On the heels of Kraft Foods (KFT) and Sara Lee's (SLE) moves to slim down for profits by spinning off parts of their businesses, some analysts wondered if PepsiCo might do well to take similar action.
But "PepsiCo isn't on the road to Splitsville any time soon," said IBISWorld beverage analyst Agata Kaczanowska. Its "dual portfolio [of snacks and beverages] allows PepsiCo pricing flexibility in its highly competitive beverages business because it is balanced out by a strong market position in the snacks business."Pepsi CEO Indra Nooyi has commented that the company's Frito-Lay operations could thrive as an independently run company, but has also said that marketing and distribution synergies for its dual snacks-beverages portfolio are too beneficial for the company to break the two up.
Kaczanowska pointed out that "in the US Soda Production industry the company has a 33.6% market share. It is second behind Coca-Cola (KO) (41.2%) and is facing increasing competition from private labels and Dr. Pepper Snapple (DPS) (15.4%) ... Comparatively, Frito-Lay has a 48.4% market share in the Snack Food Production industry, with Kraft and General Mills (GIS) far behind with just 5.2% and 5.1% market share, respectively. "
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV