Big sales may come from small packages. New mini soft drink cans and macro snacks helped drive growth for PepsiCo, Inc. during the company’s first quarter.
“We continue to execute product and packaging innovation, targeted incremental macro-snack occasions, including the launches of Rold Gold Pretzel Thins, Twistos Snack Bites, Lay’s Air Pops, Lay’s Kettle Cooked Lattice Cut Chips, and our Ready-To-Go market pack that also has a broad assortment of macro snacks,” said Indra Nooyi, chairman and chief executive officer, during an April 17 call with analysts to discuss earnings.
Smaller beverage sizes showed solid growth, with double-digit gains in the 7.5-oz mini cans during the quarter, as well as more-than-doubled sales of 12-oz glass bottles.
“These packages enable us to realize new price tag revenue benefits while providing flexibility to maintain price competitiveness,” Ms. Nooyi said.
Aside from expanded package offerings, the company also added Brisk Half & Half tea, Gatorade Fierce Blue Cherry, and Kickstart Black Cherry and Limeade to its beverage portfolio during the quarter.
PepsiCo, which ramped up its research and development investment by more than 25% since 2011, is reaping the benefits of differentiated innovation. In the quarter, products launched within the past three years contributed 8% of total net revenues. In 2013, 9 of the top 50 new food and beverage introductions across all measured U.S. retail channels were PepsiCo products, Ms. Nooyi said.
For the quarter ended March 22, net income increased 13% to $1,227 million, equal to 79c per share on the common stock, which compared with $1,085 million, or 69c per share, in the prior-year period.
Net revenue remained relatively flat at $12,623 million, compared with $12,581 million in the first quarter of the previous fiscal year.
Strength in Frito-Lay North America sales helped offset continued weakness in beverages, underscored by a 1% volume decline in carbonated soft drinks. Still, performance across all categories fell in line with PepsiCo’s expectations, Ms. Nooyi said.
“Clearly, there are a number of challenges around the globe,” she said. “But the shape and resilience of our portfolio, combined with strong execution and aggressive productivity, will enable us to navigate successfully through the current environment.”
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