In the Chinese market, PepsiCo, a multinational food and beverage giant, has successfully seized the growth opportunities in the post epidemic period.
Just past the 11 long holiday period, PepsiCo released the third quarter results, organic revenue increased by 4.2%; global snack and food business achieved 6% organic revenue growth; global beverage business resumed growth, organic income increased by 3%, and operating profit under the core constant exchange rate increased by 5%. At the same time, PepsiCo updated its annual performance forecast, predicting that organic revenue will grow by about 4% in 2020.
In a subsequent performance meeting with Wall Street analysts, PepsiCo chairman and CEO Ramon laguarta said there was a “significant improvement” compared with the previous quarter and further interpreted the growth performance of the Chinese market. In addition, he also mentioned the current product portfolio ideas, as well as future goals.
Ramon laguarta, chairman and CEO of PepsiCo
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Median single digit growth in China
At the meeting, Mr. longard said PepsiCo’s international market business achieved an organic revenue growth of 4% in the third quarter. “Our international snack business remained resilient, achieving 5% organic revenue growth, while our international beverage organic revenue grew by nearly 2%, due to the easing of epidemic related restrictions and store closures in some markets.” He said.
Overall, in PepsiCo’s international markets, organic revenue in developed markets grew by 8% in the third quarter, compared with 2% in developing and emerging markets.
“Some of the highlights are that we recorded double-digit growth in organic income in France, Australia and Brazil, high single digit growth in India, and medium single digit growth in the UK, China and Russia.” He pointed out.
It is revealed that PepsiCo has expanded its market share in many major snack markets including Mexico, Brazil, China and Russia; in terms of beverages, the company has also expanded its market share in the UK, Russia, Turkey, France, Germany and Thailand.
Long gard reiterated at the meeting that PepsiCo’s long-term goal is to become a “faster, stronger and better” company. Turning to the outlook for PepsiCo’s international business, he said he expected the snack business to remain resilient, while the recovery of the beverage business “may take more time” as some channels continue to be affected by the epidemic.
In China, PepsiCo’s food and beverage businesses grew in the third quarter.
Today, snack food agents learned from Pepsi that, from a “faster” perspective, PepsiCo achieved a 4.9% year-on-year increase in net income in the Asia Pacific region in the third quarter, mainly due to the strong demand of Australian consumers for home snacks and “the strong performance of China’s beverage business in the summer sales season”.
In addition, China’s food business reported a 2.6% increase in net income in the third quarter from a year earlier.
It is revealed that from a “stronger” perspective, PepsiCo’s e-commerce business in China, Australia and Thailand increased by double-digit in the third quarter. “Our o2o channel is growing rapidly in China, which reflects our investment in digital capabilities.” The company said.
For the newly acquired business, xiaoshidai learned that at present, PepsiCo is in the final stage of “baicaowei 100 day integration plan”. Through a combination of organic investment and external injection, the company said it planned to build stronger “direct to consumer” operational knowledge and capabilities.
Satisfied with product mix
Interestingly, PepsiCo is still enriching its product portfolio as rival Coca Cola announces it will cut more than half of its global brands.
Xiao Shi has noticed that in China, PepsiCo has introduced a new version of the sugar reducing version of the seven – hi Mo 7 Tuo, a low sugar version of Pepsi, pineapple flavored soft drinks and Pepsi flavored Pepsi Cola in the Chinese market this year. In addition, PepsiCo has introduced the brand of soda water “ivesh”, which focuses on Zero sugar and zero card, into the Chinese market.
As for the food business, Leshi has also launched many joint and exclusive products, such as potato chips with the taste of big white rabbit and Zhou Hei duck, as well as the newly launched Leshi original cut taro chips. In addition, since the beginning of this year, Guige oats have also released many new products, including the first introduction of a meal substitute product “Guige dikakong”, as well as large fruit grain Lactobacillus Cereals, as well as Hericium erinaceus oats and donkey hide gelatin oats, which are jointly launched with Guangzhou medicine.
It is not difficult to see that one of the major directions of this food and beverage giant’s product innovation in China is “health” (such as low sugar, Zero sugar and zero card, concept of medicine and food health preservation), and the other key word is “local taste” (such as Osmanthus fragrans, taro, Zhouhei duck, etc.).
Xiaoshidai noted that longjiade also talked about his views on its product portfolio at the meeting. “In general, I believe that our (International Business) as a whole has performed well and benefited from the diversity and breadth of our product portfolio and the strategic actions we have taken to promote the growth agenda.” He said.
“We are satisfied with the composition of our portfolio and are now more focused on maximizing the full potential of our existing and recently acquired assets (e.g. Baicao in China) to gradually drive growth and improve returns as we aim to be a faster, stronger and better company.” Longard said.
“Faster, stronger, better”
Under the strategic framework of “faster, stronger, better”, the food and beverage giant has also set the latest key priorities.
To become “faster,” longard said key priorities include accelerating PepsiCo’s growth in the snack and food business in the international market, while investing wisely in the beverage business to balance growth and return.
In addition, he mentioned the necessary investment in PepsiCo’s manufacturing capabilities, market access systems and digital projects, such as increasing the scale of its e-commerce business. According to reports, the company’s e-commerce business “almost doubled in the third quarter.”.
In a follow-up session with analysts asking questions, he noted that PepsiCo was satisfied with the progress made on “faster” and that the company was becoming more competitive in the market.
“Looking to the future, I think category growth may slow down slightly, so we need to work harder on share expansion. In the process of gaining market share, I think brand innovation and execution will play a very important role. ” He said.
Speaking of “stronger,” longard said at the meeting that this means PepsiCo must continue to reform its cost structure, capabilities and culture.
Here, the latest priorities focus on driving overall cost management across the organization to support PepsiCo’s investment in capacity enhancement. For example, create a “highly agile and flexible end-to-end value chain”, be more precise in revenue management, and invest in data analysis that can provide more detailed consumer insight.
“We are investing in becoming a better omnichannel company.” In response to analysts’ questions, he added that he was glad to have made a lot of investment in increasing production capacity last year, which helped PepsiCo improve its flexibility this year.
“In terms of cultural change, we are committed to diversifying the workforce, balancing internal and external perspectives. At the same time, we are strengthening the PepsiCo way. In this way, we emphasize that employees should act like the boss and implement things quickly. ” Longard said.
“The greatest opportunity” for a long time
At the meeting, when asked whether PepsiCo would continue to invest in the epidemic, longjiade gave a positive answer.
“As consumers are shopping in new ways, brands need to invest in expanding in new areas, in building new capabilities, especially around Omni channel transformation.” He said.
Long Jiade said that PepsiCo’s philosophy has always been to balance the sustainable growth of business, revenue and profit. “We will continue to do business in this way, taking into account external factors, without sacrificing the investment needed to remain competitive in the long term.” He said.
In his view, it was also one of the factors driving PepsiCo’s growth in the third quarter. “We are very satisfied with the quarter and our investments have begun to work, for example, to see our global market share expand and revenue continue to accelerate (growth),” he said He said.
In the future investment and growth plan, the international business will be a major focus of the food and beverage giant.
“The number one driving force for our company’s long-term consumption of snacks and drinks is likely to be our biggest business opportunity in the long term. So that’s a big focus for us. ” “Affordability is clearly a big driver of per capita consumption, and we will continue to adjust our cost structure to suit different markets and have greater flexibility in pricing,” longard said
He pointed out that PepsiCo’s adjustments in supply, delivery and management are bearing fruit in response to different realities in different developing markets. As a result, the company’s sales grew even as many markets faced challenges.
“Of course, many of the smaller stores are still closed. From the perspective of consumers and customers, many of these markets have made substantial adjustments to the epidemic. Our strategy is still to reduce costs, adjust price points, and continue to invest in brands and innovation to drive per capita consumption growth in the international market. ” He said.
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