Analysts have suggested that the future of PepsiCo’s Quaker breakfast cereals business could be in jeopardy after the unit reported declining first-quarter sales.

PepsiCo today (28 April) booked strong sales gains in the first three months of the year, up 27% to US$11.94bn thanks to solid organic volume growth and the acquisition of Russian dairy group Wimm-Bill-Dann.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

Related Company Profiles

View all

However, the group revealed that its Quaker business had struggled with sales down 7% in the quarter on an 8% fall in volumes.

PepsiCo said that Quaker had fallen victim to a decline in its core categories. However, Morningstar analyst Philip Gorham suggested that the brand had underperformed its rivals in the cereal aisle.

“Pepsi is investing in rebranding efforts (the rebranding of Gatorade is essentially complete, and major changes to Tropicana are likely later this year) and we suspect that Quaker could soon follow,” he wrote in a note to investors.

“If efforts to refocus Quaker in health and wellness categories fail, we expect the brand to be divested over the next few years,” Gorham added.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Nevertheless, PepsiCo remained upbeat on its ability to turn the business around.

Speaking during a conference call with analysts, PepsiCo finance chief Hugh Johnston said that the group was “very optimistic” on Quaker’s outlook.

“Quaker is a great brand it has a terrific set of products beneath it. We absolutely believe that that business it will be back to growth. What we really do think will be the biggest benefit coming from Quaker in the future is an accelerated pace of innovation, but innovation that is very specific with what the Quaker consumer wants and consistent with the brand essence of Quaker,” he said.

However, Johnson stopped short of providing guidance on when the company expects Quaker to regain sales momentum.