Consumers may be migrating from PepsiCo's (PEP) trademark sodas because of health concerns, but they clearly still have a penchant for one of the company's fizzy fruit-flavored lower calorie drinks.
According to PepsiCo, Mountain Dew Kickstart's volumes spiked 34% year over year in the first quarter, helped by several new flavors such as watermelon and blood orange that hit retail shelves in late January. Further, consumer interest in the carbonated Kickstart -- where 12-ounce cans boast 60 calories and just more than 60 milligrams of caffeine -- was likely helped by PepsiCo's viral "puppy monkey baby" TV commercial that aired during the Super Bowl.
Launched in 2013, Kickstart has been a success for PepsiCo almost since day one. Kickstart generated more than $300 million in retail sales last year, more than double the level from 2014. Sales in the first year reached $100 million.
Momentum behind Kickstart is helping PepsiCo to counteract continued sluggish sales of soda.
According to Beverage Digest, PepsiCo's carbonated soft drinks volumes fell 3.1% in 2015, worse than the 1.4% drop in 2014. Diet Pepsi volume declined 5.8% last year, according to Beverage Digest, despite the introduction of a version without controversial sweetener aspartame in August.
Total carbonated soft drink volume for the industry declined 1.2% in 2015, an acceleration from 2014's 0.9% drop, as PepsiCo, Coca-Cola (KO) and Dr. Pepper Snapple (DPS) all reported falling demand, said Beverage Digest.
Pepsi, the beverage and snacks giant, on Monday reported total revenue fell 3% year over year to $11.9 billion, matching Wall Street forecasts. Excluding the impact of the strong U.S. dollar, which hurt sales by 4.5 percentage points, sales rose 3.5%. Earnings per share, excluding one-time items, came in at 89 cents, topping estimates for 81 cents. The North America beverage business was able to overcome sluggish soda sales, aided by products such as Kickstart, and deliver respective revenue and profit increases of 2% and 7%, respectively, vs. the prior year.
The company reiterated its full-year earnings forecast of $4.66 a share. Shares were relatively unchanged in midday trading.
"From a high level, we remain confident in PepsiCo's underlying trends and continue to view the company as 'best-in-class' within the consumer packaged goods space," said Jim Cramer and Jack Mohr of Action Alerts PLUS, which own PepsiCo shares. They added, "While we recognize the macroeconomic backdrop is unfavorable, we expect PepsiCo's operational excellence, powerful brand equity and strength in its North American operations will help offset macroeconomic headwinds related to its emerging market exposure (most prominently Venezuela and Brazil)."