Daily Brief: Unshakeable Demand For Drinks And Snacks Helped PepsiCo’s Cup Overflow

Daily Brief: Unshakeable Demand For Drinks And Snacks Helped PepsiCo’s Cup Overflow

over 1 year ago3 mins

Mentioned in story

PepsiCo reported on Wednesday that its quarterly results beat expectations.

What does this mean?

Few of us can splurge on lavish meals now that rising prices are thinning out the contents of our wallets, and companies like PepsiCo – which makes everything from snacks to sodas to sports drinks – are happily pocketing the proceeds of our quiet nights in. No wonder, then, that revenue across all of PepsiCo’s segments grew last quarter. But what’s even more impressive is that profit jumped too, with price hikes defending the company’s margins against the rising cost of ingredients. That could be why PepsiCo’s overall predictions were pretty tasty, even as the company warned that the strong US dollar could sap international profit: the firm upped its outlook for both revenue and profit this year, and satisfied investors duly sent the stock up 3%.

Pepsico stock
Source: Google Finance

Why should I care?

For markets: Nobody skimps on chips.

PepsiCo’s results are a lesson in the value of consumer staples companies – firms that people tend to buy from no matter what state the economy’s in. See, the average price across PepsiCo’s delectable offerings – which include Gatorade, Lay’s chips, and Quaker Oats – was up 17% last quarter versus the same time the year before, but there was essentially no drop in the volume of goods the firm sold. That unshakable demand might explain the success of an index tracking some of the world’s biggest consumer staples companies, which has beaten the S&P 500 by a scrumptious 12% so far this year.

The bigger picture: Snacks that don’t make the world gassy.

Making snacks in humongous quantities isn’t a zero-carbon endeavor, but PepsiCo’s trying its best. It announced last month that it’s teaming up with agriculture giant Archer Daniels Midland to bring eco-friendly “regenerative” farming practices to two million acres of farmland. Together the companies reckon they could eliminate 1.4 million metric tons – a helluva lot – of greenhouse gasses, and make strides toward hitting their carbon reduction goals.

Keep reading for our next story...

The World's Going Nuclear

Westinghouse image

Westinghouse Electric, an American manufacturer of nuclear power plant equipment, announced this week that it’s being bought in a deal worth nearly $8 billion.

What does this mean?

Nuclear’s been the black sheep of the energy family for years, not least because safety concerns and overruns in high-profile projects have scared investors off. But mounting worries over climate change and the security of energy during war have made the nuclear industry – capable of producing carbon-free power every hour of the day, no matter the weather – a lot more appealing. That’s not the only good news for Westinghouse Electric: the US company, which makes the tech used in half of the world’s nuclear reactors, has just been bought by Brookfield Renewable Partners (one of world’s biggest clean energy investors) and Cameco (North America’s biggest uranium miner) in a deal worth a tidy $8 billion. Not too shabby for a company that only emerged from bankruptcy four years ago…

Why should I care?

Zooming in: Opportunities aplenty.

The future is full of promise for Westinghouse. The West is being pushed to find new suppliers for over 30 reactors that currently use Russian technology – a plum opportunity for the American firm to ply its trade. On top of that, the European Union declared nuclear power investments climate-friendly earlier this month, while the International Energy Agency has said nuclear energy production needs to double by 2050 to hit net-zero targets. No wonder some analysts think the industry’s on the cusp of a price boom that could rival the flush days of the 1970s oil crisis.

Nuclear production needs to double

The bigger picture: Keep your fingers crossed.

The price of uranium is reflecting the world’s zest for nuclear power: the metal hit over $50 a pound last month, and Bank of America estimates it could break $70 next year. Still, these outlooks are fragile: another nuclear accident could send the industry back to square one – a real risk given that war-torn Ukraine houses 15 reactors.

Uranium price


All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG