Health Snacks And NCDs Could Drive PepsiCo’s Revenues Close To $69 Billion By 2020

by Trefis Team
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PepsiCo (NASDAQ: PEP) has seen its total revenue increase from $62.8 billion in 2016 to $64.7 billion in 2018, marking an addition of $1.9 billion to its revenue base in two years. However, with consumers moving away from carbonated drinks, PepsiCo’s strong portfolio of non-carbonated drinks (NCDs) and healthy snacks is expected to help the company emerge stronger amidst changing consumer preferences and stiff competition from rivals. PEP is expected to add $4 billion to its existing revenue base over the next two years, i.e. by the end of 2020.

You can view the Trefis interactive dashboard – PepsiCo Revenues: How Does PepsiCo Make Money? – to better understand the company’s business model and performance across business segments. In addition, here is more Consumer Staples data.

PepsiCo’s Business Model

What Does It Offer?

PepsiCo, along with being one of the world’s largest carbonated soft drink manufacturers, is also a large packaged foods product manufacturer. Additionally, it owns a number of other businesses – ranging from fruit juices and other non-carbonated drinks, to bottled water, and breakfast cereal.

Who Pays?

Customers include wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, mass merchandisers, membership stores, e-commerce retailers, and authorized independent bottlers, among others. PEP normally grants independent bottlers exclusive contracts to sell and manufacture certain beverage products bearing its trademarks. This provides PEP the right to charge independent bottlers for concentrate, finished goods, and Aquafina royalties, and specify the manufacturing process required for product quality.


PepsiCo faces intense competition, both in the drinks and snacks categories, from top players such as: Coca-Cola, Procter & Gamble, Kraft Foods, Nestle S.A, Kellogg’s Company, General Mills, etc.

Performance Across Business Segments

Frito-Lay North America (FLNA)

  • Frito-Lay has seen healthy growth over the years which is expected to continue, driven by volume growth and effective net pricing.
  • Volume growth could be driven by growth in trademark Cheetos, Doritos, and variety packs, partially offset by volume pressure in Sabra joint venture products.
  • Segment revenue is expected to increase further from $16.3 billion in 2018 to $17.6 billion by 2020.

Quaker Foods North America (QFNA)

  • After years of decline, revenue saw a turnaround in the beginning of 2019.
  • Revenue could marginally go up from $2.5 billion in 2018 to $2.6 billion over the next two years.
  • Future revenue growth is expected to be driven by higher sales of trademark Gamesa and Aunt Jemima syrup, along with ready-to-eat cereals, partially offset by a decline in oatmeal volume.

North America Beverages (NAB)

  • Though revenue has been under pressure due to consumers shifting away from carbonated drinks, the segment is expected to add about $0.6 billion to its revenues base due to effective pricing and Starbucks’ coffee drinks and water business.

Latin America

  • Revenue has steadily increased by $0.6 billion, from $6.8 billion in 2016 to $7.4 billion in 2018.
  • Trefis expects the division to add another $0.6 billion, with revenues expected to rise to $8 billion by 2020.
  • Future revenue growth is expected to be driven by strong snacks and beverage sales in Brazil, Mexico, and Guatemala, partially offset by lower demand in Argentina and Honduras.
  • Unfavorable foreign exchange movements could hamper growth to a certain extent in the near term.

Europe, Sub-Saharan Africa (ESSA)

  • The segment is expected to post healthy revenue growth over the next two years, with a projected revenue addition of $1.6 billion by 2020, primarily reflecting the impact of the SodaStream acquisition and strong growth in Nigeria and Poland.
  • However, currency movements could affect revenue growth to a certain extent.

Asia, Middle East and North Africa (AMENA)

  • Revenue is expected to remain under pressure, reflecting the impact of unfavorable foreign exchange and refranchising a portion of its beverage business in India in 2019, partially offset by higher consumption demand from emerging markets.
  • It is the only operating segment which could see a decrease in revenue base in the near term.

Total Revenue

For the full year, we expect the company’s total revenues to grow by 3.0% to reach $66.6 billion in 2019, and further by 3.2% to $68.7 billion in 2020, driven by growth in the company’s healthy snacks, sports drinks, and non-carbonated beverage portfolio.


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