Strong demand
The Frito-Lay North America segment recorded a 13% increase in organic revenues, driven by strong growth in brands such as Ruffles, Doritos and Cheetos. PepsiCo gained market share in both the salty and savory categories in the US. It also held or gained market share in convenient meals, lite snacks, and hot and ready-to-eat cereal categories.
Strong double-digit growth in convenient meals, lite snacks, snack bars and cookies helped drive a 9% growth in organic revenue within the Quaker Foods segment. PepsiCo Beverages North America recorded a 12% growth in organic revenue helped by double-digit revenue growth in key brands like Pepsi, Mountain Dew, Gatorade and Aquafina.
Product innovation
PepsiCo continues to benefit from its product innovation. Products such as Doritos 3D, Cheetos Crunch Pop Mix, Lay’s Kettle Cooked Extra and Ruffles Double Crunch helped drive strong sales within the Frito-Lay segment. Convenient food options like Cheetos Mac ‘n Cheese, Pasta Roni Heat & Eat and lite snacks offerings such as rice cakes and rice crisps drove strong results in the Quaker Foods segment.
Nutritious snacking options like Bare and Smartfood yielded double-digit revenue growth during the fourth quarter. The company’s expansion into plant-based food products through its partnership with Beyond Meat (NASDAQ: BYND) will help diversify its product portfolio and drive revenue growth.
PepsiCo introduced Mtn Dew Energy through its Mountain Dew brand and through a partnership with the Boston Beer Company, it will distribute a low alcohol beverage product Hard Mtn Dew. It also introduced Starbucks BAYA energy through its joint venture with Starbucks (NASDAQ: SBUX).
Inflation
The one sore spot in PepsiCo’s results was inflation. The company was hit by higher transportation, commodity, and labor costs across all its segments which in turn caused a 9% decline in operating profit. Despite this, the company expects to deliver organic revenue growth of 6% in FY2022 along with an 8% growth in core constant currency EPS.
Click here to read the full transcript of PepsiCo’s Q4 2021 earnings conference call