- PepsiCo announced Tuesday it is reinvesting some of the millions of dollars it is saving under the new GOP tax plan in e-commerce.
- E-commerce already accounts for roughly $US1 billion in Pepsi’s annual retail sales.
- Analysts have said that Coca-Cola and Pepsi haven’t braced for e-commerce’s impact, with one calling out beverage giants for their “antiquated” approach.
PepsiCo is investing in e-commerce to avoid the downward spiral that is dooming retailers like Sears and Macy’s.
On Tuesday, the beverage and snack industry giant announced it is investing some of its savings from the new GOP tax plan in its e-commerce business, as well as in digital skills and brand marketing.
“We have seen the benefit of investing in capabilities such as e-commerce, a business that is now approximately $US1 billion in annualized retail sales for us, with a long runway for continued growth,” PepsiCo said in a statement.
The company didn’t say exactly how much money it will invest in e-commerce. PepsiCo is also investing savings under the new tax plan in training for workers, cash returns for shareholders, and $US100 million in employee bonuses.
Analysts have warned that the rise of online shopping could be dark news for beverage giants like Coca-Cola and PepsiCo.
Impulse buys make up roughly 30% of overall beverage sales, Ali Dibadj, an analyst at Bernstein, said at Beverage Digest’s Future Smarts conference in New York in December. As people increasingly shop online, those sales are in danger.
“That’s something that’s not being addressed right now,” Dibadj said.
Without customers grabbing a Diet Coke while checking out at Walmart or a two-litre bottle of Pepsi at the grocery store, the beverage industry could be in trouble. As sales of soft drinks by volume have dropped for 12 consecutive years in the US, companies like Coca-Cola and PepsiCo do not want to risk losing an opportunity to get their products in customers’ hands.
“I don’t think most beverage companies are particularly well-prepared” for the rise of e-commerce, Caroline Levy, a senior analyst at Macquarie Capital, said at the conference.
Dibadj added: “I think the discourse around e-commerce remains an antiquated discourse … On average, they don’t know what they’re doing to capture impulse, but they will out-buy smaller brands.”
Coca-Cola and PepsiCo have contested the idea that they’re ignorant of the rise of e-commerce. And, both companies are making major investments in the category. In addition to PepsiCo’s announcement on Tuesday, Coca-Cola is investigating click-and-collect grocery sales, bundled deals (such as meal kits), and new impulse “triggers” online.
On Tuesday, PepsiCo reported net revenue of $US19.5 billion in the fourth quarter, beating Wall Street forecasts.
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