PepsiCo Wants to Sell Healthy Food, Consumers Want Chips

Profit Machine: Pepsico Frito-Lay North America snack division delivers fat operating profits, fueled by traditional chip brands like Lay`s, Doritos, Cheetos, Ruffles and Tostitos (Courtesy: Wall Street Journal / FactSet / Pepsico 10-K reports)

December 12, 2016

Source

Wall Street Journal

Pepsico is a company pulled in two different directions. Chief executive Indra Nooyi has vowed to turn the maker of Fritos, Cheetos, Lay’s and Pepsi into a health juggernaut. But while consumers say they want to eat healthy, often what they really want is chips.

Despite an expanding stable of “good for you’’ brands like Quaker oatmeal, Naked juice and Sabra hummus, PepsiCo Inc. fell behind the goal it made in 2010 to triple revenue from nutritious products to $30 billion this decade.

Its new 2025 goal, announced in October, is that sales growth of its nutritious products “will outpace’’ the rest of its portfolio.

But buoyed by less-healthy snack brands such as Doritos chips and Cheetos puffs, PepsiCo’s sales and volumes are on the rise and its profit margins have expanded in 15 quarters straight. Its stock price set a record high in July.