Calling PepsiCo’s lack of bottling flexibility “hard to believe,” PepsiCo Americas Beverages CEO Al Carey said that the company has begun working with some of its more creative bottlers to create new package sizes for its beverage business, according to a recent article on BeverageDaily.com.
Speaking at Deutsche Bank’s Global Consumer Conference in Paris yesterday, Carey said that it PepsiCo was focused on “holding or improving value share” by the end of 2012, but that it was unsustainable to continue lowering prices as a way to improve its position. Instead, the company will look to improve profit margins via smaller package sizes.
Carey said that PepsiCo has three new package sizes that it will release later this summer. The company will begin to roll out 7.5 oz cans, 1.5 L bottles and 20-unit packs this quarter with a bigger push for the new sizes in 2013.
“This gives [us] an opportunity to play the margin mix game, and the retailer and us to make more money out of these packages,” Carey said. “I would say that our competitor [the Coca-Cola Company] did a better job on this – but we can do way better.”
Carey also addressed other issues affecting PepsiCo’s beverage business including its seasonal and holiday distribution, which makes up half of the company’s annual volume, but at lower prices than the rest of the year. Non-seasonal and holiday prices are as much 60 percent higher and Carey said although the issue was an industry-wide problem, PepsiCo would attempt to incrementally narrow the gap between its seasonal and non-seasonal pricing to avoid periodic sales slumps.
Carey stated that, as of June 3, PepsiCo’s single serve business was up 4 percent, and though its larger format business remains stagnant, Carey noted that he was “very excited to see Pepsi growing for the first time in a very long time.” Carey also said that Pepsi Next, the company’s recently launched mid-calorie cola, was pacing ahead of its 25 million cases in projected sales for the year.
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