PepsiCo Posts Strong Results with Impressive Growth in Pakistan

PepsiCo is one of Pakistan’s leading food and beverage companies.

According to industry insiders, Pepsi is continuously growing in Pakistan despite an overall economic slowdown in the country. Pakistan is actually one of the few markets where PepsiCo had double-digit revenue growth during July-September 2019.

Organic revenue from developing and emerging markets increased by 7% year over year, including double-digit growth in Mexico, Saudi Arabia, China, Turkey, and Pakistan.

Revenue growth

PepsiCo’s net sales increased by 4.3% year over year to $17.19 billion. Frito Lay North America, which includes brands like Cheetos and Doritos, saw revenue growth of 5.5%.

Core earnings per share (EPS) on a constant-currency basis were down 1% compared to Q3 2018 and down 0.5% year to date. However, core EPS of $1.56 beat analysts’ estimates by $0.06 per share.

Explaining the backdrop for the strong results, PepsiCo CEO Ramon Laguarta said,

We are making good progress against our strategic priorities and our businesses are performing well as we continue to make the necessary investments in our capabilities, brands, manufacturing and go-to-market capacity to propel our future growth.

Laguarta’s comments during the fiscal third-quarter conference call suggest that Pepsi may still have a few more gears to shift into to accelerate sales growth:

We’re invested to increase the capacity and reach of our go-to-market systems with substantial investments in new routes, merchandising racks and coolers, and we’re investing in additional manufacturing capacity to remove bottlenecks and expand growth capacity for our brands. These include investments in new plants, new lines and added distribution infrastructure.

PepsiCo last year had announced that it intends to invest $1 billion in the Pakistani market over the course of the next five years. It is still the market leader in the country, yet it hasn’t shown any signs of slowing down its rapid growth in the Pakistani market.

It has already opened its new manufacturing facil­ity in Multan. The Greenfield project was a $63 million investment. The plant is currently producing and supplying snacks such as Lays and Kurkure for Pakistan and its export markets.

This state-of-the-art plant is designed to increase efficiency and production capacity for PepsiCo’s growing business by allowing faster, more stream­lined access to agricultural produce and delivery of finished products to consumers. It is investing hefty amounts in the agriculture sector to become autonomous in securing a raw material line to feed its food business.

Cumulatively, the company has invested $800 million in the past five years primarily on expanding its infrastructural base and diversifying products.

  • PepsiCo is the market leader in the salty snacks category, and procures 100% of the potatoes used in its Lay’s products from local farmers. PepsiCo have grown by taking a long-term view, making investments that respond to changing social needs.

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