Lockdown living helps PepsiCo through pandemic, vaccine paves path to growth

PepsiCo Inc joined rival Coca-Cola in predicting revenue growth in 2021, saying on Thursday it expects pre-pandemic lifestyles to resume as economies reopen and COVID-19 vaccines are rolled out.

The company has navigated the health crisis better than Coca-Cola as it relies more on grocery and retail channels from where consumers stockpiled snacks and beverages.

Pepsi said its fourth-quarter revenue rose 8.8% to $22.46 billion, topping Wall Street estimates, as people munched Tostitos and Cheetos and gulped down Gatorade while stuck at home during a second wave of coronavirus lockdowns.

The increase in demand had last year led the company to launch a direct-to-consumer website that offered special flavors and specialized bundles of its top selling products.

Still, revenue from the foodservice channel, which includes restaurants, cinemas and vending machines, continued to decline at a double-digit rate, the company said.

"We assume that vaccination efforts will accelerate and that population mobility trends will gradually improve as consumers return to certain prepandemic behaviors by the second half of this year," Chief Executive Ramon Laguarta said.

However, some changes spurred by the pandemic, such as increased online shopping, more remote work arrangements and continued at-home strength, will be sustained, he said.

The company said it expects a mid-single digit rise in annual organic revenue and a high-single digit increase in adjusted earnings.

"PepsiCo's success has largely been driven by its portfolio strategy and focus on at-home consumption, which is helping the company outperform others in the category, especially in beverage," Kristen Groh, a managing partner at Publicis Sapient said.

Organic revenue under the company's snacks unit Frito-Lay North America rose 5%, while those of sodas and other beverage rose 5.5% in North America, its largest market.

Excluding one-time items, it earned $1.47 per share, a cent more than expectations, according to IBES data from Refinitiv. The Purchase, New York-based company also raised its annual dividend by 5%.