For the third quarter ending Sept. 9, 2023, PepsiCo achieved a net income of $3.116bn. The company experienced a 6.7% growth in net revenue, which is slightly lower than the year-to-date average of 8.9%. PepsiCo’s core gross profits increased by 9%, with a 105 basis point expansion in core gross margin. Additionally, core operating profit increased by 12%, and core operating margin grew by 80 basis points. Earnings per share for the quarter were $2.24, in comparison to $5.62 for the full year.
In a press release, Ramon Laguarta, Chairman and CEO of PepsiCo, stated, “We are pleased with our performance as our businesses and associates displayed tremendous agility and resilience across geographies and categories in an evolving and dynamic environment. Given the strength of our businesses and categories and a continued focus on advancing our holistic cost management initiatives, we now expect our full-year 2023 core constant currency EPS to increase 13% (previously, 12%) and continue to expect our full-year 2023 organic revenue to increase 10%.”
PepsiCo Beverages North America experienced a 6% organic revenue growth for the quarter. However, this figure is lower than the 13% growth seen in the same quarter last year. The company attributes this growth to investments in advertising and digitalization. Gatorade, one of PepsiCo’s brands, faced increased competition in the sports drink category from Logan Paul’s PRIME brand, which has gained popularity among younger consumers. Despite this, PepsiCo has introduced G Zero, Gatorlyte, and various powders and tablets to combat the competition. Laguarta noted during an investor’s Q&A that the impact of PRIME on Gatorade’s market share was relatively small and optimistic for the future.
PepsiCo is also monitoring developments in the use of Ozempic for hunger suppression and weight loss. Laguarta expressed confidence in the company’s brand evolution to counter any potential impact on its bottom line. He stated, “Everything we’ve been doing for the last five, six years when it comes to reducing sodium, reducing fat, reducing sugar, reducing… the portions of our products… those are all very positive trends that will help us beef up the portfolio if needed in the future.”
Frito-Lay North America, another division of PepsiCo, achieved 7% organic revenue growth. While this growth is lower than the previous year’s quarter, the division gained market share in macro and savory snack categories. Popular brands like PopCorners, Miss Vickie’s, and SunChips saw double-digit net revenue growth, while Doritos, Cheetos, and Ruffles experienced strong net revenue growth. PepsiCo highlighted a shift in consumer preferences towards smaller package sizes, leading the company to release smaller pack options and bite-sized versions of its products.
Overall, PepsiCo remains positive about its performance and future prospects, leveraging its agility, resilience, and continuous innovation to navigate dynamic market conditions in the food and beverage industry.
