Having delivered a strong first quarter, we highlight 10 key facts we learnt from PepsiCo’s results and what they indicate about the post-pandemic environment.
What we learnt?
1. Pandemic trends persist - large formats and ecommerce are continuing to perform well, benefitting from at-home consumption trends, supported by consumer-centric innovation. This aligns with the experiences of other suppliers, even in markets where lockdown restrictions have eased more fully
2. A clearer picture of at-home trends will emerge in the coming months - there is uncertainty around the future of at-home consumption. The company expects a clear picture to emerge over the next six to nine months, especially in terms of working from home arrangements and how much consumers will venture out for meals during the day
3. Focusing on multi-pack variety - in snacks, it is focusing on multi-packs given the increase in at-home consumption, providing more combinations and variety. It expects this to be a structural trend in the business
4. New baseline for promotions – within its North American beverages business, PepsiCo views an opportunity for promotional activity to remain structurally lower, compared to the pre-COVID-19 environment. While promotions were curtailed last year due to supply issues, it expects to compete more on innovation, brand building and execution going forward, rather than pricing
5. Adopting a balanced approach to commodity inflation – although the company is experiencing higher input inflation, it will mange this through driving productivity and optimising its net revenue management capabilities. This issue remains high on the agenda for most CPGs in the first half of 2021
6. Increased mobility will underpin future growth – the convenience and gas channel is starting to deliver strong revenue growth. The company assumes vaccination efforts will accelerate and population mobility will improve, benefitting foodservice channels
7. Traditional trade will also benefit from increased mobility – PepsiCo also expects smaller traditional trade formats in international markets to gradually improve as population mobility increases
8. Some pandemic shifts are here for the longer term – it expects pandemic-related shifts to remain; greater online adoption, more remote working arrangements and demand for large, trusted brands
9. China remains a dynamic market – the company is seeing significant changes in China, with new social channels and new types of entertainment-led ecommerce channels driving changes in the consumer. This also required companies to adapt their supply chain and marketing spend
10. Investing for the future - to enhance execution and build advantaged capabilities for future, it will continue to invest in the supply chain and go-to-market network, accelerate digitisation initiatives and expand its sustainability agenda
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