Pepsi’s beverage business, which is its largest and includes brands like Gatorade and its namesake cola, has been struggling to contend with increased competition from upstart brands and changing consumer tastes.
Organic sales for its drinks unit were down 2 percent, while they were up 3 percent for its Frito-Lay snack business.
Nooyi also said in the morning’s call its core soda business was losing share to its main rival — though she did not mention Coca-Cola by name. Coke has been pouring money into marketing, innovation and new packaging to help promote products young and old. Its January launch of a millennial-focused revamp of its Diet Coke brand helped bring it back to positive volume growth in North America.
Company executives said they have no plans to split the two businesses, highlighting on the call, the leverage it brings with retailers.
“We’ve consistently…driven growth for our retailers because of the fact that we have impulse categories and strong brands, and they’ve been well marketed over time. So as our retailers are looking for growth, they inevitably come first to PepsiCo because of the size of the two businesses,” Chief Financial Officer Hugh Johnston said on the call, according to an initial transcript from Factset.
“We just think the two of them are better together, and I have a lot of evidence to support that.”
During this year’s Superbowl, Pepsi made a concerted push to market its snacks and drinks businesses together, choosing as its headline a duo of Mtn Dew Ice and Doritos Blaze.
The combined business continues to give Pepsi leverage in Europe, Nooyi also noted.
To help reinvigorate its North American beverage business, Pepsi said it is putting marketing dollars back to work on Pepsi Cola, Pepsi Zero Sugar and Diet Pepsi.
Johnston said some of those dollars will be a reallocation and others will be additional spending.
“We are working through those details now,” he said.
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