Pepsi Wants to Fatten Up With Nutrition

At its Yankee Stadium analysts' day, PepsiCo says that its Americas drinks business could grow over the next three years with the help of new products and more efficient distribution.

By Andrea Tse , Mar 23, 2010 11:44 AM EDT

(Pepsi story updated with analyst insight, background information and recent stock price movements.)

NEW YORK (TheStreet) -- PepsiCo (PEP) - Get Report says that its Americas drinks business could grow over the next three years with the help of new products -- including a slew of what it says are healthier offerings -- and more efficient distribution.

PepsiCo believes that unit profit will rise by a mid-single-digit rate over three years and that revenue could be increase at a low-single digit rate, according to reports. PepsiCo revealed its outlook and future plans at a two-day investor conference at Yankee Stadium in New York on Monday and Tuesday.

On Tuesday, PepsiCo's Gatorade unit announced the launch of a new G Series Pro sports drink to be distributed by

General Nutrition Center

(GNC).

Also, last week, PepsiCo announced plans to stop selling full-sugar soft drinks to primary and secondary schools worldwide by 2012.

Pepsico wants to triple the size of its nutrition business to $30 billion by 2020, according to the

Associated Press.

"I can certainly see companies like Pepsi and Coke investing in brands and products lines that are healthier," said John Lindeman, Manager Director, Investment Banking, Co-Head of Consumer and Retail at Janney Montgomery Scott. "I think we're going to continue to see more of that. There are a lot of constituents around the country, and around the world; at the federal level, at the state level and the consumer level -- all of which I think want to see a healthier human being."

PepsiCo said Monday that returning its North American drinks business to growth beginning this year is a top goal, according to

Reuters.

Bloomberg

reported that PepsiCo maintains an earnings growth forecast of 11% to 13% for 2010 and low-double-digit profit growth for 2011 and 2012.


Stockpickr: Who Owns Pepsi? Prince Al-Waleed Atticus Capital Children's Investment Fund

PepsiCo last month completed mergers with its two largest bottlers, while rival

Coke

(KO) - Get Report

announced

a bottling acquisition of its own.

"I think that both strategies are similar," Lindeman said. "Perhaps Pepsi is further along in that process, but certainly it's a pretty meaningful deal for Coca-Cola." By owning their distributors, both companies "feel they can perhaps introduce products more nimbly as well as manage their brands more nimbly and profitably," Lindeman added.

Pepsi shares were ganing 1% to $67 Tuesday afternoon, while

Coke

(KO) - Get Report

was up 1.4% at $55.30.**

-- Written by Andrea Tse in New York

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