In 2025, that will mean categories such as functional hydration, sports nutrition and energy drinks.
Releasing its FY2024 results this morning, PepsiCo Beverages North America – which boasts brands such as Pepsi, Mtn Dew and Gatorade – saw organic revenue increase 1% in 2024, comparing to 7% organic revenue growth the year before.
PepsiCo FY2024
Company-wide, PepsiCo saw revenue increase 2%, compared to 9.5% growth in 2023.
Core operating margin expansion for the company was led by the international business, as well as PepsiCo Beverages North America.
While the North American market has been subdued, PepsiCo anticipates gradual improvement as the year progresses and its commercial activities take hold.
It is forecasting low-single-digit organic revenue growth and mid-single-digit core constant currency EPS growth in 2025.
In 2024, Pepsi Zero Sugar brand delivered double-digit net revenue growth, as did functional hydration offerings such as fitness water Propel and convenient enhancers and tablets.
Power brand Gatorade, meanwhile, gained market share in the US: despite stiff competition in the category.
“Within our broad beverage portfolio, we continued to elevate and prioritize our focus on attractive segments of the category – such as zero sugar, functional hydration, and sports nutrition, while also optimizing our resources to focus on fewer, larger initiatives,” said chairman and CEO Ramon Laguarta.
PepsiCo will also maintain its pre-existing focus on energy - which remains a ‘fundamental bar of our beverage growth strategy in the US" - with drinks such as Rockstar Energy, AMP Energy, Mountain Dew Kickstart and an investment in Celsius.
And protein is set to be another area to explore further: the company already has protein shake Muscle Milk, various protein options under its Gatorade brand (protein drinks, protein bars) and is also looking to boost protein options in its snack business (including its recent acquisition of hummus brands Sabra and Obela).
“On protein beverages, we’re trying to participate in that with a sense of urgency,” said Laguarta in response to analysts' questions on the company’s earnings call. “We’re trying to participate in the functionality of the beverage category, functional hydration with Gatorade and Propel, we see the opportunity to create more opportunity with hydration and hydration plus protein.
“And protein, yes, Muscle Milk and other innovations, we are looking to participate in that category.”
The key to all innovation efforts is to focus on this better-for-you occasion, says Laguarta.
“In 2025, we expect to remain disciplined and selective with our investments and commercial activities by focusing on attractive, profitable growth segments that address consumer preferences around positive choices, functional hydration, and sports nutrition.”
Other highlights
Pepsi has executed the nationwide rollout of Mountain Dew Baja Blast which generated more than $1bn in annual retail sales (including foodservice channel).
Meanwhile, Pepsi remains committed to its multi -year productivity agenda within PepsiCo Beverages North America, which aims to improve core operating margin over time.
It will do this by deemphasizing low margin product and package combinations and becoming more precise with price and package combinations by brand and channel.
Other goals are to reduce transportation and logistical inefficiencies, and optimize advertising and marketing spend.