PepsiCo released its Q3 earnings report earlier this week, and when it comes to its flagship soda unit, it starts off looking good:
Despite a challenging LRB [liquid refreshment beverage] category, NAB [North America beverages] sequentially improved both volume and market share performance in measured channels while leading the industry in net realisation at retail.
OK, “improved both volume and market share” sounds like good news, right?
Further down the report, the section dealing with PepsiCo Americas Beverages (PAB), the unit of the business that actually sells Pepsi in the U.S., says:
In North America, non-carbonated beverage volume declined low-single digits, and CSD [carbonated soft drinks] volume declined mid-single digits.
Reported net revenue declined 2 per cent ….
Sales for Pepsi, Diet Pepsi, and Gatorade are in decline, in other words. PepsiCo didn’t even put an exact number on what “mid-single digits” might be — 5%? 8%? We don’t know.
Nielsen puts the decline for Pepsi even steeper — at up to 11%.
The rest of the company — snacks and so on — is in better shape. Overall, revenues for the entire company are up. But Pepsi is PepsiCo’s flagship product — it’s a classic American brand. Coca-Cola is stealing its market.
CEO Indra Nooyi thinks those who worry about Pepsi are “maniacal.” But the results only fuel the cause of activist investor Nelson Peltz, who wants the drinks business separated from the holding company.
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