14 July 2000

Boosted by such high profile promotions as Pokemon in Latin America and the Pepsi Challenge in the US and Europe, earnings at PepsiCo rose 21% in the second quarter. The period also saw the advertising debut of Aquafina, its bottled water brand.

Despite an increase among US consumers in so-called "cola fatigue", PepsiCo is to extend the Pepsi Challenge program this summer to supermarkets and other heavy-footfall outlets.

Overall, the latest results demonstrate that Pepsi, the world's second-largest cola brand, now relies on non-cola products for much of its growth. Its Frito-Lay salty snacks units, which contribute more than 60% of profits, saw volumes rise 5% in North America and double digit growth in countries such as Mexico and the UK [where it retails under the Walkers brand]. This level of growth contrasts with industry estimates of soft drink volumes, which are expected to rise only 3-4% this year.

PepsiCo group earnings rose to $563m (38 cents per share) compared with $467m (31 cents) for the same period in 1999.

News source: Financial Times