Pepsi Q4 2016 earnings beat driven by Foods with Integrity investment theme
PepsiCo Inc reported a better-than-expected quarterly profit, as the company benefited from its cost-cutting programs and higher demand for its healthier beverages and snacks in North America.The company’s shares were up marginally at $107.15 in premarket trading on Wednesday.PepsiCo and other processed-food companies are investing heavily to develop products to meet the changing tastes of consumers, who are increasingly seeking healthier options.The company has said it now gets about 45 percent of its net revenue from “guilt-free” products – beverages that have fewer than 70 calories per 12 ounces and snacks that have lower amounts of salt and saturated fat.
Source: Pepsi Q4 2016 earnings – Business Insider
Our Food with Integrity theme at Tematica Research focuses in on consumer demand for healthy foods and their willingness to pay more for products that claim to boost health and weight loss or are all natural. It’s a theme that has played-out well for our Tematica Investing subscribers through a couple of positions. PepsiCo (PEP) and Coca-Cola (KO) haven’t made their way into that theme, for while larger and larger portions of their operating profits are coming from “guilt-free” products as this article describes — 45 percent to be exact — that means the other 55 percent comes from food and beverages that are anything but healthy. Additionally, we would point PepsiCo’s definition of “guilt-free” includes beverages under 70 calories, which by definition would include diet sodas and those are anything but food with integrity.
Nevertheless, an interesting data point to reflect the consumer trend towards more healthier food options that we will use to invest our hard-earned capital. Of course, we do have another investment theme called Fattening of the Population, which both PEP and KO fit nicely into, thank you.
