2013 Consumer Perception for Beverages & Snacks: Starbucks and Coca-Cola Improve, PepsiCo Dominates

Investing in brands which resonate well with consumers is logical and often profitable. That's why this article will explore the beverages and snacks which received the highest scores for positive sentiment, as well as the beverages and snacks which saw the most improvement in their positive sentiment scores in 2013. These trends will likely continue through 2014. 

YouGov BrandIndex's buzz score rating is based on whether or not consumers heard anything positive or negative about that brand over the past two weeks via news, advertising, or social media. A score of 0 indicates neutral sentiment. A score between 0 and 100 indicates positive sentiment, and a score south of 0 indicates negative sentiment. 

Top scorer
Campbell Soup  (NYSE: CPB  ) sported a 2013 Buzz Score of 24.7 on YouGov BrandIndex's rating system.  

The launch of V-Fusion in April 2013 contributed to the rise in brand sentiment for Campbell Soup. V-Fusion takes the V8 brand from targeting the health-conscious consumer to targeting all consumers. That's because with the V-8 Fusion, consumers will only taste the fruit and not the vegetables. 

V-8 Fusion has acted as a positive catalyst for Campbell Soup. Consider that while the company's revenue has only increased 1.39% over the past five years, it has increased 2.18% over the past year. However, Campbell Soup has a debt-to-equity ratio of 3.60. Campbell Soup generated operating cash flow of $908 million over the past year, and short-term and cash equivalents stand at $324 million, but paying off $4.84 billion in long-term debt won't be easy, potentially limiting growth potential.  

Second place
Coca-Cola (NYSE: KO  ) had a strong Buzz Score of 16.8 in 2013. This came as somewhat of a surprise given the rise of the health-conscious consumer and because many consumers frown upon sparkling beverages (soda). More on Coca-Cola soon.

Third place, fourth place, and fifth place
PepsiCo (NYSE: PEP  ) might not have made it to the top of the list, but the company's brands took three of the top five spots for consumer sentiment, which is impressive. Doritos scored a 15.6, Ocean Spray scored a 15.4, and Lay's scored a 13.9.

The Frito-Lay division of PepsiCo includes Doritos and Lay's. PepsiCo shares marketing responsibilities and pools product innovation resources with Ocean Spray. Here's a little fun fact for you: the Mexican Spanish definition for Doritos is "turned golden or crisp."

From an investing standpoint, this consistency demonstrates PepsiCo's ability to target different types of consumers with its broadly diversified portfolio. For the record, Pepsi received a 2013 Buzz Score rank of No. 9 (soda) in the Beverages and Snacks category. 

Biggest improvements
Starbucks (NASDAQ: SBUX  ) has attempted to enter the energy drink market with its Starbucks Doubleshot Energy Coffee and Starbucks Doubleshot. Consumer sentiment has gone from poor to subpar for both drinks. 

For instance, in 2012, Starbucks Doubleshot Energy Coffee sported a Buzz Score of negative 6.6. That score improved to negative 1.5 in 2013. In 2012, Starbucks Doubleshot delivered a Buzz Score of negative 5.1. That score improved to negative 0.6 in 2013.

Based on the upward direction in sentiment, there is potential for more traction going forward. It should be noted that Red Bull -- the energy drink leader -- had a Buzz Score of just negative 8.6 (from negative 11.1 in 2012).

Based on Starbucks' track record, it shouldn't be counted out of the energy drink market. Starbucks has a tremendous and loyal following. If one of the above-mentioned energy drinks, or a future energy drink, took off it could provide significant revenue and growth for Starbucks in the future. 

Other improvements
Coca-Cola's Powerade delivered a Buzz Score of 3.3 in 2013, up from negative 1.8 in 2012. That's a solid improvement, and it could lead to a little more visibility for the product versus Pepsi's Gatorade in the sports drink market. Coca-Cola's NOS also saw an improvement, from negative 3.1 in 2012 to negative 0.8 in 2013. However, NOS isn't likely to have much of an impact in the energy drink market as long as Red Bull and Monster are around. 

The Foolish takeaway
Campbell Soup's V8 targets more consumers than it did in the past, which might act as a growth catalyst going forward. However, debt is a concern for the company. Although Starbucks' energy/coffee drinks have not been overly well-received thus far, it should only be a matter of time before Starbucks makes the necessary adjustments.

All that said, PepsiCo is the most impressive company on this list in regard to beverages and snacks. Three of its products made the top five for consumer sentiment in 2013, which should lead to continued momentum in 2014.

If you're on the fence between PepsiCo and Coca-Cola, PepsiCo has seen top-line growth of 53.43% over the past five years, whereas Coca-Cola has driven its top line 48.95% over the same time-frame. Coca-Cola offers a slightly higher dividend yield of 2.90% than the 2.80% from PepsiCo, but that shouldn't be enough to sway you toward Coca-Cola.

Conclusively, PepsiCo's broad product diversification, ability to target a variety of consumers, and the strong consumer sentiment for three of its brands are positive signs for investors. PepsiCo should continue to perform well in the beverages and snacks category. Please do your own research prior to making any investment decisions. 

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