Raised demand for snacks, breakfast cereal, and soft drinks from housebound consumers helped PepsiCo produce a bigger than anticipated rise in revenues in the last three months of 2020. The group also joined rival Coca-Cola in predicting better times ahead if the vaccine rollouts allow consumers to resume their pre-pandemic lifestyles.
PepsiCo’s fourth-quarter revenue rose 8.8% to $22.46bn, topping Wall Street expectations and helping the group deliver a 4.8% rise for the year. However, operating profit for 2020 was still down 2% at $10.08bn.
Despite the effects of falling out-of-home consumption in places like restaurants and cinemas, sales in PepsiCo’s beverage business accelerated at end of the year. The group, which makes Gatorade, Tropicana, and its namesake soft drink, reported fourth-quarter organic sales in its North America beverage unit up 5.5%.
Snack revenues also continued to rise. North American sales of Frito-Lay and Quaker Foods products increased by 5% and 8% respectively. And the company also produced sales growth across its international markets, led by an 8% rise in Europe.
Hugh Johnston, PepsiCo’s CFO, said the results reflected strong sales in convenience stores and other retailers as well as e-commerce, offsetting continued weakness in the foodservice industry.
“We have figured how to do well in this environment,” said Johnston, highlighted that a lot of the growth had come from no-sugar, low-calorie and healthy options.
For 2021, PepsiCo said it was targeting a mid-single-digit percentage increase in organic revenue, as well as a high-single-digit increase in core earnings per share.
Chief Executive Ramon Laguarta, commented: “Our results were indicative of the strength and resilience of our highly dedicated employees, diversified portfolio, agile supply chain and go-to-market systems and strong marketplace execution even in the face of difficult Covid-19 challenges.”
He said the group expects consumers to return to certain pre-pandemic behaviours by the second half of 2021 but highlighted that some changes such as increased online shopping and home working are likely to be sustained trends.
