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April 29, 2020

PepsiCo to invest in brands boosted by stay-at-home policy

US food and beverages giant PepsiCo is to invest in products which have benefited from people eating at home during the Covid-19 lockdown.

By Leonie Barrie

US food and beverages giant PepsiCo is to invest in products such as cereal brand Quaker that have benefited from people eating at home during the Covid-19 lockdown.

The Frito-Lay crisps owner said it will also spend more on e-commerce, where sales across the industry have generally increased in recent months as consumers avoid going to the supermarket.

Speaking to analysts after issuing first-quarter results yesterday (28 April), PepsiCo CEO Ramon Laguarta said: “We’re reallocating resources from other parts of the P&L into e-commerce and capturing consumers in that particular channel, and then, obviously, we’ll keep investing to retain those consumers as they [will] probably stay in e-commerce. There are some brands that are benefiting from this consumption at home, like Quaker.

“I think we want to invest in some of those brands that are getting consumer tailwinds now because we want to retain those consumers with the brands as we exit the crisis situation.”

Laguarta said the Quaker range, based around porridge and other oat-based products, had increased penetration “massively” during the crisis.

“The number of families that have bought Quaker in the last six weeks has gone up a lot,” he said. “Obviously, there’s one clear reason. People are cooking at home and therefore they’re using the product more.”

He added: “And we’re emphasising in our marketing not only the breakfast opportunity, but also the cooking and the recipes where our oats can be part of that cooking opportunity. And this is here in the US but it’s also in Latin America.”

Laguarta suggested that, given the changes PepsiCo has made to Quaker products – including reducing sugar and artificial ingredients – this is an “opportunity for consumers to reassess the brand and to give it a structural boost”.

He told analysts that sales of the company’s snack products – especially multi-packs, have also increased during the lockdown.

PepsiCo’s first-quarter group revenues rose 7.7% to US$13.9bn, with snacks arm Frito-Lay North America up 7% at $4.07bn. Revenues for the Quaker Foods segment climbed 6.7% to $634m.

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