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PepsiCo’s Quaker Foods Business Notches a 55% Profit Spike

By Demitri Kalogeropoulos – Jul 13, 2020 at 9:43AM

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The division helped offset sharp declines in on-the-go beverage sales.

PepsiCo's (PEP -1.73%) consumer foods division is enjoying unprecedented growth in the pandemic era. The company announced on Monday that its Quaker Foods segment, which markets home-prepared foods like cereals and pastas, expanded by 23% in the 12 weeks that ended in mid-June. That success allowed Pepsi to report flat organic sales for the period, even through its beverage unit took a big hit related to COVID-19 social distancing efforts. Rival Coca-Cola will announce its own results next week in a report that investors expect to show a much sharper sales decline due to its focused beverage portfolio.

Quaker Foods boosted profits at an even faster pace, with operating earnings jumping 55% and operating margin expanding by 6 percentage points. Still, Pepsi reported lower overall earnings, in part due to supply chain challenges and extra health-related costs.

A young girl eating cereal.

Image source: Getty Images.

In a conference call with investors, Pepsi said it is seeing its positive market share trends continue in the food segment even as economies opened back up in recent weeks. It plans to press that advantage over the next few months, including with higher marketing spending and new innovative launches like the upcoming Cheetos Mac 'n Cheese product set to release this fall.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Pepsico, Inc. Stock Quote
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$165.75 (-1.73%) $-2.92
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