In the first quarter of 2021, PepsiCo saw net revenue growth of 6.8 percent, for a total of $14.8 billion in revenue, up from last year’s $13.9 billion, the company announced on Thursday (April 15). Given that the quarter ended March 20, 2021 in North America, and that it ended in February in some of the international markets incorporated, this revenue is being compared, for the most part, to the company’s pre-pandemic performance. The bulk of the revenue came from Frito-Lay North America, which brought in $4.2 billion, and PepsiCo Beverages North America, which brought in $5.1 billion.
“A couple of highlights under performance — the share performance of Frito has accelerated in the last six months, most notably in the last three months, so we feel good about that part,” Chairman and CEO Ramon Laguarta told investors on a call with analysts. “We’re seeing more and more small portion consumption in the snacks business, and to a certain extent also in the beverage business, smaller units, especially now in the form of multi-packs, given there is an increase in home consumption … We’re seeing consumers in the U.S. obviously moving around much more, which has a positive impact, by definition, in consumption trends in both large format and small format.”
The pandemic has benefitted many companies that sell snack foods — PYMNTS’ How We Eat report found that 40 percent of consumers have been eating more “indulgent” fare during the virus outbreak. However, despite this bump in demand for snack foods, a demand from which PepsiCo has benefitted, the company believes that the vaccine rollout will actually benefit its sales.
“We are assuming that vaccination efforts will accelerate and population mobility will improve,” CEO Ramon Laguarta told Reuters. “This should benefit the [away-from-home] channel as and when travel, lodging, dining, education, and entertainment trends accelerate.”
This may seem counterintuitive. However, as executives pointed out in the company’s prepared remarks, the company has not seen a decline in markets where consumers are beginning to return to public life.
“Our North America business trends have remained resilient while our international businesses have held up well despite ongoing restrictions and closures related to the pandemic,” the statement noted. “Both our global snacks and beverage businesses have performed well even as consumers gradually return to pre-pandemic activities and behaviors.”
Additionally, PepsiCo CFO Hugh Johnston told CNBC in an interview following the earnings release, “We’ve started to lap some of the pandemic surge … our expectations going forward is that we’ll accelerate in the second quarter, and the back half of the year we certainly feel very good about as well.”
PYMNTS data find that 79 percent of consumers are at least somewhat interested in leaving home more often, and 36 percent are very or extremely interested. Given this pent-up demand, it is likely that, as the vaccine continues to roll out across the country and around the world, consumers’ mid-pandemic snacking behaviors will likely return to something resembling a pre-COVID normal. In fact, Johnston conceded in an interview with Yahoo Finance that pandemic-driven snacking habits are “likely to normalize as we move on a little bit.”
However, he referred to this shift as a “tailwind,” noting, “Even in the latter portion of the first quarter, where we had been seeing away-from-home consumption … running at about 25 percent down for a number of months — in the latter portion of the quarter, it was only down about 13 percent.”
Johnston does not believe that consumers seek out snack foods more at home than away from home, a belief that he did not square with the company’s elevated snack food sales in the past year.
“Generally speaking,” he said, “people don’t consume dramatically different amounts whether they’re in home or away from home, is the reality, and in the Frito-Lay business, because our penetration is so high across all the channels, we are really somewhat channel-agnostic … Generally speaking, mobility is a tailwind for us, not a headwind. ”
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