Consumer Sector Ideas

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PepsiCo -


http://seekingalpha.com/article/918031-3-companies-that-could-soar-on-massive-stevia-market-opportunities?source=yahoo



>>> Another company to watch closely in this space is PepsiCo , which has to address health concerns because it has substantial business in foods, snacks, and beverages. PepsiCo has made a move into stevia-based sweeteners by joining hands with Chicago- based Merisant's subsidiary, The Whole Earth Sweetener Company, in developing a stevia-based product called PureVia, which it is using it for some of its products. PepsiCo is focused on providing healthier foods and beverages, and has made a number of moves in this area. The company is well aware that consumers are becoming much stricter about what they eat and drink. Over the years, PepsiCo has acquired companies like Quaker Oats and Sabra, and has introduced a number of health-conscious products, including healthier Frito-Lay options, whole grain products, and low sodium items along with beverages that have lower sugar content.

PepsiCo has recently made a major move away from its traditional beverages by setting up a joint-venture with the Theo Muller Group, a large German dairy company, which will be called Quaker Dairy. The joint venture will sell yogurt and dairy products in the U.S., and this is an important strategy in developing a health food portfolio. The U.S soft drink market has been shrinking over the past several years, but yogurt sales have grown from under $5 billion in 2006 to $6.4 billion in 2011, and could reach almost $10 billion by 2015. This move will allow PepsiCo to go head on with General Mills (GIS), the producer of Yoplait, and Dannon, which combined account for nearly 60% of all yogurt sold in the U.S. Driven by the expected revenues from the joint-venture, Pepsi wants to generate revenues of $30 billion from its health product portfolio, but it will take some time for results from Quaker Dairy to materialize. In the continuation of this strategy, PepsiCo has already acquired a 66% stake in Wimm-Bill-Dann Juice Company, based in Russia, for $3.8 billion, and has cemented a partnership with Saudi Arabia's Almarai. Both of these companies are the largest dairy producers in their respective countries.

PepsiCo has been very proactive in growing its businesses, and this is evident from its operations in two major emerging markets, India and Brazil. PepsiCo has not been afraid to diversify its products and modify them to suit local tastes. Revenues in India grew 30% last year to $2 billion, primarily due to Pepsi's ability to market products that cater to local tastes. Products for the highly price sensitive rural markets had appropriate price points such as the snack Lehar Iron Chusti in the state of Andhra Pradesh at a price of Rs 2 (<4¢). PepsiCo is now planning a national launch of the snack as well as the introduction of Quaker Oats in affordable snack pack sizes. Brazil is the second largest producer of crackers and cookies in the world, and Pepsi has acquired Mabel, the country's second-biggest cookie maker, in a deal worth $520 million.

Unlike its giant rival Coca-Cola, whose sales have been relatively flat, PepsiCo has lots of growth potential, and there is a considerable upside to its stock price as a result. The stock has been trading around $71.11 recently, between a 52-week range of $61.50 and $73.66. The dividend yield of around 3% is an added bonus, and I highly recommend this stock to investors.

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