PepsiCo admits it needs to improve digital capabilities as online sales soar

PepsiCo saw a slight uptick in beverage sales after a 7% decline last quarter, with snack sales spurred on by working from home.

PepsiCo is increasing its focus on ecommerce as Covid-19 accelerates the growth of the number of people shopping online.

The company says it is looking to invest in the “booming market” as the channel’s growth over the past few months means it is well ahead of PepsiCo’s predictions for the next few years. That makes building a profitable online business more important than ever.

Speaking on an investor call after its results, PepsiCo CEO Ramon Laguarta, said: “The penetration of ecommerce or e-grocery just accelerated by three years. It’s happening now.

“That is a big focus of the organisation, how do we accelerate the pivot into the omni-channel much faster, which means that, we’re going to have to [improve] some of the capabilities that we have.”

The company has already looked to boost its online business with the launch of its first direct-to-consumer sites. It launched both and earlier this year to meet the shift in demand online.

The focus comes as PepsiCo’s quarterly sales grew by more than 5%, with its snacking division boosting its results.

For the third quarter ending 5 September, sales of snacks in its North America unit rose 7%, while higher demand for breakfast foods led to a 6% rise at its Quaker Foods business.

As people work and study from home, snacks consumption has risen, fuelling demand for products such as Tostitos tortilla chips, Walkers crisps and Quaker porridge. However, its beverages have been hit as people drink and eat out less, with organic sales at the company’s beverages division in North America up just 3%, although this is an improvement on the 7% decline in the previous quarter.

PepsiCo also provided an outlook for its earnings and revenue for the first time since pulling its forecast in April, when coronavirus lockdowns hit sales. It now expects full-year organic revenue growth to be approximately 4%.

Laguarta adds: “Despite the ongoing volatility and complexity in our operating environment, I believe our third quarter performances reinforces the diversification of our portfolio, the resilience and agility of our teams across every continent and demonstrates our ability to support our customers and communities during their time of need while also delivering good results for our shareholders.”