Growing food business and filling up the decline in beverage sales in multiple regions. Pepsi has beaten Coca-Cola in this round?

Recently, PepsiCo released its 2020 performance.

In 2020 (actual time is from December 29, 2019 to December 26, 2020, the same below), the company's annual revenue is 70.
372 billion U.

Among them, Pepsi's performance growth mainly comes from the food business.

In 2020, Frito-Lay's North American business increased by 6.
5%, and Quaker North American business revenue increased by 10.

It is worth noting that PepsiCo's operating profit in the Asia-Pacific region, Australia, New Zealand and China increased by 24%, and some of its net profit increased by 18%.

Regarding changes in performance, PepsiCo said that for multinational companies, performance is affected by many factors, including the global new crown epidemic and changes in global exchange rates.

Compared with Coca-Cola, which released earnings reports in the same period, Pepsi's performance is obviously better.

Coca-Cola's revenue fell 11% year-on-year last year, and many sub-business segments experienced revenue declines.
From the perspective of industry insiders, during the 2020 epidemic, the increase in home consumption by consumers has driven food consumption.
Compared with Coca-Cola’s single beverage company, PepsiCo’s food business has made up for the decline in beverage consumption and achieved sustained growth in revenue.
Its performance is better than Coca-Cola.

Eye-catching food performance

Eye-catching food performance

The financial report shows that in 2020, Pepsi's revenue is 70.

372 billion U.
S.
dollars, an increase of 4.
8%.

China's food industry analyst Zhu Danpeng believes that in 2020, affected by the new crown pneumonia epidemic, Pepsi can achieve revenue growth mainly due to the growth of its food sector performance.

The financial report shows that although the organic income of PepsiCo's various business segments has achieved growth, food sales have also achieved positive growth.

However, the beverage segment has experienced a decline in sales in North America, Latin America, Africa, the Middle East, and South Asia.

In 2020, Pepsi's Frito-Lay North American business revenue reached 18.

189 billion U.
S.
dollars, an increase of 6.

Quaker Foods North America revenue reached US$2.

742 billion, an increase of 10.
5% year-on-year, and operating profit increased by 23% year-on-year.

In other regions, the sales of Pepsi Foods also achieved positive growth in 2020.

Sales in Europe increased by 4%, and Africa, the Middle East and South Asia increased by 4%.
The Asia-Pacific region grew by 7%.

Pepsi said that as of the end of last year, Pepsi has gained more market share in many major snack markets including Mexico, Brazil, China and Russia.

Operating profit decline in some areas

Operating profit decline in some areas

Although PepsiCo's organic revenue has grown in all regions, operating profits have declined in many regions.

Specifically, the operating profit of Pepsi Beverages in North America fell by 11%.
Pepsi said in the announcement that in 2020, due to the increase in the cost of information technology and the new crown pneumonia epidemic, expenses will increase by 14%, resulting in an increase in operating costs.
These effects offset productivity savings, lower advertising and marketing expenses, and higher costs.
Low cost of goods.
In addition, the impairment charges related to the coconut water brand had a negative impact of 2%.

In addition, operating profit in Latin America fell by 10%, in which exchange rate factors and expenses incurred by the new crown pneumonia epidemic had a negative impact on operating profit performance by 11 percentage points and 8 percentage points, respectively.
Operating profits in Africa, the Middle East and South Asia fell by 11%.
Among them, Pepsi's acquisition of Pioneer Foods-related fair value adjustments and integration expenses had a negative impact on operating profit performance of 24%, and Pioneer Foods' profits offset 9%.
The expenses incurred by the new crown pneumonia pandemic have a negative impact on operating profit performance by 5 percentage points.

In the above-mentioned regions, Pepsi's beverage business sales have all experienced a decline.
Among them, Pepsi's North American beverage sales fell by 1.
5%.
Latin America’s beverage sales fell by 1%, and the Africa, Middle East and South Asia regions fell by 7%.

Among other regions, operating profit in Europe increased by 2%, and operating profit in Asia Pacific, Australia, New Zealand and China increased by 24%.
And in some specific areas, Pepsi's beverage market share has achieved certain growth.
Pepsi said that in terms of beverages, as of the end of 2020, its market share in China, India, the United Kingdom, Germany, Egypt and Thailand also increased last year.

It is worth noting that while the sales of Pepsi's beverages in some regions are declining, the organic revenue growth of its main competitor Coca-Cola in all regions of the world in 2020 will also be negative.
It can be seen that the beverage sector has been severely affected by the epidemic.

Coca-Cola's 2020 revenue and net profit both drop by more than 10%

Coca-Cola's 2020 revenue and net profit both drop by more than 10%

The performance report shows that Coca-Cola’s fourth-quarter revenue was US$8.
611 billion, a year-on-year decrease of 5%; net profit was US$1.
474 billion, a year-on-year decrease of 29%.
Earnings per share were 47 cents, and the market forecast was 42 cents.
Gross profit in the fourth quarter was US$5.
033 billion, a year-on-year decrease of 9%.

For the full year of 2020, Coca-Cola’s revenue was US$33.
014 billion, a year-on-year decrease of 11%; net profit was US$7.
768 billion, a year-on-year decrease of 14%; diluted earnings per share were US$1.
79, compared to US$2.
07 in the same period last year.

In terms of categories, Coca-Cola's sparkling soft drink revenue fell 1% in the fourth quarter, and its full-year revenue fell 4%.
The main reason for the decline was that the coronavirus pandemic has caused pressure on the North American beverage business and non-family consumption channels in Western Europe.

Coca-Cola juice, dairy products and plant-based beverages fell 2% and 9% in the fourth quarter and full year, respectively, as the strong performance of Simply and fairlife brands in North America was offset by the decline in MinuteMaid, and transaction volume was further affected by Asia Pacific And the impact of operating pressures in Europe, the Middle East, and Africa.

In order to ensure profitability, in 2020, Coca-Cola will cut 2,200 jobs worldwide.
Among them, the United States will cut 1,200 jobs through layoffs and buyouts, accounting for about 12% of the labor force in its home market.

It is reported that the layoffs include voluntary and involuntary resignations.
Coca-Cola is expected to pay between US$350 million and US$550 million in employee severance.
In addition to job cuts, Coca-Cola has reduced the number of operating departments from 17 to 9.

"Optimizing employees and adjusting the organizational structure is the performance of the company to reduce expenditure, and it can have a positive effect in the short term.
" Xu Xiongjun, founder of Jiude Positioning Consulting, told a reporter from the Securities Daily.

It is reported that in 2020, due to the pressure on the business caused by the coronavirus pandemic and currency headwinds, Coca-Cola’s operating cash was 9.
8 billion U.
S.
dollars, a year-on-year decrease of 6%.
However, due to the decrease in capital expenditures from the previous year, Coca-Cola’s annual free cash flow was 8.
7 billion.
US dollars, an increase of 3%.

Looking forward to the full year of 2021, Coca-Cola predicts that under non-GAAP organic revenue growth rate will reach nearly 10%; free cash flow will be at least US$8.
5 billion.
Among them, operating cash flow will be at least 10 billion U.
S.
dollars, and capital expenditures will be approximately 1.
5 billion U.
S.
dollars.

Betting on the Chinese market

Betting on the Chinese market

The relevant person in charge of Pepsi said in an interview with the Blue Whale reporter that China is one of Pepsi's important markets and one of the engines driving business growth.
In the fourth quarter of 2020, PepsiCo performed well globally, achieving high single-digit growth in China, India, Australia and Germany.
In the Chinese market, PepsiCo has expanded its market share in the snack market and beverage market.

Pepsi's investment in China is also very large.
Zhu Danpeng believes that Pepsi has invested heavily in the Chinese food market, and its food business has a relatively large proportion.
Pepsi also expects to gain more.

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