Demand for healthier snacks and beverage drove quartelry revenue higher at PepsiCo. But, as Fred Katayama reports, analysts were cautious about its results.
Raising prices helped PepsiCo grow revenue in the latest quarter. Demand for healthier drinks and snacks drove revenue and profit higher. The company whose brands include Pepsi, Lays, and Quaker, has been pushing healthier snacks and drinks, such as baked potato chips and unsweetened tea, to meet consumers' changing preferences. PepsiCo now gets nearly half of its revenue from what it calls "guilt-free" products that feature less salt and saturated fat. Its profit and revenue beat Wall Street's expectations. PepsiCo managed to grow its North America beverage business - its biggest unit - by more than two percent even though it called conditions there "challenging." Rival Coca-Cola reported disappointing profit. Analysts were cautious about PepsiCo's results. J.P. Morgan Securities analysts wrote, "The quality of the quarter was disappointing as organic revenue, gross margin, and operating margin all came in weaker than we anticipated." PepsiCo shares, which have outperformed Coca-Cola this year with a seven percent increase, gave back some of those gains at the start of trading.