UK: Juice costs hurt Tropicana - PepsiCo

PepsiCo juice brand Tropicana faces tougher competition in Western Europe and must work hard to offset rising supply chain costs, the head of PepsiCo International has said.

One-off charges and a "significant increase" in juice costs in the fourth quarter damaged profit for the Tropicana brand in 2008, according to Michael White, CEO of PepsiCo International.

White made his comments during PepsiCo's full-year results conference late last week.

A PepsiCo spokesperson declined to give specific figures for Tropicana when contacted by just-drinks, but White indicated that the brand faces a tough 2009 in established European markets.

He said: "The UK and France are working hard to improve net revenue management, as well as drive significantly lower costs across the juice supply chain."

White said that, while conditions remain challenging in the near-term, the brand should deliver operating profit growth for the full-year.

Tropicana is the 11th largest grocery brand in the UK, according to Nielsen's Top 100 Brands 2008 report. Year-on-year sales rose by 10% to GBP245.9m (US$350m) in 2007, said Nielsen late last year.

This growth rate, however, was slower than an increase of more than 20% in 2006, suggesting private label products and other branded competitors have begun to peg Tropicana back in the UK.

PepsiCo said last week that reported net profit for the 12 months to 27 December fell by 9% to US$5.1bn. Profit in the fourth quarter tumbled 43% to $1.2bn.