In an interview to CNBC,
) chief executive officer (CEO), Indra Nooyi, said there is no
need to split the company's beverage and snacks businesses. Nooyi
insisted that the businesses are complementary and "better
together", not just in United States but worldwide.
Pepsi has been under pressure from activist investor, Nelson
Peltz to acquire food giant
Mondelez International, Inc.
) and then spin-off its underperforming beverage business.
Peltz's investment company, Trian Fund Management, holds major
stakes in both the food companies.
Pepsi earns approximately equal revenues from snacks and
beverages. Pepsi's snack business is growing fast on the back of
successful innovations and increased brand-building investments.
However, the beverage business is lagging.
Peltz believes that shifting consumer preferences toward
health and wellness and "good-for-you" products is lowering the
demand for high-calorie soft drinks. Thus, beverage giants like
The Coca-Cola Company
) are witnessing declining sales of carbonated beverages,
especially the colas. Peltz feels Pepsi's underperforming
beverage business is overshadowing its snack unit.
PepsiCo has increased marketing investments and is driving
package and product innovation to boost its American beverage
business. Moreover, the company is looking for structural
alternatives to turn around this business.
Mondelez International focuses on the global food and snacks
business of the erstwhile Kraft Foods which includes several
popular brands like Tang, Oreo and Cadbury. In Oct 2012, the
former Kraft Foods spun off its North American grocery business
into a separate independent company,
Kraft Foods Group, Inc.
COCA COLA CO (KO): Free Stock Analysis Report
KRAFT FOODS GRP (KRFT): Free Stock Analysis
MONDELEZ INTL (MDLZ): Free Stock Analysis
PEPSICO INC (PEP): Free Stock Analysis Report
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