>> THANK YOU.
CHERYL: ALL RIGHT.
LET’S MOVE OVER TO PEPSICO.
THE SODA CANS BUSINESS OVER FOR
THIS COMPANY THIS MORNING.
THE LATEST QUARTER REVENUE GREW
MORE THAN 5% AS FOLKS CHUG THEIR
SODAS AND OTHER BEVERAGES AND
GOBBLED UP THE SNACKS ONCE
AGAIN.
PEPSICO PROVIDED FORWARD
GUIDANCE FOR THE FIRST TIME
SINCE THE PANDEMIC BEGAN.
INVESTORS HONING IN ON THIS AS
IT SHOWS CONFIDENCE IN THE
ABILITY TO PERFORM IN THE MIDST
OF ALL OF THIS UNCERTAINTY.
LET’S BRING IN PEPSICO CFO, HUGH
JOHNSON.
GREAT TO SEE YOU AGAIN.
>> GREAT TO SEE YOU AS WELL.
CHERYL: IT’S BEEN AWHILE.
I GOT TO ASK YOU ABOUT GUIDANCE.
YOU ARE NOW STANDING OUT AMONG
OTHER COMPANIES THAT ARE NOT
OFFERING GUIDANCE.
WHAT WENT INTO THE DECISION
BETWEEN YOU TO DECIDE TO GIVE
THE STREET THE FULL PICTURE?
>> I THINK THE BIGGEST THING WAS
OBVIOUSLY, WE HAD IT FOR EVERY
QUARTER AND WE FELT GOOD ABOUT
THAT BUT WE STARTED TO SEE
CONSUMER TRENDS STABILIZE TO
SOME DEGREE.
MOBILITY TRENDS ARE UP AND HAVE
GOTTEN STABLE.
PEOPLE EATING OUT MORE, IT’S UP
AND IT’S GOTTEN STABLE.
WE FELT LIKE WE HAD VISIBILITY
AT LEAST FOR THE REST OF THE
YEAR AND WE THOUGHT THAT WAS
VALUABLE INFORMATION FOR
INVESTORS.
WE PUT GUIDANCE OUT THERE AND IT
SEEMS TO HAVE BEEN WELL
RECEIVED.
CHERYL: YOU ALSO REPORTED THE
COVID COSTS.
WE ARE NOW SEEING THIS AS THE
NORMAL TREND FOR COMPANIES, $147
MILLION.
THAT WAS FOR THIS LAST FISCAL
QUARTER.
IS THAT SOMETHING THAT YOU THINK
IS GOING TO CONTINUE TO BE A
PIECE OF THE BOTTOM LINE OR IS
THAT SPENDING GOING TO PULL
BACK, DO YOU THINK?
>> IT WILL SUSTAIN BUT IT WILL
CONTINUE TO DIMINISH FROM MONTH
TO MONTH.
I THINK WHEN WE STARTED DOING
THE COVID COSTS, IT WAS MOSTLY
AROUND PROTECTIVE EQUIPMENT FOR
OUR EMPLOYEES TO ENSURE THAT
THEY COULD OPERATE SAFELY.
OBVIOUSLY, WHEN YOU START UP ON
THAT INITIALLY, EITHER THAT OR
SANITATION OR LOGISTICS, YOU ARE
RELATIVELY INEFFICIENT AT IT.
WE HAVE GOTTEN BETTER AND BETTER
AT IT OVER TIME.
OUR PRIORITY IS CLEARLY TO
PROTECT OUR EMPLOYEES, BUT I
THINK WE WILL BE ABLE TO DO THAT
MORE AND MORE EFFICIENTLY AS
TIME GOES ON.
I THINK THOSE COSTS WILL
DIMINISH AND ULTIMATELY,
OBVIOUSLY WHEN WE FINALLY GET
PAST THE PANDEMIC, THOSE COSTS
WILL LARGELY DISAPPEAR.
CHERYL: THE PANDEMIC LOOKS LIKE
IT’S BEEN GOOD FOR YOUR BOTTOM
LINE, SAD TO SAY.
BUT THE TRUTH.
TOSTITOS, CHEETOHS, DORITOS, MAC
AND CHEESE FROM THE QUAKER
BRAND.
YOU ALSO LAUNCHED NEW MAC AND
CHEESE LINES.
FLAMING HOT.
WE HAVE THE STORY ON THE
BUSINESS NETWORK AND WE GOT A
LAUGH OUT OF IT BUT FOLKS ARE
GOING FOR COMFORT FOOD.
DOES THIS TREND CONTINUE?
>> YEAH, THEY CERTAINLY ARE
GOING FOR COMFORT FOOD.
IN A LOT OF WAYS, I THINK IT’S A
LITTLE BIT DIFFERENT THAN THE
OTHER FOOD COMPANIES.
I THINK IN TERMS OF THE SNACK
BUSINESS THAT WE HAVE RIGHT NOW,
IT SEEMED TO A GREAT DEGREE A
REVERSION OF CONSUMERS BACK TO
BIG BRANDS.
FOR A LONG TIME THEY REALLY
WANTED SMALL CRAFT BRANDS AND
THOSE NO DOUBT HAVE A PART OF
THE LANDSCAPE BUT I THINK AS
CONSUMERS HAVE GONE BACK TO BIG
BRANDS BECAUSE OF THE QUALITY
AND BECAUSE OF THE FLAVOR AND
FRANKLY, BECAUSE OF THE
AVAILABILITY, BECAUSE OF THE
SUPPLY CHAIN SYSTEMS WE HAVE,
THEY REDISCOVERED THEY REALLY
LIKE THOSE BIG BRANDS.
I THINK THAT’S SOMETHING THAT’S
GOING TO BE THERE TO STAY FOR
QUITE A LONG TIME.
CHERYL: WE ARE JUST LOOKING AT
PICTURES OF PANCAKE SYRUP,
ANOTHER FAVORITE OF THE STAY AT
HOME TREND.
YOU DECIDED TO DROP AUNT JEMIMA.
HOW TOUGH WAS THAT DECISION?
>> IT WAS A DECISION THAT WAS
OBVIOUS TO US IN THE FACE OF
WHAT’S GOING ON IN SOCIETY RIGHT
NOW.
WE ARE GOING TO TAKE OUR TIME
AND DO IT METHODICALLY.
NO NEW UPDATE ON THAT.
I THINK YOU CAN EXCEPT SOMEPECT
FROM US IN THE COMING MONTHS
WHAT THE NEW BRAND WILL BE.
IN A LOT OF WAYS IT WILL BE
BETTER FOR CONSUMERS THAN WHAT
WE PREVIOUSLY HAD.
CHERYL: YOU WILL CHANGE THE
NAME, I’M ASSUMING?
>> YES.
YES, WE ARE.
CHERYL: ALL RIGHT.
LET ME ASK YOU THIS.
ONE OF THE THINGS COCA-COLA HAS
DONE, I HATE TO BRING UP THE
OTHER GUY BUT I HAVE TO, THEY
HAVE GOTTEN INTO ALCOHOL SALES
WITH ITS PARTNER TOPO CHICO.
THIS IS SOMETHING PEPSICO HAS
NOT DONE YET.
IS THAT SOMETHING YOU THINK YOU
WOULD CONSIDER?
>> I GUESS WHAT I WOULD TELL YOU
ON THAT FRONT IS WE LEAVE NO
STONE UNTURNED LOOKING FOR GOOD
GROWTH OPPORTUNITIES.
I DON’T HAVE ANYTHING NEW TO
REPORT TO YOU RIGHT NOW BUT WE
ARE ALWAYS GOING TO LOOK AT
THOSE TYPES OF OPPORTUNITIES AND
SEE IF THEY MAKE SENSE TO US.
IF THEY MAKE SENSE, OBVIOUSLY
WE’VE GOT A MANAGEMENT TEAM AND
A SYSTEM THAT CAN REALLY
EXECUTE.
CHERYL: ONE OF THE THINGS YOU
HAVE DONE OVER THE LAST, GOSH,
REALLY THE LAST DECADE, I GUESS,
IS WE HAVE BEEN TALKING HERE ON
FOX BUSINESS WITH YOU, IS KIND
OF THAT EXPANSION OF THE BRAND
GOING INTO THAT HEALTHIER
SNACKS, WHETHER IT WAS HUMMUS OR
SPARKLING WATER.
WHAT WE ARE SEEING NOW IS WITH
THE STAY AT HOME NOT ORDERS
ANYMORE BUT AT LEAST FOLKS
WORKING OR STAYING AT HOME,
GOING FOR THE GOOD OLD STUFF.
DID THAT CHANGE THE STRATEGY
PEPSICO WILL TAKE IN THE NEXT
QUARTER, TWO QUARTERS WHEN IT
COMES TO EXPANSION, MAYBE?
GIVING AMERICANS WHAT THEY WANT,
NOT WHAT YOU THINK MAYBE THEY
WANT HEALTHIER?
>> I THINK OUR STRATEGY IS GOING
TO BE TO OFFER CONSUMERS A WIDE
VARIETY OF CHOICE AND WHERE THEY
CHOOSE TO GO IS OBVIOUSLY WHERE
WE ARE GOING TO PUT OUR
EMPHASIS.
AS YOU KNOW, PARTICULARLY EARLY
IN THE PANDEMIC, PEOPLE WANTED
COMFORT FOOD.
I THINK THAT REBALANCING HAS
ALREADY STARTED TOWARDS A
BALANCE BETWEEN WE WANT SOME
COMFORT FOOD BUT WE ALSO WANT
FOOD THAT’S LESS INDULGENT AND A
LITTLE MORE HEALTHY.
WE ARE GOING TO GIVE THEM BOTH.
A COUPLE OF EXAMPLES IN THAT
REGARD.
WITH OUR SODA STREAM PRODUCT, WE
WILL BE LAUNCHING BUBBLY DROPS.
YOU BASICALLY PUT SOME DROPS
INTO YOUR SODA STREAM BOTTLE AND
YOU GET A TERRIFIC ZERO CALORIE
BEVERAGE THAT YOU CAN CONTROL
THE FLAVOR OF.
THAT’S CERTAINLY A HEALTHIER
OPTION.
AT THE OTHER END OF THE
SPECTRUM, I POINTED OUT, YOU
MENTIONED EARLIER THE CHEETOS
MAC AND CHEESE.
THAT’S A PROBLEM WE ARE
LITERALLY OUT OF CAPACITY OF.
EVERY BOX WE CAN MAKE, WE ARE
SELLING.
I THINK PEOPLE ARE CHOOSING BOTH
RIGHT NOW.
CHERYL: INTERESTING.
OKAY.
NOW, WE HAVEN’T FIGURED OUT THAT
MAC AND CHEESE WOULD BE A BIG
HIT.
GOT TO TALK ABOUT THE NFL.
YOU ARE THE BIGGEST SPONSOR OF
THE NFL.
OBVIOUSLY THE SEASON IS
DIFFERENT.
I’M WONDERING HOW YOU AND THE
COMPANY APPROACHED THIS NEW
DIFFERENT NFL SEASON AND IF YOU
CHANGED YOUR STRATEGY AND
CHANGED ANYTHING ABOUT THE
PARTNERSHIP WITH THE NFL,
BECAUSE LAST TIME I CHECKED WITH
YOU, IT WAS A BILLION DOLLAR
CONTRACT YOU HAD WITH THEM.
>> YEAH.
IT’S A BIG, BIG COMMITMENT.
OBVIOUSLY, WE ARE BIG FANS OF
THE NFL.
WITHOUT THE FANS IN THE STANDS,
OBVIOUSLY IT’S CHANGED THE
EXPERIENCE.
WE HAVE DONE A LOT OF THINGS
ONLINE WITH THE NFL IN ORDER TO
REALLY BRING THE IN-STADIUM
EXPERIENCE HOME TO PEOPLE’S
HOMES.
I THINK WE’RE STILL EVALUATING
HOW MUCH OF THAT IS WORKING WELL
AND HOW MUCH NOT, BUT CLEARLY,
THE NFL IS AN IMPORTANT PART OF
OUR MARKETING.
CHERYL: YOU ARE GOING TO STICK
WITH THE DEAL, I’M ASSUMING?
THE PARTNERSHIP?
>> RIGHT NOW, WE ARE VERY MUCH
STICKING WITH THE NFL.
YES.
CHERYL: OKAY.
OKAY.
GOT TO ASK.
HUGH JOHNSON, GREAT TO SEE YOU
AGAIN.
>> GREAT TO SEE YOU.
THANKS FOR HAVING ME ON.
CHERYL: YEAH, YEAH, YEAH.