Dive Brief:
- In its fourth quarter 2014 earnings, PepsiCo managed to match or surpass financial targets and analyst expectations in several areas, including organic revenue growth of 5% for quarter and 4% for the year.
- The company's net revenue fell 1% for the quarter and was even for the year, which it believed was caused by the fluctuation of the dollar in foreign markets.
- PepsiCo also announced its financial expectations for 2015, which included returning "approximately $8.5 to $9 billion to shareholders through dividends and share repurchases."
Dive Insight:
PepsiCo's earnings come a day after Coca-Cola Co.'s announcement, which was slightly less positive with a 55% drop in net profit, also impacted by waning foreign currencies, as well as drops in net operating revenues and adjusted net income. Both earnings reports are set against the backdrop of a steady decline in soft drink sales over the past decade, including a drop in 2013 that was more than twice as high as 2012 and three times as high as 2011.
PepsiCo and Coca-Cola have responded to drooping sales, which is mainly due to consumers seeking healthier alternatives, with new, healthier products, but only time will tell if these strategies actually succeed in turning the soft drink market around. Pepsi has also begun to turn to its snack business, particularly Frito-Lay, which had 3% growth in revenue in North America. Also, "Recent price increases, on top of cost cuts and growth in its emerging markets, have helped to offset the sluggish demand and foreign-exchange headwinds," according to MarketWatch/The Wall Street Journal.