A few weeks ago, Barclay's Capital hosted a "Back to School Conference" where consumer goods companies presented on major events. In particular, beverage and snack companies Coca-Cola (NYSE: KO), PepsiCo (NYSE: PEP), and Campbell Soup (NYSE: CPB) offered some clues that may help the individual investor.
Saturation in developed markets
Most new market opportunities reside outside the United States. Innovation and acquisitions serve as keys in maintaining and expanding sales. For example, Campbell Soup introduced a soup kit tailored for Green Mountain Coffee Roasters' Keurig Machine . This will engage the consumer who regularly eats snacks throughout the day. Overall, Campbell's will introduce more than 200 new products this yea r.
Sparkling needs a push
Coca-Cola only grew its global sparkling revenue 2% year to date . Its executives understand the need for sparkling beverage expansion in face of headwinds from the healthy lifestyles movement. Coca-Cola and rival PepsiCo strategically market sparkling beverages in developing and emerging markets such as Russia and Africa where per capita consumption remains low. The "Share a Coke" program, where you can customize a Coca-Cola can with your name, represents one strategy for generating excitement in lucrative markets such as China. Pepsi ran the "Drink Happiness" campaign in China where it tapped into the Chinese sentiment toward their New Year. The sparkling future for Coca-Cola and PepsiCo lies in consumer adoption and retention in emerging and developing markets.
The future European resurrection
Coca-Cola and PepsiCo invest heavily in the European continent hoping to take advantage of an eventual economic rebound. According to Coca-Cola's presentation, Europe's low per capita consumption means a higher market opportunity for Coca-Cola and rival Pepsi. Coca-Cola's partial purchase of the European juice company , Innocent, represents one of the ways it wants to capitalize on the healthy lifestyles trend. PepsiCo rolled out its Trop 50, a "lighter orange juice" in the UK and Western Europe with great success. By contrast, Campbell Soup wants to exit Europe, leaving it out of any European economic rebound.
Eating and drinking healthier
These companies understand that the consumer wants to eat healthier. Campbell Soup purchased Bolthouse Farms , a seller of natural organic juices, dressing, and vegetables. It also purchased Plum Organics, a seller of organic food in the children's market. Coca-Cola's Innocent brand holds a #1 market position in certain parts of Europe. Moreover, PepsiCo continues innovation in its Quaker unit which sells healthy products such as Quaker Oats and other hot cereals .
On the whole, new and interesting variations on products such as Campbell's soup and sauces in the developed markets will drive top and bottom-line growth. Expansion in countries with low per capita consumption will help grow global sparkling beverages for Coca-Cola and PepsiCo. Coca-Cola and PepsiCo will benefit from their investments in Europe, but Campbell will miss out due to its exit from that market. These companies will need to adjust their strategies to the healthy lifestyles trend by innovating healthier products and purchasing companies that make and sell them.