Pepsi 3Q16 Earnings Call Notes

PepsiCo’s CEO (PEP) Indra Nooyi on Q3 2016 Results

3% volume growth in snacks

“we had more than 3% organic volume growth in global snacks and more than 2% organic volume growth in global beverages. While foreign-exchange translation continued to pressure our reported revenue results, we delivered more than 4% organic revenue growth, which represents an acceleration from the first half.”

Generated 37% of all food and beverage sales growth in the US

“For example, the third quarter in the US, which is our largest market, we were once again the largest contributor to retail food and beverage sales growth. We generated approximately 37% of all food and beverage retail sales growth, significantly higher than our food and beverage dollar share position of less than 10%. And we generated more retail sales growth than all other $5 billion class food and beverage manufacturers combined.”

SG&A leverage all starts with topline growth

” On the SG&A leverage, it all starts first with topline growth. The minute you get good top line growth, you get leverage on all of the other SG&A costs that we have in the P&L. And so, this quarter was a very, very good top line growth at 4.2%. That’s pretty significant.”

Hugh Johnston

Deflationary environment in commodities, but do have a negative water mix

“We are continuing to get good pricing in carbonated soft drinks. The couple of factors I would remind you of is we do have deflationary commodities right now. So you’re seeing a little bit less of that pricing flow through into retailers as we have deflationary commodities. The other is, we do have a negative water mix going on. So on the one hand, non-carbs were quite positive. But a portion of that was water which is, obviously, from a price mix perspective, negative”