Emerging markets help PepsiCo offset North American weakness

Posted by James Ferre on 23rd July 2009

Food and beverage giant PepsiCo has seen revenues fall by three per cent in the second quarter as the North American beverage market failed to emerge from its slumber.

Indra Nooyi, PepsiCo Chairman and Chief Executive Officer, said the company had been shielded from the full impact of the global recession by its expansion into emerging markets.

“Our results this quarter reinforce the advantages of our balanced portfolio, as our food and international businesses delivered solid performance while we continued the transformation of our North American beverage business,” she said. “Across our businesses, we are investing aggressively in R&D to drive innovation to further differentiate our brands; and we believe now is the time to invest in key markets that represent enormous opportunities for years to come.”

As part of its strategy to grow in key markets, the company recently announced plans to invest $1 billion over the next four years in China, PepsiCo’s highest priority growth market. And, in Russia, PepsiCo along with its partner The Pepsi Bottling Group, Inc., announced a plan to invest $1 billion over the next three years.

The company did not discuss the proposed takeovers of their two major American bottlers, with their offer seemingly remaining unchanged from the ones rejected in May.

PepsiCo advised that their experimentation with the new zero-calorie sweetener PureVia – made from the stevia plant – has been well received.Their stevia-based SoBe LifeWater brand was the fastest growing enhanced water product, while their other PureVia product, Torp50, was “performing well”.

There are hopes that stevia-based beverages could be the next big thing in the industry, potentially breathing life back into the carbonated soft drinks arena.

Closer to home, Pepsi’s Asia/Middle East/Africa division – which includes Australia – reaped net revenue growth of 14 per cent on volume growth of 8 per cent. India and China led the way, although Australia recorded robust growth in the snacks category.