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PepsiCo

PepsiCo is a leading manufacturer of beverages and snack foods, with annual revenues of over $63 bn in 2016. Examples of PEP's primary businesses include Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. PEP operates six reporting segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), North America Beverages (NAB), Latin America, Europe Sub-Saharan Africa (ESSA), and Asia, Middle East and North Africa (AMENA). North American segments account for 62% of sales and 71% of adjusted segment operating profit. Approximately 53% of PEP's revenue is from snacks and 47% is from beverages. In February 2010, PEP acquired its two largest anchor bottlers, PBG and PAS in a $7.8 bn deal. Coca-Cola has recently refranchised its wholly-owned bottlers but PEP has not shown any interest in following suit. About 80% of total beverage business is done through owned bottlers. (03 Oct 2018)

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November 2018 US Retail Sales

Sector Analysis: 17 Dec 2018, 4:56 AM ET - November US retail sales came in mildly ahead of consensus, with signs that consumer momentum continues through the Holiday period. 

US Inflation: Goods Inflation Is Back

Sector Analysis: 12 Dec 2018, 11:57 PM ET - Headline and core indexes both increased in line with expectations.  We highlight the first bought of YoY core goods inflation since 2016 and anecdotes of margin pressure from the most recent Beige Book.

IG European Consumer: 2019 Outlook Opinion Changes

Sector Outlook: 11 Dec 2018, 9:03 PM ET - We set out more on our six opinion changes in European food & beverage/HPC and retail for 2019, plus the initiation of Molson Coors, and give specific bond recommendations in order to execute them. 

US Employment: Modest Gains for Jobs & Wages

Sector Analysis: 09 Dec 2018, 9:01 PM ET - Payrolls and wages both took a step back in November.  We highlight this months employment data and discuss the possibility for manufacturing, construction, and mining employment to lead a 2019 deceleration in jobs growth.

IG European Consumer 2019: Known Unknowns

Sector Outlook: 06 Dec 2018, 10:03 PM ET - We have updated our frameworks for assessing RV in our high grade/crossover European food & bev/HPC and retail names for 2019, the 500th anniversary of the death of Leonardo da Vinci. We also initiate coverage on Molson Coors.

US Income & Spending: Strong Start to 4Q Spending

Strategy Analysis: 30 Nov 2018, 4:37 AM ET - October consumer data delivered above expectations with strong real spending, solid income, and soft inflation.  We dig into the details and highlight strong growth in discretionary spending categories.

Consumer Pulse: Holiday Sales Update & More

Sector Analysis: 28 Nov 2018, 4:11 AM ET - Consumer holiday spending viewed through the e-commerce lens looks to be off to a strong start. The consumer economy has a mix of puts and takes, ranging from rising mortgage rates to falling prices at the pump.

US Employment: Almost Full, Keeps Eating

Strategy Analysis: 05 Nov 2018, 5:16 AM ET - Employment growth bounced back in October with a strong 250k print.  Wage growth hit a new high, but its gradual acceleration coupled with the strong job growth trend makes us question what full employment looks like.

US Productivity Is A Small Offset To Labor Costs

Sovereign Analysis: 02 Nov 2018, 5:38 AM ET - We break down 2 separate pieces of 3Q economic data that show while labor costs continue to rise, controlling for productivity growth gives a rosier picture. 

PCE Deflator: Steady in September

Worth Watching: 29 Oct 2018, 10:19 PM ET - PCE Deflator: The September income & outlays report showed another mild month for consumer price gains. The headline all-items index increased by 0.1% MoM, bringing the YoY rate to 2.0%, down from its July peak of 2.3%. The core PCE deflator (e ..

US GDP: Consumers Show Up Again

Strategy Analysis: 29 Oct 2018, 5:06 AM ET - 3Q US GDP beat expectations with a strong performance by the US consumer, inventory growth, and government spending offsetting weak trade, residential investment, and capex.

US Inflation: Consumer Prices Eke Out Another Gain

Strategy Analysis: 11 Oct 2018, 10:35 PM ET - The September consumer price index report showed weaker price gains than expected for the second consecutive month. 
Focused

PepsiCo: Cleaning Up Capital Structure

Worth Watching: 11 Oct 2018, 10:28 PM ET - PepsiCo (A1/A+) commenced a tender offer and an exchange offer for various bonds issued by its bottling subsidiaries as well as two series of longer dated notes issued by PepsiCo, Inc. The tender offer is for any and all of the notes shown in th ..

US Strategy: What to Watch for on 3Q Earning Calls

Strategy Analysis: 11 Oct 2018, 4:37 AM ET - We surveyed our analyst teams for key sector level issues they will be paying close attention to with upcoming third quarter earnings calls beyond the typical sales, margins and earnings guidance. 

US Employment: 3.0% Wage Growth on the Horizon

Strategy Analysis: 05 Oct 2018, 12:24 PM ET - September nonfarm payrolls disappointed on the headline number, but under the surface, the report was solid.  Wages posted another strong gain and are just one tick away from the 3.0% YoY milestone.
Focused

PepsiCo 3Q18: NAB Returns to Growth

Earnings Note: 02 Oct 2018, 1:32 PM ET - PEP reported a strong 3Q18 sales period marked by a return to organic growth in the N. American Beverages business. However, the top line growth came at a cost of slight margin compression, due in part to stepped up marketing/advertising.

US Income & Spending: Consumption Stays On Track

Strategy Analysis: 01 Oct 2018, 6:11 AM ET - The August income & spending report contained another solid reading for consumer spending, continued income growth, and modest inflation. We dig into the pricing environment for a few discretionary spending categories.

US Employment: Finally, A Wage Growth Surprise

Strategy Analysis: 07 Sep 2018, 4:06 PM ET - The August employment report contained the long-awaited breakout in wage growth to a new cycle high. Payroll growth was also solid, and we highlight our outlook for it going forward.

US Income & Spending: Inflation Momentum Fading?

Strategy Analysis: 30 Aug 2018, 2:43 PM ET - July consumer spending and income increased largely as expected, providing a solid start to 3Q spending. The core PCE deflator hit the Fed’s 2.0% target. We highlight that the recent inflation data have cooled some from earlier this year.
Focused

PepsiCo: Acquires SodaStream for $3.2 bn

Worth Watching: 20 Aug 2018, 6:10 PM ET - PepsiCo (A1/A+) has agreed to acquire all of the outstanding shares of SodaStream International for $3.2 billion. The purchase price of $144/sh represents a 32% premium to SODA's 30-day vwap. PEP plans to fund the acquisition with cash on hand, ..

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