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Ramon Laguarta, chairman and CEO of PepsiCo (PEP), doesn’t like the idea that ultra-processed food labels are increasingly being pushed onto big food manufacturers.
“I don’t like the word ultra-processed, I don’t believe in the word,” Laguarta told Yahoo Finance Live in an exclusive interview Tuesday at the World Economic Forum in Davos, Switzerland. “I think we use kitchen logic to define our products.”
Laguarta said PepsiCo continues to look for ways to make its products better for consumers, driven in part by one of his key leadership principles: “Big changes for big things.” He explained that it was done.
Its major efforts range from promoting sugar-free beverage options, improving the ingredients in Frito-Lay snacks, and developing smaller package sizes.
Laguarta added: “We need to be clear about what is ultra-processed. I don’t think our products are ultra-processed.”
Meanwhile, Wall Street has been weighing how the growing popularity of weight loss drugs will affect big food companies, primarily by putting pressure on stock prices.
Laguarta says adoption of weight loss drugs such as Novo Nordisk’s (NOV) Ozempic won’t happen overnight. PepsiCo continues to evolve its product portfolio to support changing consumer behaviors.
To be sure, Ozempic and other weight loss drugs didn’t drag down PepsiCo’s third-quarter results.
The company, which makes Pepsi soda and Lay’s chips, posted sales growth in all of its business units except Africa/Middle East, which significantly missed Wall Street profit expectations.
PepsiCo has set its organic sales growth rate for 2023 at 8.8%, compared to the forecast of 8.3%. Profits are expected to rise 16% this year.
The company has plans for further double-digit EPS growth into 2024.
PepsiCo’s full-year 2023 results and guidance update is expected to be released in February.
“Even if management executes accurately, we expect ‘GLP-1 concerns’ to continue to have a significant impact on stock prices. PepsiCo underperforms the index for East and West Coast consumers, “We note that this concern is likely overblown, as we have doubts about this.” “PepsiCo’s pricing is well established, with the impact of past elasticity being modest, and the company’s performance has far exceeded long-term expectations.” Evercore ISI analyst Robert Ottenstein said in a client note reviewed by Yahoo Finance.
Brian Sozzi I’m the executive editor of Yahoo Finance. Follow Sozzi on Twitter/X @BrianSozzi And even more linkedin. Have a tip about a deal, merger, activist situation, or more? Email brian.sozzi@yahoofinance.com.
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