Dive Brief:
- PepsiCo's fourth-quarter earnings beat industry expectations with a net revenue jump of 5% to $19.5 billion and earnings of $1.20 per share for the period, according to a company release.
- The beverage giant also revealed that it earns 45% of its net revenue from "guilt-free" beverage products with fewer than 70 calories per 12 ounces and snacks with reduced levels of sodium and saturated fat. The company's "everyday nutrition" category, which consists of unsweetened tea, water and healthy snacks accounts for 25% of sales.
- Net revenue in the North American beverages segment, PepsiCo's largest market, increased 8% in Q4, and volume rose 1%.
Dive Insight:
PepsiCo estimates that its organic revenue will grow at least 3% this year, slower than its 3.7% growth rate in 2016. The company's net income also fell to $1.40 billion, or 97 cents per share, in Q4 from $1.72 billion, or $1.17 per share, in the year-ago period.
The company attributes this dip to pension-related settlements and a debt redemption charge in Q4.
Still, the beverage maker exceeded analyst predictions overall, the result of PepsiCo's cost-cutting programs and high consumer demand for healthy snacks and beverages in the North American market.
PepsiCo CEO Indra Nooyi's efforts to introduce new health-based products to the company's portfolio, as well as reformulate existing snacks and beverages to be better-for-you, have helped the company thrive despite the soda industry's struggles. Consumer distrust of sugary beverages and state initiatives to tax drinks with added sugar have caused soda sales to fall flat, but PepsiCo's forward-thinking innovation in premium health categories have sustained it despite hits to its unhealthy products.
PepsiCo made big strides in its commitment to healthier products last year. The company debuted an organic version of Gatorade in August and acquired sparkling probiotic and kombucha beverage maker KeVita in November.