Baking&Snack International - December 2012 - 1

December 2012

Vol. 1, No. 12

In this issue

2 6 12 14 19

Editorial Domino’s Pizza Group Chia Seeds Starch New Products

Snacks division drives growth at PepsiCo P
by Ildikó Szalai epsiCo’s latest financial results further highlight the differing growth capabilities between its snack food and beverages divisions. The Purchase, New York, US-based company’s last three quarters show its snacks business delivering revenue growth and profitability, while within its beverages arm, most growth indicators remain sluggish. During the third quarter of its 2012 financial year, PepsiCo’s reported net revenue and operating profit declined 5% and 4%, respectively. Organic revenue growth, excluding the impacts of acquisitions/divestments and currency exchange translations, was 5%, of which one percentage point was accounted for by volume growth and four percentage points by net price increases. Performance in emerging markets remained positive, where beverages and foods are reported together. Although the Asia, Middle East and Africa (AMEA) division reported a net revenue decline of 21%, reflecting a 27-percentage-point negative impact from the refranchising of bottling operations in China, the division was the most profitable, with a 14% operating profit margin. In North America, results were more mixed, highlighting the relative strengths of its beverages and foods businesses. On the basis of having distinct growth priorities and achieving higher growth through leaner operations, a number of multinational packaged food players such as Kraft Foods, Inc., Northfield, Illinois, US, and Sara Lee Corp., Downers Grove, Illinois, US, have split up businesses. PepsiCo has repeatedly declined to spin off its low-growth beverages division from its better performing snacks business. However, if PepsiCo is committed to running its complementary snacks and beverages operations together, it will have to invest into more holistic and long-term growth driving initiatives.

Brought to you by the following advertisers
American Pan .................... 3
www.americanpan.com

The price of profitability
Those of PepsiCo’s reporting segments which encompass only food divisions — Frito-Lay North America, Quaker Foods North America and Latin America Foods — were the strongest net revenue growth drivers, at 2.5% on reported bases and at 7% organic growth. However, operating profit declined for all these divisions, with the exception of Frito-Lay North America. Revenue for Frito-Lay North America and Quaker Foods North America benefited from the investment the company has made in product innovation and brand building advertising. Although PepsiCo has not quantified how much the stated “substantial increase” in investment actually was, it has said that product developments in North America were driven by hot cereals, for example the Real Medleys oatmeal innovation. Continued on Page 4 www.bsimagazine.com

Hansaloy Corp ................... 5
www.hansaloy.com

International Baking Industry Exposition (IBIE) ............. 16
www.ibie2013.com

K-Tron Process Group. ... 10
www.ktron.com

Kwik Lok Corp. .................. 9
www.kwiklok.com

Reading Bakery............... 20
www.readingbakery.com

ShickUSA Corp................ 18
www.shickusa.com

http://www.americanpan.com http://www.hansaloy.com http://www.ibie2013.com http://www.ktron.com http://www.kwiklok.com http://www.readingbakery.com http://www.shickusa.com http://www.bsimagazine.com

Baking&Snack International - December 2012

Table of Contents for the Digital Edition of Baking&Snack International - December 2012