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Pepsi is shifting away from the soda that made it famous.
PepsiCo CEO Indra Nooyi said on Monday that less than 25% of the company’s global sales are from soda,reports The Associated Press. Instead, the company is increasingly focusing on healthy snacks and non-carbonated beverages.
Last October,Nooyitold investorsthat focusing solely on carbonated soft drinks was “a thing of the past.” Instead, non-carbonated beverages are “driving all the growth in the whole industry.”
Naturally nutritious options like bottled water and unsweetened drinks now account for 25% of sales at PepsiCo, the company announced on Monday. Nooyi calls the emphasis on products aimed at nutritionally-savvy customers “future-proofing” Pepsi’s portfolio, “reshaping it to capitalize on consumers’ increasing interest in health and wellness.”
- Hollis Johnson
PepsiCo has also found success with its snack business, with the Frito-Lay divisionserving as a bright spot in the company’s most recent quarter. Frito-Lay sales rose 3%, thanks to average price increases in the division that makes Doritos, Cheetos, and Lay’s chips.
Pepsi’s move toward snacks and non-soda beverages comes at a time when soda consumption is dropping across the US.
The total volume of soda consumed in the US decreased 1.2% in 2015,according to Beverage Digest’s annual report. Pepsi Cola consumption in the US dropped 3.2%, compared to Coca-Cola’s decrease of 1% by volume.
With soda consumption declining, soda giants have been forced to either diversify or win back customers.
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Pepsi has made some changes to boost soda sales. Smaller bottles and cans have helped the soda industry more broadly boost sales while reframing declining soda consumption.
“People ask me, ‘When do you think the carbonated soft-drink categories are going to stop declining?'” Sandy Douglas, president of Coca-Cola North America, said at the Morgan Stanley Global Consumer and Retail Conference in November. “That question is born of measuring volume, a gallonage, not packages.”
Pepsi is also attempting to convince consumers that soda can, in fact, be an authentic and craft-oriented option.
- Caleb’s Kola
The company recently launched hipster,vintage-inspired brands Mtn Dew Black Label, 1893 Original Cola, Caleb’s Kola, and Dewshine. In January, Pepsi announced plans to open a“restaurant-bar-event space” called Kola House in New York City, intended to offer customers the premium-soda experience.
While PepsiCo isn’t completely abandoning soda, the company is clearly eager to look outside of carbonated drinks for sales. When just 12% of the company’s international sales come from Pepsi Cola, it becomes easier for PepsiCo to deal with the fact that Americans are drinking less of the beverage than ever before.