PURCHASE, N.Y. — Frito-Lay, a brand owned by PepsiCo, Inc., continues to capitalize on Americans’ desire for salty, savory snacks. Driven by volume growth and net price realization, organic revenue for Frito-Lay North America grew 5% in the third quarter ended Sept. 7.
“Importantly, the business is not only growing, but winning in the marketplace versus competition,” said Ramon L. Laguarta, chief executive officer of PepsiCo, in an Oct. 3 earnings call. “In the quarter and year to date, Frito-Lay is growing value share in salty, savory and macro snack categories. Investments we’ve made in innovation, marketing and consumer insights and manufacturing and go-to-market capacity are providing benefits across the brand portfolio with strong net revenue growth in our large mainstream brands like Doritos, Cheetos, Ruffles and Fritos and double-digit growth in our smaller premium brands, such as Bare and Off the Eaten Path.”
Within Frito-Lay North America, operating profit rose 3.6% to $1,286 million from $1,241 million in the third quarter of the previous fiscal year. Net revenue increased 5% to $4,105 million from $3,891 million.
Prioritizing brands and adding more routes drove the performance, Mr. Laguarta said.
“We’re gaining share, but the category is also very healthy,” he said. “Of course, we’re a big part of the category, so we’re driving the attractiveness of the category as well with our increased advertising, very good innovation across the big brands and the small brands.”
Purchase-based PepsiCo companywide posted net income of $2,100 million, or $1.50 per share on the common stock, in the quarter, which was down 16% from $2,498 million, or $1.77 per share, in the third quarter of the previous year. Third-quarter net revenue rose 4.3% to $17,188 million from $16,485 million. PepsiCo executives expect to meet or exceed the full-year organic revenue growth target of 4%.
PepsiCo’s stock on the Nasdaq traded higher Oct. 3, the day third-quarter results were announced, peaking at $139.75, up 4.3% from $133.94 per share on Oct. 2.
Within Quaker Foods North America, operating profit of $126 million in the third quarter was down 12% from $143 million. Net revenue rose 1.6% to $576 million from $567 million.
“We will continue to invest to make sure that business continues to grow, maybe not at the levels that we have Frito-Lay, but just good levels,” Mr. Laguarta said of Quaker. “We’ve done several things with that business. One is we invested a bit more, both in capex and on cost of goods.”
PepsiCo has improved the formulation of Quaker products, he said.
“So we’ve eliminated all the artificials,” Mr. Laguarta said. “Now it’s only natural, and I think that will do well for the brand going forward.”
Over the first three quarters of the fiscal year, PepsiCo companywide had net income of $5,548 million, or $3.96 per share on the common stock, which was down 2% from $5,661 million, or $3.99 per share, in the same period of the previous year. Net revenue over the first three quarters was $46,521 million, up 3.1% from $45,137 million.