PepsiCo reported a stronger-than-expected spring as consumers looking for comfort stocked up on snack foods during the US lockdowns -- and its current-quarter forecast was even more bullish.
As Covid-19 raged across the US, Americans filled their shelves with salty, crunchy treats, driving double-digit sales growth for brands like Tostitos, Fritos and Cheetos.
Beverage sales were one key weakness, as both in-restaurant and grab-and-go petrol station sales lagged during the lockdowns.
“Our snacks and food business has performed very well, while our beverage business was challenged but continued to improve its competitive positioning,” chief executive Ramon Laguarta said.
“Consumer eating habits continue to evolve with consumers spending more time at home, which benefits the at-home breakfast, snacking and dinner occasions,” he said.
As one of the first big packaged-food companies reporting results for the spring months, PepsiCo is being closely watched by investors for a look at how consumers are responding to 2020’s upheaval.
And snack foods, it seems, carried the North American consumer through a difficult quarter. Ruffles potato chip brand saw high-single-digit growth, while oatmeal line Quaker’s organic revenue spiked 23% in the quarter. The snack and beverage giant said it has marketing plans to retain any new Quaker customers it picked up during the quarantines.
Other packaged-food companies have been pummeled by Wall Street after reporting strong spring quarters, since investors didn’t see signs they could hold onto the gains. But PepsiCo says it’s optimistic it can capitalize on these new buying habits.
“As we look ahead for North America, we expect our overall business to perform well, assuming there is no large-scale disruption in economic activity or population mobility as a result of the recent surge in Covid-19 infections in many markets,” Mr Laguarta said. “With this in mind, we expect our snacks and food businesses to remain resilient, albeit with some moderation in growth while our beverage businesses should deliver better performance during the second half of this year.” Bloomberg