Health Conscious Consumers a Growing Concern for Pepsi

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Three Pepsi flavours

On Thursday, PepsiCo Inc. reported its quarterly review which was better than expected. Pepsi recorded double digit growth in some markets but failed to improve its results in the soda market in the U.S. as many persons are now more health conscious than ever before. Current trends are recording a shift in lifestyle behaviours where consumers are limiting their consumption of carbonated soft drinks.and are leaning more towards healthier juices. According to Beverage Digest, the consumption of sodas fell to a 31 year low in the US in 2016.

In an effort to combat this development, PepsiCo has introduced new drinks to the U.S. market that have yet to meet wild commercial success reminiscent of campaigns past . However, since Pepsi introduced four new flavours of Diet Coke there has been an increase in demand for its Coke Zero sugar beverage. Sales for Coke has outperformed other beverages and because of this, Pepsi has decided to increase its marketing spend on colas.

Revenue in PepsiCo’s beverage unit in the U.S. fell by 1 per cent; as soft drinks account for nearly a third of total revenue for PepsiCo. Overall revenue was USD$12.6 billion compared to the forecasted value of USD$12.4 billion. There was a 14 per cent increase in sales in Europe and the sub-Saharan African markets. On the other side of the globe, sales in North Africa the Middle East and Asia increased by 7 per cent.

In addition to beverages, PepsiCo also markets popular brands such as Frito Lay chips and Quaker Foods, which have done better on the market than beverages. Frito Lay sales increased by 3.4 per cent while Quaker sales remained unchanged due to negative pricing.

PepsiCo is currently trading on the NASDAQ at USD$103.26 per share.


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