) --


(PEP) - Get PepsiCo, Inc. Report

third-quarter earnings beat

showed the beverage and snack maker has been successful in passing on higher costs to consumers.

Standard & Poor's analyst Esther Kwon was encouraged by the company's reiteration of its 2011 earnings guidance, particularly as the boost from foreign exchange was less robust. Kwon maintained a buy rating on the stock but cut her price target by $1 to $70.

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Beverage volume in the Americas was "lackluster" because of a decline in sales of carbonated soft drinks, Kwon said, although this was somewhat offset by gains in non-carbonated drinks.

Pepsi's 13% jump in total revenue, to $17.58 billion, was led by 33%

growth in emerging markets

, helped in part by the company's recent

acquisition of Will-Bill-Dann, a Russian dairy and juice company


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On an adjusted basis, Pepsi earned $2 billion, or $1.31 per share, in its recent quarter, topping expectations by a penny.

In July

, Pepsi lowered its guidance for the year, citing soft consumer demand in developed markets like North America, while input costs for commodities and fuel were rising


To offset these rising costs, Pepsi said it would implement previously announced incremental price increases. On Wednesday, the company maintained its forecast for high-single-digit core EPS growth from its fiscal 2010 profit of $4.13 a share. In July, analysts had expected Pepsi to earn $4.50 a share for fiscal 2011, but the consensus has since dropped to $4.41.

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While demand in developed markets has waned somewhat, the opposite is true in emerging markets like Brazil, Russia and India, where disposable income among consumers is growing. Pepsi's exclusive contract with

Yum! Brands

(YUM) - Get Yum! Brands, Inc. (YUM) Report

to serve Pepsi products in its restaurants also helps, particularly in the fast-growing market of China.

Yum, which operates Taco Bell, Pizza Hut and KFC restaurants, last week matched quarterly profit expectations as continued strong performance in China drove year-over-year revenue growth of more than 14%


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As of earlier this year

, Pepsi had been able to manage the risk of rising commodity costs better than Coca-Cola

(KO) - Get Coca-Cola Company Report

. Pepsi had turned to improved operational efficiencies and price increases to help offset those costs, but Chief Financial Officer Hugh Johnston conceded in April that pricing in the first half of the year "has not been what we would have liked or expected."

Costs for plastic bottles and fuel to transport beverages have risen as oil prices heated up this year. Oil prices affect the price of polyethylene terephthalate, or PET, the plastic used by beverage companies to make soda bottles. Coke, Pepsi,

Dr Pepper Snapple


and other beverage makers cannot hedge the prices they pay for PET because the material is not traded like other commodities.

>> PepsiCo: Executive Change-Ups

Over the last three months, Coke shares have fallen less than 0.1%, while Pepsi lost around 8.3%. Dr Pepper Snapple's stock is lower by around 4.3% in the same period.

On Wednesday Pepsi shares rose 3.9%, thanks to its earnings beat, to trade around $63.31.

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Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here:

Miriam Reimer


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