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PepsiCo Introduces Limited Edition ‘Pepsi Fire’ Beverage


PepsiCo, Inc. PEP has been forging ahead with its aggressive marketing drive and research & development (R&D) investments to strengthen its brands and accelerate product innovation. Recently, the company introduced the limited edition cinnamon-flavored cola ‘Pepsi Fire’. The new beverage will be available in stores for a period of eight weeks starting May 22.

Limited editions are important marketing means used by companies to bolster consumer interest in brands. Given PepsiCo’s persistently sluggish Carbonated Soft Drink (“CSD”) volumes, management expects Pepsi Fire to ‘ignite this season with an unexpected and spicy twist to classic cola taste.’

As part of the campaign, PepsiCo partnered with Snapchat wherein users can unlock a range of exclusive Snapchat features and a new Pepsi mobile game with a ‘Snapcode’ on packs of Pepsi Fire, Pepsi, Diet Pepsi, Pepsi Zero Sugar and Pepsi Wild Cherry. The latest campaign will also be through digital, out of home, on-air advertising, including a new national TV commercial in June.

Notably, the company has increased investments in social and digital marketing as well as improved advertising efficiency by directing more of its spending toward consumer-facing activity.

The company has stepped up its investments in R&D by 45% since 2011, investing approximately $3.5 billion as of 2016.

Advertising & marketing (A&M) and R&D plans have been paying off well for the company. These initiatives helped the company to deliver an overall healthy performance — either achieving or exceeding most of its financial goals in the year — despite the tough macroeconomic environment.

Stock Price Movement

PepsiCo’s shares have gained 8.4% year to date, as against a 1.5% decline of the Zacks categorized Beverages-Soft Drinks industry. The company beat earnings estimates in all of the past four quarters. The company’s new product lineup, aggressive marketing, productivity improvement and cost-saving initiatives should boost profits and thereby the stock’s performance in the upcoming quarters as well.

Zacks Rank & Stocks to Consider

PepsiCo carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the sector include Coca Cola Femsa S.A.B. de C.V. KOF, Embotelladora Andina S.A. AKO.B and Inter Parfums, Inc. IPAR, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Full-year 2017 earnings are expected to increase 22.6% for Coca Cola Femsa, 36.5% for Embotelladora and 11.4% for Inter Parfums.

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