USA – PepsiCo has raised its outlook for the full-year 2023 organic revenue to increase by 8%, up from 6%, and core constant currency EPS to increase by 9% from 8%.

The outlook follows a reported net revenue growth of 10.2% to US$17.85 billion for its first quarter, up from US$16.2 billion (9.3%) in the same period last year. Operating profit stood at US$2.63 billion, down 50% from US$5.27 billion the prior year.

Unit case Volumes rose 1% in PepsiCo’s beverage business, while they declined 3% in its food segment. Overall, volumes were down 2% across all categories, while overall prices were up 16%.

PepsiCo’s Frito-Lay North America division reported a 15% rise in net revenue to US$5.58 billion, fueled by market share gains and double-digit net revenue growth across key brands like Lay’s, Doritos, and Cheetos, as well as brands such as Sun Chips and PopCorners.

Meanwhile, PepsiCo Beverages North America’s net revenue rose 12%, with Pepsi delivering double-digit net revenue growth and brands like Gatorade and Aquafina delivering high single-digit net revenue growth.

The company also recognized gains associated with its US$3.3 billion juice divestiture in its PepsiCo Beverages North America and Europe divisions, in 2021.

PepsiCo’s chairman and CEO, Ramon Laguarta, said: “We are very pleased with our performance and business momentum as our categories and geographies remained resilient during the first quarter.”

“Our results demonstrate that the investments we have made to become an even faster, even stronger, and even better organization by winning with pep+ are laying the foundation for durable and sustainable growth.”

CFO Hugh Johnston said in a conference call with analysts that the company’s intention is not to build a large portfolio of products or a complex portfolio, but it is to focus on a few good brands, develop with strategic partners, and then leverage its distribution capabilities.

The owner of 7Up and Doritos highlighted brand portfolio impairment charges related to property, plant, and equipment impairments, as well as the charges and losses concerning the “deadly conflict in Ukraine”.

The multinational food and beverage giant also noted that it is beginning to face new challenges from retailers’ private-label brands as ongoing food and beverage inflation begins to influence more and more consumers’ purchasing choices.

“We’re seeing private label growth in some of the categories where we participate, especially waters, juices, salty snacks,” Laguarta told analysts on a call.

“We see both private labels increasing, although from a very low base, in salty snacks, but most importantly for us, we’re seeing our brands continue to gain loyalty, expand their consumer base, and be preferred in that segment.”

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