PepsiCo CEO Ramon Laguarta has reiterated the company’s commitment to drive growth in functional beverages and seize opportunities in multicultural snacks.
Addressing the Consumer Analyst Group (CAGNY) in New York, Laguarta emphasized PepsiCo’s dedication to enhancing consumer health and wellbeing. This entails initiatives aimed at portion control and reducing sodium and fat across the entire drinks and snacks portfolio.
Laguarta highlighted customer feedback, noting a strong demand for “more functionality, especially around hydration, energy, protein, and fibre.” This theme was a focal point of the discussions among food and drink manufacturers at the conference. He remarked that “functionality” is evolving into a more “central” aspect of PepsiCo’s drinks portfolio.
Currently, powders and tablet formats represent a “very small” segment of the business; however, Laguarta believes there is vast potential for growth in this area.
“Innovation will now play a greater part in driving growth in the functionality segment,” he stated, indicating that this will significantly influence future investment decisions and resource allocation.
He elaborated, “We have invested in an infrastructure for powders and mixing that allows us to create much more complex solutions in sachets and tablets. We’re going to invest massively behind that business.”
Providing more context, he noted, “It is now a $1 billion business in the US – our Gatorade and Propel Powders. This will be a driver of growth for us.” Thus, PepsiCo aims to enhance functionality while ensuring convenience in every sachet, facilitating hydration throughout the day for consumers.
Alongside Laguarta, CFO James Caulfield discussed PepsiCo’s strategic priorities. These include ongoing investments, increasing shareholder dividends, and utilizing spare cash flow for share repurchases.
Caulfield also mentioned that PepsiCo will “selectively, and with discipline, consider acquisitions, partnerships, and divestitures.” Recently, the company has made significant inroads in the multicultural snacks market, notably with acquisitions such as Kurkure in India and Siete in the Hispanic sector.
“Many societies around the world are becoming much more multicultural. We need to provide consumers with authentic, relevant flavours and products that resonate with their food cultures,” said Laguarta. Nevertheless, he did not suggest an expansion of PepsiCo’s M&A strategy in this area.
External challenges remain a critical topic in discussions among packaged foods and drinks manufacturers. At CAGNY, Laguarta remarked, “Clearly, geopolitics and macros are impacting us more and more.”
He reflected on recent impactful events, stating, “If you just think about the last five years between Covid, some of the wars that affected our business in Russia, Ukraine, and the Middle East, and the recent inflationary pressures, macroeconomic factors and regulation have become a significant part of our long-term strategic planning.”
