Pepsi Profits Up
PURCHASE, N.Y. -- Soft drink and snack food giant PepsiCo Inc. yesterday reported a 16-percent rise in fourth-quarter profits, but concerns rose over rumors that Coca-Cola Co. is muscling in on the company's popular Gatorade sports drink brand.
PepsiCo said first-quarter sales growth at its Gatorade and Tropicana North America unit could be soft and that the Gatorade line faced intense competitive pressure, Reuters reported
Gatorade, the crown jewel of Pepsi's acquisition of Quaker Oats Co. last year, has faced increased pressure from Coke's revamped Powerade brand. Revenues at Gatorade/ Tropicana North America slipped 2 percent, though operating profit rose 6 percent.
Across the major sales outlets -- convenience stores, drugstores and mass merchandisers -- Gatorade lost 2.5 market share points in 2001, while Powerade gained 2.5 share points, the report said.
PepsiCo said the integration of Quaker is "solidly on track," and expects to realize synergies in 2002 at the high end of its previously announced range of $140 million to $175 million.
Pepsi, whose other products include Pepsi soft drinks and Frito-Lay snacks, stood by its long-term profit outlook. The company said it earned $764 million, or 42 cents per share, up from $656 million a year earlier, due to the strength of newer drinks like Aquafina bottled water and its core lineup of salty snacks.
Atlanta-based Blimpie International also yesterday said it would go with Pepsi products in its 1,900 sandwich shops, dropping Coca-Cola, which had supplied Blimpie since the chain opened in 1964.
"They're more aggressive, marketwise, right now," said Blimpie president Jeff Endervelt, who was part of a private investor group that completed the purchase of Blimpie last month.
Coca-Cola sought a temporary restraining order earlier this week to prevent the switch. A Georgia judge would not stop the change, which is under way. Coke plans to seek arbitration under its contract with Blimpie.
"Unfortunately, given the recent developments at Blimpie International, we felt it necessary to take this step to make sure the terms of the contract are upheld," Coke spokesman Bill Marks said.
The new contract with Pepsi includes fountain service as well as bottles and cans. The size of the deal was not disclosed.