WEBVTT - S&P's Agnese on PepsiCo: New Products Will Boost Revenue(Audio)

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<v Speaker 1>Broadcasting live to New York, Bloomberg even to Washington, d C.

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<v Speaker 1>Bloomberg to Boston, Bloomberg twelve hundred to San Francisco, Bloomberg

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<v Speaker 1>the Bloomberg Radio plus chapp and Bloomberg got gone. This

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<v Speaker 1>is taking stock. Coming off on taking stock, Trito's, Derrito's

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<v Speaker 1>and Cheetos. Yes, we're gonna be talking about PepsiCo quarterly

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<v Speaker 1>profit topping Wall Street estimates. The shares are higher by

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<v Speaker 1>more than one and a half percent. We're gonna be

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<v Speaker 1>speaking with jog Needs equity analysts for consumers staples at

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<v Speaker 1>SMP Global Market Intelligence. Coming up on taking stock. Now

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<v Speaker 1>to the newsroom. Charlot Pellets there with the Bloomberg business lash,

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<v Speaker 1>and I think of very much, Kathleen, thank you. Pim Fox.

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<v Speaker 1>The doll the SMP lower, naznac is higher. Stocks are falling,

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<v Speaker 1>crude oil slipping below forty dollars a barrel on renewed.

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<v Speaker 1>Concerned about an oversupply in the US treasuries falling, with

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<v Speaker 1>gold amid eighties in demand for haven assets before tomorrow's

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<v Speaker 1>payrolls report. Right now, gold is down six ninety The

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<v Speaker 1>ounce thirteen sixty drop of five tenths of one percent.

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<v Speaker 1>Crude oil down to twenty four a barrel right now

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<v Speaker 1>forty five seventeen on West Texas, Enemyia crude down four

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<v Speaker 1>point eight percent, Brent crew down five point one percent.

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<v Speaker 1>Filing for US unemployment benefits unexpectedly declined last week to

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<v Speaker 1>the lowest level since mid April, the Labor Department said

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<v Speaker 1>John Bless. Claims dropped by sixteen thousand, two hundred fifty

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<v Speaker 1>four thousand. White Wave shares surging today They are up

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<v Speaker 1>now by eighteen point six percent. Done Known has agreed

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<v Speaker 1>to buy White Wave Foods for about ten billion dollars,

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<v Speaker 1>adding the best selling US soy milk brand Silk and

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<v Speaker 1>the line of plant based foods, and doubling its size

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<v Speaker 1>in that market. At Hammond Covers deals for Bloomberg News

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<v Speaker 1>sort of pivots towards health and while list that we're

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<v Speaker 1>seeing a lot of the big food groups they're trying

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<v Speaker 1>to do. At the moment, it doesn't come cheap. There

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<v Speaker 1>is a guess, Tavalian, there's not many companies that do

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<v Speaker 1>sort of you know, specialize in this space in the

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<v Speaker 1>way that White Waves do. And it's the company that

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<v Speaker 1>has had a huge amount of sort of noise around

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<v Speaker 1>it for the past couple of years. A lot of

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<v Speaker 1>people have looked at it, a lot of people have

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<v Speaker 1>been interested in it. So it is expensive, but it

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<v Speaker 1>also does make sense that they're paying up for this

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<v Speaker 1>very highly priced asset. PepsiCo shares surging after second quarter

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<v Speaker 1>profit beat analysts estimates. The company also boosted its full

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<v Speaker 1>year forecasts, help by rising sales of snacks and soft

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<v Speaker 1>drinks in the US. PepsiCo shares up now by one

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<v Speaker 1>point three percent, and it is to thirty two on

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<v Speaker 1>Wall Street. Now, let's take a look at other news

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<v Speaker 1>from around the world on Bloomberg Radio. Thank you, Charlie

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<v Speaker 1>from the Bloomberg News Room. I'm Raimi in essentio. On

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<v Speaker 1>Capitol Hill, FBI Director James Comey is facing an onslaught

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<v Speaker 1>of criticism from Republicans regarding his decision not to pursue

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<v Speaker 1>criminal charges against Hillary Clinton over her use of a

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<v Speaker 1>private mail server. Committee chairman Jason chafe It says he's

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<v Speaker 1>mystified over how the FBI chief made his decision. The

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<v Speaker 1>average American that if they had done what you laid

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<v Speaker 1>out in your statement, that they'd be in handcuffs, and

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<v Speaker 1>they might be on their way to jail, and they

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<v Speaker 1>probably should call me. Maintains there is no evidence the

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<v Speaker 1>former Secretary of State lie to the FBI. The Justice

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<v Speaker 1>Department accepted his recommendation and now says the investigation is over.

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<v Speaker 1>Minnesota's governor is asking the Department of Justice to investigate

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<v Speaker 1>the shooting of a black man by a police officer

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<v Speaker 1>during a traffic stop. The victim's girlfriend posted the aftermath

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<v Speaker 1>of the shooting live on Facebook. She says police pulled

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<v Speaker 1>over Filando Castile for a broken tail light. The couple's

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<v Speaker 1>daughter was in the backseat of the car. Here's Minneapolis

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<v Speaker 1>and double A CP president in Nikima Levy pounds, the

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<v Speaker 1>reality is that something needs to be done, and it

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<v Speaker 1>needs to happen with a sense of urgency. We're tired

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<v Speaker 1>of the excuses. We're tired of the status quo. We're

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<v Speaker 1>tired of people being killed at the hands of those

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<v Speaker 1>who are supposed to protect. And swimming hours for women

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<v Speaker 1>only will continue at two Brooklyn pools. That's after city

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<v Speaker 1>officials determined the pools policy does not qualify as gender discrimination.

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<v Speaker 1>Women only swimming at the sites in Williamsburg and Crown

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<v Speaker 1>Heights is largely meant to accommodate Orthodox Jewish women whose

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<v Speaker 1>religious beliefs bar them from bathing with men. Global News

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<v Speaker 1>twenty four hours a day, powered by more than journalists

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<v Speaker 1>and analysts in more than one twenty countries from the

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<v Speaker 1>Bloomberg News Room. I'm Ramy in essentio, Charlie, and we

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<v Speaker 1>thank you and again recapping the down SMP R law

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<v Speaker 1>and NASDAK has higher SMP five hundred index now down

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<v Speaker 1>nine points of two thousand ninety, a drop of four

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<v Speaker 1>tenths of one percent. I'm Charlie. That's a Bloomberg Business flash.

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<v Speaker 1>Busy is taking stock with Kathleen Hayes and Prim Fox

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<v Speaker 1>on Bloomberg Radio. So you thought maybe sugary soft drinks

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<v Speaker 1>and snack foods are on their way out in a new,

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<v Speaker 1>more health conscious world, will think again. Results out from

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<v Speaker 1>Pepsi beating estimates and our next guest is actually lifting

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<v Speaker 1>his twelve month target on a PEPSI by four dollars

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<v Speaker 1>to a hundred twenty two dollars a share. Joe Agneasy

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<v Speaker 1>joins us now Equity analysts for consumer Staples at SMP

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<v Speaker 1>Global Market Intelligence here in New York City, Joe, Welcome

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<v Speaker 1>to the show. Good afternoon, So PEPSI what made the

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<v Speaker 1>quarter so good? While they reported solid organic sales growth

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<v Speaker 1>at three point three percent, this was driven by four

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<v Speaker 1>percent growth at Frio Lay, which is an improvement open

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<v Speaker 1>the prior year, and improving pricing at the North American

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<v Speaker 1>beverages their beverage Group developing markets up seven percent. This

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<v Speaker 1>is being fueled by improved portfolio of healthier options health

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<v Speaker 1>and wellness as people say that packaged food companies are

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<v Speaker 1>shifting towards health and wellness as a consumers desire to

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<v Speaker 1>eat better. Um. These sails are being fueled by cost

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<v Speaker 1>savings to the company's multi year productivity improvement initiatives, which

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<v Speaker 1>we see further supporting EPs growth going forward. I wonder

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<v Speaker 1>if you could tell us a little bit about some

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<v Speaker 1>of the divisions. I mean, let's start off with the

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<v Speaker 1>Quaker Foods operation in North America. Lower raw material cause

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<v Speaker 1>productivity gains, and they cut some operations at a joint

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<v Speaker 1>venture for dairy products. Yeah, so quickerly the smaller division

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<v Speaker 1>of the company. Uh, what they're doing there is part

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<v Speaker 1>of their overall growth strategy, which is shifting their products

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<v Speaker 1>and ingredients towards healthy eating UH. In Quaker, for instance,

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<v Speaker 1>they're launching stack bars, which the convenient item that consumers

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<v Speaker 1>are shifting towards, helping support revenue growth in the division.

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<v Speaker 1>But as I said, the Quakes Food division is a

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<v Speaker 1>little bit smaller. The division Freedom Law is the largest

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<v Speaker 1>division for the company. Gener is about a toll profits

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<v Speaker 1>and against are They're adding natural dents, UH, eliminating artificial

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<v Speaker 1>colors and flavors, launching new products which we expect to

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<v Speaker 1>help drive help books in the second half of the year.

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<v Speaker 1>Could you just give us a sense though, so on

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<v Speaker 1>the margin, it seems to me they're adding some products

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<v Speaker 1>that are helping UM, but they sell products around the world.

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<v Speaker 1>If you look at if you just kind of divide

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<v Speaker 1>this into truly like healthier less sugar products versus everything else.

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<v Speaker 1>Are they still getting by far and away the bulk

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<v Speaker 1>of their profit from kind of the sugary drinks and

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<v Speaker 1>the snacky snack foods. Well, the beverage shells are about

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<v Speaker 1>half of total sales. A little bit more of the

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<v Speaker 1>profits UH the weekend if everybody wants to focus on,

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<v Speaker 1>is in the carbonated soft drink, which continues to decline

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<v Speaker 1>along with the diet beverages, but within beverages itself, they're

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<v Speaker 1>shifting towards non carbonated drinks, which are doing extremely well.

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<v Speaker 1>They've got brands such as Gatorade and Tropicana what's are

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<v Speaker 1>growing strongly. Outside of the beverage division, they do focus

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<v Speaker 1>on salty and savory snacks, which is performing extremely well. Um,

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<v Speaker 1>they're they're focusing passage sizes are larger package, family and

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<v Speaker 1>party size packages, and they're shifting the ingredients to give

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<v Speaker 1>options to consumers who prefer to eat health here. So

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<v Speaker 1>they're launching lower fat products, reduced calorie products in such

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<v Speaker 1>of those that that that fit to consumer trends. Can

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<v Speaker 1>you tell us a little bit about some of these

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<v Speaker 1>new products as I'm looking at what's called the craft

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<v Speaker 1>Cola brand eighteen ninety three, how does that fit in

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<v Speaker 1>with the idea that they're going to bring back diet

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<v Speaker 1>pepsi that's made with aspartane. That's less than a year

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<v Speaker 1>after they've changed the sweetener for diet pepsi. But what

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<v Speaker 1>the doing is there's a sagentation of the market, so

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<v Speaker 1>UH as many different consumer groups that they are speaking

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<v Speaker 1>different uh the different desires for Cola the Pepsi eighteen

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<v Speaker 1>ninety three is a premium product, something of sleek can

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<v Speaker 1>made with real sugar. The diet soda with the affactan

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<v Speaker 1>that you mentioned UH is going to be they get

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<v Speaker 1>pulled of them shelves. They've got a back last consumers

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<v Speaker 1>who were very loyal to the product, and so they've

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<v Speaker 1>recognize that they've made a mistaken pulling that product and

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<v Speaker 1>they're not gonna added back. UM, giving consumers options and

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<v Speaker 1>choices across the beverage category, the better meat demands of

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<v Speaker 1>the consumers today. Acquisitions, UM, they have their flesh with

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<v Speaker 1>cash they're looking to spend. Yeah, I think there they

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<v Speaker 1>are inferent spanser. I would be surprised that they need

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<v Speaker 1>a significant, large acquisition. They mentioned to then the call

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<v Speaker 1>that a tuck tucking acquisitions will be the most likely

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<v Speaker 1>way they go UM, and again, I would think that

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<v Speaker 1>would focus on healthier organic type items. That's that's hitting

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<v Speaker 1>TV snack category into assaulting savory type snack typors and

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<v Speaker 1>not submission acquisitions like other UH players make within the

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<v Speaker 1>packaged food stack. You're not like the the acquisition today

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<v Speaker 1>announced by dan On for a white Wave estimated value

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<v Speaker 1>about ten billion dollars. Thank you very much. Joe and

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<v Speaker 1>Y c. He is equity analyst consumers Staples for S

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<v Speaker 1>and P Global Market Intelligence, who can follow them on

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<v Speaker 1>Twitter at sp Capital. I Q you're listening to taking Stock?

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<v Speaker 1>I'm PIM Fox my co host Kathleen Hayes. Right now

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<v Speaker 1>the shares of PepsiCo. They are up more than one

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<v Speaker 1>and a quarter percent, trading at a hundred seven dollars

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<v Speaker 1>and thirty four cents. This is Bloomberg. FBI Director James

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<v Speaker 1>Comey defending his recommendations against pursuing criminal charges for Hillary

0:11:05.679 --> 0:11:08.839
<v Speaker 1>Clinton over use of her private email while secretary of State?

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<v Speaker 1>Is it over? Are the Republics going arrest? Now? That's

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<v Speaker 1>coming up on Bloomberg