Lockdown living helps PepsiCo through pandemic, vaccine paves path to growth

By Nivedita Balu

3 Min Read

(Reuters) - PepsiCo Inc has joined rival Coca-Cola in predicting revenue growth in 2021, saying on Thursday it expects pre-pandemic lifestyles to resume as economies reopen and COVID-19 vaccines are rolled out.

The company has navigated the health crisis better than Coca-Cola as it relies more on grocery and retail channels from where consumers stockpiled snacks and beverages.

Pepsi said its fourth-quarter revenue rose 8.8% to $22.46 billion, topping Wall Street expectations, as people munched Tostitos and Cheetos and gulped down Gatorade while stuck at home during a second wave of coronavirus lockdowns.

The increase in demand had last year led the company to launch a direct-to-consumer website that offered special flavors and specialized bundles of its top selling products.

"We have figured how to do well in this environment," Chief Financial Officer Hugh Johnston told Reuters, adding that most of the growth came from no-sugar, low-calorie and healthy options.

Still, revenue from the foodservice channel, which includes restaurants and vending machines, fell at a double-digit rate.

Chief Executive Ramon Laguarta said he expects consumers to return to certain pre-pandemic behaviors by the second half of 2021, but some changes such as increased online shopping and more remote work arrangements will likely be sustained.

The company expects a mid-single digit rise in annual organic revenue and a high-single digit increase in adjusted earnings.

"PepsiCo's success has largely been driven by its portfolio strategy and focus on at-home consumption, which is helping the company outperform others in the category, especially in beverage," Kristen Groh, a managing partner at Publicis Sapient said.

Organic revenue for Frito-Lay North America rose 5%, while those at the North American beverage unit rose 5.5%.

Excluding items, it earned $1.47 per share, a cent above expectations, according Refinitiv IBES data.

PepsiCo's shares, which had gained nearly 9% last year to outperform Coca-Cola's 1% rise, were marginally down in early trading.

Reporting by Nivedita Balu in Bengaluru; Editing by Arun Koyyur

Our Standards: The Thomson Reuters Trust Principles.