlined plans to invest in products that have benefited from people eating at home during the Covid-19 lockdown, including popular snacks in Frito-Lay division.

The company ramped up its global advertising and marketing spending by over 12% for the full year of 2019 across its full portfolio of brands. The strategy did pay off, with CFO Hugh Johnston attributing the increased financial results that year a result of advertising, not solely increased sales growth.

However, due to the current environment, a reduction in non-essential advertising spend and tightly managed discretionary expenses has been crucial to ensure that the company has insulated itself from the challenges posed by Covid-19. Its decision appears to have paid off.

Latest reports from

• PepsiCo Inc – Strategy, SWOT and Corporate Finance Report

Or to search over 50,000 other reports please visit

GlobalData Report Store

GlobalData is this website’s parent business intelligence company.