PepsiCo’s snacks pick up the slack for its ailing beverages

PepsiCo’s sales topped Wall Street forecasts in the fourth quarter, as higher demand at its snacks business that makes Doritos and Cheetos made up for a decline in sales of sugary drinks.

As consumers increasingly ditch sodas and sugary drinks, Pepsi has sharpened its focus on snacks as well as healthier beverages.

In the quarter to December 31st, organic sales at Pepsi’s Frito-Lay snacks division rose 5 per cent, buoyed by demand for salty snacks and as prices rose 2 per cent. Organic sales exclude the impact of currency, acquisitions and divestitures.

The snacks business contributes about 25 per cent of overall revenue.

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Organic sales at PepsiCo’s North American beverages business that sells Gatorade and Mountain Dew dipped 3 per cent.

Total revenue rose slightly to $19.53 billion, topping analysts' average estimate of $19.39 billion. PepsiCo recorded a loss of $710 million, reflecting a $2.5 billion one-time charge related to new US tax laws, compared to a year-earlier profit of $1.40 billion.

Excluding one-time items, the company earned $1.31 per share, edging past analysts’ estimates of $1.30. – Reuters