Quaker sales struggle

Quaker sales struggle

Analysts have suggested that the future of PepsiCo's Quaker breakfast cereals business could be in jeopardy after the unit reported declining first-quarter sales.

PepsiCo today (28 April) booked strong sales gains in the first three months of the year, up 27% to US$11.94bn thanks to solid organic volume growth and the acquisition of Russian dairy group Wimm-Bill-Dann.

However, the group revealed that its Quaker business had struggled with sales down 7% in the quarter on an 8% fall in volumes.

PepsiCo said that Quaker had fallen victim to a decline in its core categories. However, Morningstar analyst Philip Gorham suggested that the brand had underperformed its rivals in the cereal aisle.

"Pepsi is investing in rebranding efforts (the rebranding of Gatorade is essentially complete, and major changes to Tropicana are likely later this year) and we suspect that Quaker could soon follow," he wrote in a note to investors.

"If efforts to refocus Quaker in health and wellness categories fail, we expect the brand to be divested over the next few years," Gorham added.

Nevertheless, PepsiCo remained upbeat on its ability to turn the business around.

Speaking during a conference call with analysts, PepsiCo finance chief Hugh Johnston said that the group was "very optimistic" on Quaker's outlook.

"Quaker is a great brand it has a terrific set of products beneath it. We absolutely believe that that business it will be back to growth. What we really do think will be the biggest benefit coming from Quaker in the future is an accelerated pace of innovation, but innovation that is very specific with what the Quaker consumer wants and consistent with the brand essence of Quaker," he said.

However, Johnson stopped short of providing guidance on when the company expects Quaker to regain sales momentum.