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PepsiCo CEO: 'Several of our brands virtually define their categories'

By Kacey Culliney+

Last updated on 23-Jul-2014 at 14:02 GMT2014-07-23T14:02:53Z

Lay's is one of PepsiCo's power brands defining its category and driving business, CEO Indra Nooyi says
Lay's is one of PepsiCo's power brands defining its category and driving business, CEO Indra Nooyi says

Power brands like Doritos, Lay’s and Quaker Oats are allowing PepsiCo to stay strong in volatile market conditions, CEO Indra Nooyi says.

Speaking to analysts on the company’s first quarter (Q1) 2014 call on Thursday, Nooyi played up the market dominance of a number of PepsiCo brands.

“Our brands hold the number one or number two position in many of our markets, and several of our brands like Mountain Dew, Doritos, Gatorade, Lay’s and Quaker Oats virtually define their categories.”

She said PepsiCo held the top spots in a range of markets, from Russia where it represented nine of the top 50 food and soft drink brands; Mexico where it held seven spots; and the UK with six.

It was this, she said, along with PepsiCo’s geographic footprint that put its business on strong footing.

PepsiCo CEO Indra Nooyi spoke about brand and snack strengths

Beyond brand strength, she said the breadth of the company portfolio – from fun-for-you to good-for-you products – also enabled the company to, “manage through issues”.

“We believe our business is well-positioned to deliver top-tier return in the current volatile environment.”

PepsiCo reported a net profit surge of 13%, totting up $1.2bn for Q1, 2014 amid relatively flat sales. Frito-Lay North America saw a rise in net sales of 3% - the highest across the business.

Snacks strong, again…

In the company’s full-year 2013 results, released in February this year, Nooyi said it would be snacks that took the heavyweight position of PepsiCo’s future .

“Over time, our business mix will gradually shift to be more heavily weight towards snacks,” she said.

Snacks had outshone beverages for the full year; a trend that remained similar in Q1, 2014. Organic revenue growth for snacks in Q1 was up 5%. Beverages were up 3% in revenues.

Speaking on the Q1, 2014 performance, Nooyi said: “Frito-Lay North America delivered another quarter of very strong results.”

Operating profit for the business arm was up 6% and Frito-Lay had balanced volume growth and price realization well, she said. Revenue growth had been driven by the five biggest brands – Lay’s, Tostitos, Doritos, Cheetos and Ruffles.

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