just On Call - PepsiCo shrugs off US corn crop fears
PepsiCo thinks Pepsi Next can become a legacy product
Record corn crop failures in the US won't affect PepsiCo's full-year results, the soft drinks company has said.
In a conference call with journalists today (July 25), PepsiCo CFO Hugh Johnston said his company's forward-buying programme means corn prices are “not an issue in 2012”. He also said corn was less than a tenth of overall commodities spending.
“We buy a very, very wide batch of foods and commodities,” Johnston said. “Corn or anything else contributes not even 10% for the overall total of the commodities we buy. Any individual one is often offset by the others.”
Earlier this month, the US government lowered its forecast for domestic corn production, confirming fears the country's worst drought in almost 25 years has hit yields.
Johnston, speaking following the release of H1 results earlier today, said PepsiCo was not planning any major mergers or acquisitions. In the growing energy drinks market, PepsiCo, whose partnership with Rockstar gives it a far smaller market share than Coca-Cola Co's tie-up with Monster Beverage, said it planned to grow presence organically rather than through M&A.
Johnston pointed to moves with Mountain Dew and PepsiCo's partnership with Starbucks and the coffee-infused Refreshers range, released in April.
“We think doing it organically thorough the platforms that we have is a much more successful way for us to go at it than pouring a lot of capital into the energy drinks base,” he said.
Turning to one of PepsiCo's newest products, Pepsi Next, Johnston said: “We don't think it will be just a big hit one year, but rather a continual build where we expect each quarter to get bigger and bigger,” he said.
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