PepsiCo drops a strategic hint: fewer calories, energy drinks, recurring revenue

PepsiCo selling a controlling stake in Tropicana and Naked Juice brands isn’t in itself a big deal for marketers – but what the FMCG giant is choosing to focus on instead says a lot about its view of the future of beverages and consumer preference.

Why it matters

A health focus and a need to find products that can bring customers into a closed ecosystem are now a major consideration in FMCG.

What’s happening

• The FT reported earlier this week that the company was selling control of two major juice brands in order to “steer our portfolio towards higher-growth” areas, in the words of PepsiCo’s vice-chair and CFO.
• The motivations are partly around profit, with juice less profitable than the average product in its portfolio.
• Healthy products are now the bigger focus for the company – juice faces growth constraints because of high sugar content – in zero-calorie drinks, energy, and light snacks.
• Another area of focus is the SodaStream – a countertop device to carbonate liquids – which the company bought in 2018, and that offers a higher-value product, that also establishes a recurring relationship with customers.

Sourced from the Financial Times