Segment performance

PepsiCo’s (PEP) North American segments continued to outperform its international segments in terms of revenue growth. PepsiCo’s operations are organized into six segments—Frito-Lay North America, Quaker Foods North America, North America Beverages, Latin America, Europe Sub-Saharan Africa, and Asia, Middle East & North Africa. In 4Q16, with the exception of the Latin America and the Asia, Middle East & North Africa segments, all of PepsiCo’s segments posted revenue growth.

PepsiCo’s North American Segments Impress in 4Q16

North American segments

In 4Q16, the Frito-Lay North America, Quaker Foods North America, and North America Beverages segments delivered revenue growth of 9.8%, 5.2%, and 7.5%, respectively. Both Frito-Lay North America and North America Beverages experienced higher volumes and pricing in 4Q16. For the Quaker Foods North America segment, 4Q16 revenue growth was driven by higher volumes and the positive impact of a 53rd week. The growth was partially offset by unfavorable net pricing.

PepsiCo’s North America Beverages segment is the largest segment based on overall revenue, followed by Frito-Lay North America. Overall, North America Beverages’ volumes rose 2.0% in fiscal 2016. This growth was driven by a 7.0% rise in non-carbonated beverage volumes. Soda volumes fell 1.0%.

Other non-alcoholic beverage peers also experienced weakness in soda volumes in 2016. Coca-Cola (KO) experienced flat volumes in the sparkling beverage category, while its still beverage volumes rose 3.0%. Dr Pepper Snapple Group (DPS) reported a 1.0% rise in both its carbonated soft drink and non-carbonated beverage volumes in 2016.

International segments

The Latin America segment’s revenue fell 0.4% in 4Q16. The favorable impact of higher volumes and increased pricing was offset by significant currency headwinds. PepsiCo’s Europe Sub-Saharan Africa segment posted revenue growth of 1.5% in 4Q16, driven by higher volumes and favorable net pricing. The Asia, Middle East & North Africa segment reported a 1.5% decline in its 4Q16 revenue. This fall was caused by adverse currency fluctuations, which were offset by higher volumes. We’ll discuss PepsiCo’s growth initiatives in the next part of this series.

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