PepsiCo reports a ‘strong’ double-digit hike in ad spend

PepsiCo’s revenues were up in Q4, managing to deliver profit despite spending significantly more on marketing across its brands.

In the three months ended Dec. 31, the company’s revenue jumped 10% to $28 billion USD, with core operating profit up 7% year-over-year. The company’s operating margin declined 40 basis points, which chairman and CEO Ramon Laguarta said reflected a “strong” double-digit increase in advertising and marketing spend, as well as additional investments to “build digital capabilities and integrate purpose” throughout the organization, both of which will have benefits in the long run.

In an inflationary environment, PepsiCo’s revenues were also driven by a 16% increase in average prices.

The Frito-Lay chips and snacks division delivered 18% organic revenue growth during Q4, gaining share in the macro and savory snack categories for the full year. Strong performance came across the Doritos, Cheetos, Lay’s, Ruffles, Tostitos and Fritos brands.

For Quaker Foods, operating profit fell 3% in North America thanks to hikes in production costs, but it had market share gains in the snack bars, lite snacks, rice, pasta and ready-to-eat cereal categories for the full year.

The beverage segment’s organic revenue increased by 11% in North America in 2022. Many key brands performed well with Gatorade, Pepsi, Mountain Dew and Aquafina each delivering double-digit net revenue growth for the fourth quarter and the full year.

The CPG notes that it managed parts of its business portfolio to “shift towards fast growing, highly profitable areas.” This included closing the divestiture of Tropicana, Naked and other juice brands.