PepsiCo’s (NYSE:PEP) has a diverse portfolio of 22 brands — from its namesake soda, gatorade, Mountain Dew, and Tropicana juices to snacks like Fritos, Lays, Cheetos, and even Quaker Oats — that product diversity helped the company immensely in the third quarter. While growth in the company’s beverage segments slowed or declined in many regions, that hiccup was offset by a sales expansion in its food divisions. The company’s name may suggest that is primarily a soda manufacturer, but PepsiCo actually generates approximately half of its revenue from its snack business. The strength in its Frito-Lays snacks enabled the company to report a higher-than-expected profit for the three-month period ended in September.
In particular, the company’s North American beverage unit did poorly, as it has for some time. For the division, revenue fell as higher product prices could not manage to offset the 4 percent drop in sales volume. It is because of that outcome, and similar results in past quarters, that activist investor Nelson Peltz’s Trian Fund Management wants PepsiCo to split its business, spinning off its beverage division and merging its snacks business Mondelez International (NASDAQ:MDLZ), the Oreo cookie maker than was once part of Kraft Foods (NASDAQ:KRFT).
But executives at PepsiCo are not interested in that suggestion. In a Wednesday interview with Bloomberg Television, Chief Financial Officer Hugh Johnston said that management was concentration on “meeting the needs of the largest group of shareholders, not necessarily one or two of the loudest.” Trian owned 12.3 million shares, or 0.8 percent, of PepsiCo as of June 30, and 41 million shares, or 2.3 percent, of Mondelez.