Sales improved, continuing to invest in digital transformation and automated production | PepsiCo, Inc. (PEP) Q3 2023 Earnings Call Transcript

PepsiCo, Inc. (NASDAQ:PEP) Q3 2023 Earnings Conference Call October 10, 2023 8:15 AM ET

1. The company is seeing sequential volume improvement globally, while optimizing for consumer interaction with brands and overall business margin. PBNA has been more aggressive in volume optimization, making decisions around take-home water promotions. The company expects higher inflation in 2024 and plans to maintain pricing in line with inflation. The LatAm snack business has seen decisions around affordability and reduced portion size to remain affordable to consumers with limited disposable income.

2. The company is confident in meeting or exceeding expectations, given its long history of doing so. The consumer environment remains cautious, but the company's long-term structural tailwinds, innovation plans, and commercial plans drive confidence in its categories and market share.

3. PepsiCo discussed its focus on automation and digitalization for better decision-making and precision across the business. The company also talked about its commercial relationship with Instacart to enhance DSD capabilities. The company expressed optimism for Gatorade's performance in 2022, citing sequential improvement and new infrastructure, despite some impact from emerging competition in the category.

4. PepsiCo discussed its continued focus on portfolio transformation to reduce sodium, fat and sugar content, as well as its strategy to hold share in the North American beverage business by adding third-party brands like CELSIUS to its distribution system.

5. The company also addressed concerns regarding the adoption of GLP-1 drugs and potential impact on its business, stating that so far the impact has been negligible, and it remains optimistic about positive structural trends in categories like beverages and snacks driven by urbanization, middle class development, and changing consumer lifestyles.