PepsiCo CEO Ramon Laguarta has emphasised a commitment to drive growth in functional beverages, while grabbing opportunities in multicultural snacks.
Laguarta spent some time hammering home PepsiCo’s desire to cater to the health and wellbeing of consumers through portion control and lowering sodium and fat across the drinks and snacks portfolio as he addressed the Consumer Analyst Group (CAGNY) of New York conference.
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Feedback from customers is that that they want “more functionality, especially around areas like hydration, energy, protein and fibre”, Laguarta said at the event yesterday, where food and drinks manufactures have been talking strategy this week.
“Functionality” is becoming more “central” to PepsiCo’s drinks portfolio, he said, adding that powders and tablet formats are still a “very small” part of the business as it stands, compared to what the company can “deliver”.
Innovation will now play a greater part in driving growth in the functionality segment.
“A lot of these pillars, I would say, are a journey for the next five, six years. We have them in the portfolio. Now, they will be central to our investment decisions and our space allocation, resource allocation,” Laguarta explained.
“We have invested in an infrastructure for powders and mixing that allows us to create much more complex solutions in sachets and tablets and we’re going to invest massively behind that business.”
Providing more colour, he added: “It is now a $1bn business in the US – our Gatorade and Propel Powders. This will be a driver of growth for us.
“We can provide much more functionality in every sachet. Clearly, there is a lot of value, I think, in providing convenience and making sure that we can take our hydration with us throughout the day.”
Alongside Laguarta, CFO James Caulfield touched on PepsiCo’s priorities, including continuing to invest, to pay and grow shareholder dividends, and to use spare cash flow to repurchase shares.
Caulfield added that PepsiCo, will “selectively, and with discipline, consider acquisitions, partnerships and divestitures”.
An area where PepsiCo has expanded recently through M&A is in what Laguarta termed the “multicultural” snacks sphere, with deals for Kurkure in India, and Siete in the Hispanic sector.
“Many societies around the world are becoming much more multicultural. We need to be able to provide consumers with authentic, relevant flavours and products that remind them of their food cultures and the country they come from, or the culture where they come from,” the CEO said, although he did not infer PepsiCo will expand its M&A strategy in that area.
External challenges have been a front-and-centre topic of discussion among packaged foods and drinks manufacturers in results calls of late and continued to be a theme at CAGNY.
From PepsiCo’s perspective, Laguarta said: “Clearly, geopolitics and macros are impacting us more and more.
“If you just think about the last five years between Covid, some of the wars that impacted our business in Russia, Ukraine, the Middle East, the recent inflationary, clearly micro, macros and regulation, are becoming a very meaningful part of how we think about the long-term of the company and how we manage the company.”
