Round-Up with Russell - The Week in Soft Drinks
A round-up of the week's soft drinks news
The company reaffirmed its full-year guidance on Wednesday (12 October), on the back of a rise in Q3 profits, citing emerging markets and top-line gains in its snacks and drinks divisions as the main drivers.
However, the results did little to dampen talk of a much-speculated split of the company. Following Kraft's split back in August, rumors swirled that PepsiCo might follow suit. However, a spokesperson for the firm told just-drinks at the time that the company had no plans to do so. This may well have been the end of it but, for PepsiCo, the speculation has refused to go away. The company's CFO, Hugh Johnston, had the job of fielding journalists' questions on the subject on the company's earnings call this week.
Much has been made by analysts of the potential benefit to shareholders a split might garner, but Johnston was insistent this week that there would be no value in making such a move. While this may serve to silence industry speculation for now, PepsiCo's struggles in its home market, on both the beverages and snacks (Quaker) front, may give rise to further split-talk come the firm's full-year results in February.
Coca-Cola FEMSA, meanwhile, completed its merger with the bottling division of privately-held Mexican conglomerate Grupo Tampico. The deal was first announced in June and is the second sizeable deal for the Mexican company in the last six months. In September, Coca-Cola FEMSA acquired its fellow Coca-Cola bottler Grupo CIMSA. The firm is clearly intent on maintaining its position as Mexico's largest Coke bottler and, with the recently-formed Arca Continental now snapping at its heels, the industry awaits its next move.
In innovation, male consumers across the US will now be able to sup on a beverage women are being encouraged to step away from - Dr Pepper Ten. Targeted at the male market, Dr Pepper Snapple Group's (DPSG) Dr Pepper Ten enjoyed a successful test period and has now been rolled out across all US states, complete with a macho marketing campaign. Click here to view a Ramboesque male attempting to pour a glass of the said drink, whilst fighting off snakes and gunfire.
Elsewhere, the can size war continues, as Jones Soda this week launched a 16oz can, for consumers who might prefer more than its original 12oz. The news is anything but surprising, given the number of new bottle and can sizes that have hit the shelves in recent months. Earlier this year, PepsiCo caused a stir with the roll-out of its 'skinny' Diet Pepsi cans in the US, and Coca-Cola launched a 'mini' 12.5oz bottle last month. DPSG next maybe?
Looking ahead, next week sees the release of Coca-Cola's third-quarter results. Forbes analysts are predicting EPS of US$1.02 - a $0.92 rise from a year ago. Given the company's three straight quarters of profit increases, the omens look well-placed for Forbes' fortune tellers.
Click play, below, to view the thoughts of PepsiCo's CEO, Indra Nooyi, on the company's structural changes announced earlier today (12 March)....
A change in legislation in California this month has put The Coca-Cola Co and PepsiCo in a soft drink pickle. Ray Rowlands, for one, fears a case of history repeating itself....
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