PepsiCo earnings topped expectations in Q2, which the company says reflects “a strong double-digit increase in our advertising and marketing spend.”
The CPG reported revenue for the three months ended June 17 came in at $22.32 billion USD, while average prices spiked 15%. The company says it expects 2023 organic revenue to rise 10%, compared with a previous forecast of 8%.
Frito-Lay
Frito-Lay North America delivered 14% organic revenue growth, which, according to the company, “reflects a significant increase in advertising and marketing spend and planned business investments.”
Brands such as Lay’s, Doritos, Cheetos and Ruffles each delivered double-digit net revenue growth, while smaller brands such as SunChips and Off The Eaten Path did the same.
Frito-Lay will continue innovating across its portfolio by introducing “bolder and spicier flavor combinations” of existing brands to address societal preferences, such as extending its Flamin’ Hot flavor variety across Doritos, Cheetos, Funyuns, Fritos and Chester’s.
The snack business delivered “strong net revenue growth across all channels, including large format, foodservice, and convenience and gas.”
PepsiCo Beverages
PepsiCo Beverages North America maintained its recent momentum with 10% organic revenue growth.
In his prepared remarks, chair and CEO Ramon Laguarta says that investments it has made in its brands, technology, consumer insights, manufacturing and go-to-market execution are fueling growth across the portfolio: the company is reporting double-digit net revenue growth in Gatorade and high-single-digit net revenue growth in Pepsi, Starbucks, and Rockstar.
Laguarta says it continues to advance its zero sugar offerings across brands such as Pepsi, Mountain Dew and Gatorade, and is refreshing its lineup of ready-to-drink teas, sparkling and enhanced waters. It is also expanding its presence in the carbonated soft drink category with its recently launched, Starry.
For the beverage portfolio, Laguarta says PepsiCo is “increasing the portion of our working media spend to support the growth of our brands and optimize the return on investment of our advertising and marketing spend.”
Quaker Foods
Quaker Foods North America’s organic revenue grew 2% in Q2, compared with 18% organic revenue growth in the second quarter of 2022. Core operating profit declined, but it did see a double-digit increase in advertising and marketing spend.
However, the company notes Quaker Foods achieved share gains in the pancake mix, pancake syrup, grits, rice and pasta and lite snacks categories, and delivered double-digit net revenue growth in the lite snacks, grits, cookies, and pancake syrups and mixes categories.
PepsiCo says its Quaker business continues to innovate and extend its brands to serve multiple dayparts and occasions with recent launches of, for example, Quaker Chewy Granola and Cap’n Crunch Instant Oatmeal made with Quaker Oats.
