Earnings

PepsiCo To Allocate Some Of Its Tax Windfall To eCommerce

PepsiCo Launches First Cash-Back Loyalty Program

PepsiCo is using its newfound wealth from President Donald Trump’s tax reform bill to invest in its eCommerce business and for digital marketing.

According to a report in Business Insider, the beverage company said that it has benefited from investing in eCommerce, and that its online focus has resulted in around $1 billion in annualized retail sales. As a result, it plans to invest more on that front. While the company didn’t specify how much money will go toward eCommerce investments, it did say it will also use proceeds to train workers, return to cash holders and pay out $100 million in staff bonuses.

The comments come as some Wall Street watchers are concerned that sales of beverages, which are impulse buys at physical retailers, will slow down as more people shop online. According to Ali Dibadj, a Bernstein analyst, about 30 percent of overall drink sales are impulse purchases. He said the dwindling of those sales caused by online shopping isn’t being addressed by the beverage companies. The leading drink companies, including PepsiCo, balk at that notion as they make investments in eCommerce.

PepsiCo is in a better position than some of its rivals, largely because its “huge distribution reach and agility arguably make it less vulnerable,” Bloomberg Intelligence analyst Ken Shea said back in the summer. By comparison, Coca-Cola has found itself a civilian casualty of the dying retail industry: As shoppers forgo the mall experience, they’re also presented with fewer opportunities to purchase Coke at a vending machine or food court, CEO James Quincey told Bloomberg in May. Target and retail analysts have long seen that people are spending more online and on health or experiences. For its fourth quarter, PepsiCo reported net revenue of $19.5 billion.

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