PepsiCo Plans No Beverage Acquisitions

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PepsiCo Plans No Beverage Acquisitions

PURCHASE, N.Y. -- PepsiCo Inc.'s CEO said the nation's No. 2 soft drink company plans no new acquisitions of North American drink manufacturers in the current economic climate, but will focus resources on expanding markets for drinks it has developed on its own, according to an Associated Press report.

"I'd like us not to make any more beverage acquisitions, tuck-in type acquisitions," CEO Indra Nooyi said during a Beverage Digest conference in New York. "I think our R&D pipeline is well-primed."

However, PepsiCo, which also owns the Frito-Lay snacks business, will consider acquisitions in the growing snacks sector, Nooyi said.

PepsiCo and other soft drink sellers have suffered from declining soda sales. Morgan Stanley analyst Bill Pecoriello sees soda sales falling 6 percent next year, according to the report.

Third-quarter sales growth at PepsiAmericas Beverages, which sells drinks in the United States and Latin America, was flat with a 2.5-percent decline in the volume of drinks sold. Sales of carbonated soft drinks fell 3 percent in North America, while bottled water sales volume slid by double digits as consumers switched to tap water.

The PepsiAmericas Foods division, which includes the Doritos, Ruffles and Fritos brands, along with other snacks, reported a 12-percent rise in revenue in the third quarter.

Prior to the economic slowdown, PepsiCo maintained a robust acquisitions strategy, buying drinks companies such as Izze, Naked Juice and a major juice maker in Russia. Earlier acquisitions brought the Tropicana, SoBe LifeWater and Gatorade brands to the company, the report noted.

Declines in soft drink sales drove the makers of both Pepsi and Coke to promote alternatives such as bottled water, energy drinks and sparkling juices, but the economic downturn may force them to refocus their marketing attention back to lower-priced soft drinks.

PepsiCo's top executives told bottlers in October they would engineer a return to carbonated soft drinks, according to the report.