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PepsiCo reported Q1 gains across many of its key bev and snacks platforms this morning, tho volume growth remained stubbornly hard to come by. But chmn/CEO Ramon Laguarta assured investors that co is acting with sense of urgency to address pressure points, from struggling snacks biz that's undergoing sweeping revamp to leadership bev segments like coffee and tea that are in need of reinvigoration. Among bright spots heralded this morning were hydration platform led by Gatorade and Propel and robust energy platform that's quickly taken Pepsi from also-ran status to 20% share. Among innovations heralded by CSD giant today: more intensified Gatorade formula that will go out under name Gatorlyte Longer Lasting, its highest-electrolyte offering to date. It's due to hit later this year in select markets with national rollout slated for 2027. It's coming at time that fast-hydration Electrolit brand has been scoring big share gains even as many newcomers to category in both bottled and powdered space have been offering onerous comparisons of their high electrolyte bills vs core Gatorade. Since PEP is first among wave of large-cap staples companies due to report their Q1, report seemed to draw broad interest across Wall Street for any light it might shed on impact of Iran war. Topic duly came up in Pepsi q&a this morning. PEP brass indicated the war hasn't created any undue stresses so far, either on cost side or demand side, and may in fact have benefited Pepsi in some overseas markets where it maintains more robust supply chain than rivals, particularly in food, per CEO Ramon Laguarta. But it will stimulate inflation, tho it's too early to scope out magnitude, indicated CFO Steve Schmitt. So far, it hasn't exacted an impact on demand, added Laguarta.The numbers showed that net revenue in Q1 rose 8.5% to $19.4 bil, +5.1% excluding foreign exchange impact on 2.6% of organic growth and 2.5% thanks to additions like Poppi and Alani Nu. Volume rose 4% across portfolio that's evenly split between food and bev. Gross margin narrowed a tad to 55.2% from 55.8% a year earlier, our calculations suggest. Operating profit surged 24% to $3.2 bil.At PepsiCo Beverage North America, revenues rose 8.8% to $6.3 bil, 10-Q filing indicates. That reflected organic revenue growth of 2%, bolstered by addition of Poppi and shift of Alani Nu distribution from beer systems into Pepsi's own blue system and partly offset by sale of Rockstar to Celsius Holdings and move of Aquafina-branded casepack water to outside partner Niagara that's better tuned to handling low-margin segment. Organic volume slipped 2.5%, 2 pts of that reflecting the Aquafina shift. Gross margin appeared to narrow to 53.2% from 54.7%, per our calculations from 10-Q data. Operating profit rose 60% to $460 mil.As CFO Schmitt indicated in prepared remarks disseminated before this morning's live q&a, "a key strategic objective entering this year was to improve PepsiCo Foods North America volume performance," which it delivered on to tune of 2% gain in Q1. "The international businesses also performed well, aided by organic volume and organic revenue growth within Asia Pacific Foods, Europe, Middle East & Africa and International Beverages Franchise." Most of analysts' questions on call pertained to the food turnaround effort.Recall that pressure from activist investor Elliott appears to have shaken PepsiCo team out of its complacency, putting on table previously taboo issues like potential refranchising of bottling system. PepsiCo is undertaking some modest experiments along those lines, but there was nothing yet to report on that today.Co did point to progress on one key category it leads, hydration. A retooling Gatorade brand generated both volume and net revenue growth on strength of Gatorade Zero Sugar, Gatorlyte and Propel enhanced water, the latter now a billion-dollar brand at retail. So for first time in years, functional hydration portfolio is accelerating and outgrowing overall LRBs. Co also will reduce pricing of Gatorade multipacks to stimulate volume. Among pair of other platforms where PEP has long enjoyed leadership role, "there is still work to do to accelerate the coffee and the tea business," CEO acknowledged. Innovations like Starbucks Coffee & Protein and Pure Leaf Mental Focus are intended to stoke those engines.Among CSDs, Pepsi trademark rode Pepsi Zero Sugar and flavor extensions like Pepsi Wild Cherry & Cream to net revenue growth even as Mountain Dew delivered "sequential improvement" in volume share on strength of flavors like Baja Blast, including Cabo Citrus extension. Mug Root Beer also was a bright spot. For rest of portfolio, Pepsi team is "optimizing" pricing and sizing "to participate in a better way in the summer," as Laguarta put it.Energy portfolio that's been greatly strengthened in recent years got a lift from integration of Alani Nu into co's DSD system following its acquisition by strategic partner Celsius Holdings, now nearly a 20-share player in category, as we'd noted. Outside retail, away-from-home biz got a lift from zero-sugar brands, Poppi, Celsius and Alani Nu.Co hopes to build on progress with raft of innovation, with Laguarta highlighting recently intro'd items like Pepsi Prebiotic, reformulated Muscle Milk and Dirty Mountain Dew Cream Soda. At one point he used term "modern soda" to refer to entries like Poppi, embracing burgeoning term that implicitly classes legacy CSDs as old-fashioned.In World Cup summer, PepsiCo will heavily activate its snack and food brands like Lay's, a global sponsor, and Quaker, forging partnerships with retailers and quick-delivery partners around the world in hope of juicing combo orders of Lays plus drinks. Of course, rival Coca-Cola is longtime FIFA global sponsor, so it will reap the lion's share of benefit from mega-event here in N Amer.

PepsiCo Claims Headway on CSDs, Hydration, Energy in Q1 with Work to Be Done on Coffee & Tea; 'Gatorlyte Longer Lasting' Extension Will Hit New Electrolyte Peak

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