just On Call - China still powering PepsiCo despite slowdown - CEO
PepsiCo released its Q3 results today
China's cooling economy retains enough heat to power beverage sales in the country, PepsiCo's CEO has said.
China's economy grew 7.6% in the second quarter, the slowest pace in three years. However, in a conference call with investors today (17 October) following her company's third-quarter results, PepsiCo CEO Indra Nooyi said optimism in China remains high at street level.
“I've been there three times this year and will go back next week,” Nooyi said. “If you are on the ground in China you don't sense the slowdown. If you are trying to address unemployment it matters a lot, but from a consumer product perspective, especially small, basic food and beverages you don't really see the impact.”
PepsiCo did not release a regional breakdown for China, but Asia, Middle East & Africa posted 13% volumes increase in Q3 over a year prior and 11% operating profits growth.
“Both our snacks and beverage business are growing very nicely (in China),” Nooyi said. “Beverage for a quarter or two went though transition pain, but we are through with that and the business is back to growth.”
PepsiCo's recent tie-up with Chinese noodle and soft drinks maker Tingyi will further boost sales as the partnership starts to show up in results from next year, Nooyi said.
“Being part of Tingyi has really strengthened our franchise massively and given instant access to the whole country,” she said. “Once we put the right manufacturing lines in Tingyi's plants, it is going to give us a real boost in our coverage of China.”
PepsiCo CFO Hugh Johnston said carbonated soft drinks volumes in September had jumped 15%, possibly due to Tingyi's distribution footprint.
Just over six months ago, PepsiCo garnered quite a few headlines when it launched Pepsi Next in Australia. What caught the industry's eye was that this marked the first time that the company had used ...
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