Performance in 2018
PepsiCo’s (PEP) revenues grew 2.6% in the first nine months of 2018 due to higher volumes and increased pricing. PepsiCo and Coca-Cola (KO) have been increasing product prices to combat weak volumes, specifically in the soda category. PepsiCo’s organic revenues, which ignore the impact of currency fluctuations, acquisitions, and other structural changes, grew 3.4% in the first nine months of 2018. PepsiCo’s Frito-Lay business continues to be the company’s key growth driver.
Coca-Cola’s reported revenues declined 11.1% in the first nine months of 2018, which reflected the impact of refranchising the company’s bottling business. On an organic basis, Coca-Cola’s revenues grew 5.0%.
Analyzing the volume growth
Coca-Cola has experienced improved volumes in the sparkling beverage category in recent quarters. In North America, Coca-Cola’s unit case volume increased 1% in the first nine months of fiscal 2018. Sparkling soft drinks volumes rose 1% due to a 1% rise in Coca‑Cola volumes and 3% growth each in Sprite and Fanta volumes. The unit case volume of water, enhanced water, and sports drinks increased 3% due to the demand for packaged water and sports drinks. However, the company’s North America division experienced a 3% fall in the unit case volume of juice, dairy, and plant-based beverages category.
PepsiCo’s North America Beverages division reported a 1% decline in its volumes. A 2% rise in non-carbonated beverage volumes was offset by a 3% fall in soda volumes. The division’s non-carbonated beverage volume growth was boosted by its water portfolio and Gatorade sports drinks.
Coca-Cola and PepsiCo are focused on expanding their non-carbonated beverage offerings to cater to consumers’ demand for healthier beverages instead of sugary soda drinks.
Coca-Cola expects organic revenue growth of at least 4% in 2018. PepsiCo expects organic revenue growth of at least 3%. Currently, analysts expect PepsiCo’s revenues to rise 1.9% to $64.7 billion in 2018 and 2.7% in 2019. Analysts expect Coca-Cola’s revenues to fall 10% to $31.9 billion in 2018 due to the impact of refranchising bottling territories. Analysts expect Coca-Cola’s revenues to rise 3.5% in 2019.