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US Pepsi reports 9 per cent decline in revenue news
21 April 2009

PepsiCo's beverage division in the US reported a nine per cent decline in revenue and a six per cent decrease in volume for the quarter.

Chief financial officer Richard Goodman, however, is unperturbed. He said that the company's focus for the quarter was largely on brand restages and innovation launches and both have been executed successfully.

The sales of  its fruit-based drinks category Tropicana, however, plummeted 20 per cent in the weeks following the introduction of new packaging.

Massimo d'Amore, CEO-PepsiCo Americas Beverages, said performance at Tropicana has picked up since the original packaging was reinstated. Trop50, a new line extension of light orange juice, has helped boost the brand's performance, he added.

PepsiCo also announced plans to acquire all outstanding shares of its two largest bottlers, Pepsi Bottling Group and PepsiAmericas, for $6 billion. (See: Pepsi offers to buy out its two bottlers for about $6 billion) 

Indra Nooyi, CEO said that the category still remains attractive and that maintaining a strong position in this business will be a key component of PepsiCo's overall success.

Nooyi pointed out that the North American beverage category is valued at more than $100 billion, and PepsiCo believes the category can sustain volume growth of about 1 per cent to 2 per cent, in line with population growth, once the recession is over.

If successful, the bottler acquisitions would give PepsiCo control over 80 per cent of its total beverage volume in North America and result in $200 million in pre-tax synergies annually. Consolidating the bottlers would also enable the company to better test new products.

While PepsiCo Americas Beverages continues to receive plenty of attention and investment, it's Frito-Lay North America that has been the bright spot. Revenue at the division was up 12 per cent during the quarter, though volume decreased 1 per cent. Frito-Lay North America is PepsiCo's single largest division, and accounted for more than one-third of revenues during the quarter.

The division began putting 20 per cent more product in take-home sizes of Doritos, Cheetos, Tostitos and Fritos without raising the price.

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US Pepsi reports 9 per cent decline in revenue