PepsiCo plans to step up the innovation within its Quaker range in North America after the division booked falling sales and earnings in the second quarter of 2010.
Earlier today (20 July), the US food and beverage giant reported its second-quarter numbers and said sales from its Quaker Foods North America division had fallen 4% to $379m. Operating profit slid 13% to $114m.
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Speaking on the firm’s earnings conference call today (20 July), CFO Hugh Johnston said PepsiCo would have liked a stronger performance from Quaker and admitted that the firm had not invested enough in the brand.
“We are now moving forward with a plan to refocus, strengthen and extend the advantages of the Quaker portfolio by improving quality, aggressive investment and innovation and delivering greater differentiation in the market place,” Johnston said.
He added that Quaker is an important part of PepsiCo’s nutrition initiative and the firm is now investing to build “layers of advantage” in areas from consumer insight and product innovation to productivity.
“This will take some time,” Johnston said. “In the interim, the US has stepped up innovation and value initiatives, which we believe will drive improved performance through the back half of this year and beyond.”
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By GlobalDataIn the second half of the year, Johnston said PepsiCo will improve the texture of its core instant oatmeal products and also reduce salt and sugar in its Quaker products.
“We are also introducing a multi-grain oatmeal for adults and a fun new product for kids called Kids Creations. So, we have a clear plan for Quaker to drive improvements in the short term and, as importantly, to strengthen our competitive position and expand our portfolio to regain long-term growth,” Johnston said.
For the 12 weeks ended 12 June, net income attributable to PepsiCo amounted to US$1.6bn compared to $1.66bn a year earlier.
However, revenues leapt 40% to reach $14.8bn, while operating profit increased 12% to $2.46bn.
Within the group’s PepsiCo Americas Foods (PAF) division, Frito-Lay North America delivered an 8% increase in revenues to $3.19bn and an 8% lift in operating profit to $845m.
In Europe, revenues increased 47% to reach $2.42bn, while operating profit rose 3% to $266m.
In Asia, Middle East and Africa revenues reached $1.72bn, a 22% increase on the prior year. Operating profit increased 17% to $277m.
PepsiCo shares rose $1.32 or 2.13% to reach $63.37 at 10.10am ET.
