Key Takeaways PEP's PBNA posted high-single-digit away-from-home growth and gained share in no-sugar colas and Gatorade.PBNA division's focus on innovation, affordability and functional hydration products drives consumer demand.Frito-Lay faces volume challenges, with Lay's lagging amid progress in Cheetos, Doritos and other snacks.PepsiCo, Inc. (PEP) enters the third quarter of 2025 with strong momentum in the PepsiCo Beverages North America division (PBNA), which delivered high-single-digit growth in away- ...

Core Insights - PepsiCo, Inc. is addressing volume softness through strategic pricing, targeted value investments, and product innovation, particularly in its Frito-Lay North America segment [1][3] - The company has implemented a "dual-size" price-pack architecture to cater to both value-conscious and premium consumers, resulting in improved unit volumes [1][3] - PepsiCo is focusing on intelligent reinvestment strategies that balance affordability with profitability, utilizing data to optimize promotions and product sizes [2][3] Strategic Initiatives - The introduction of smaller packs and value-priced options aims to maintain consumer frequency while enhancing operational efficiencies [2][8] - PepsiCo's portfolio transformation includes expansion into high-growth international markets, with expected mid- to high-single-digit growth from countries like India and Brazil [3][8] - The company is leveraging international momentum to offset domestic volume pressures and preserve margins [3][8] Competitive Landscape - Coca-Cola and Mondelez are key competitors in the beverage and snack sectors, respectively, with Coca-Cola focusing on beverage dominance and Mondelez competing in the snack category [4][5][6] - Both competitors are also emphasizing innovation, affordability, and international expansion to capture market share [6] Financial Performance - PepsiCo's shares have declined by 11.6% year to date, contrasting with the industry's growth of 7% [7][8] - The company trades at a forward price-to-earnings ratio of 17.09X, which is below the industry's average of 18.47X [9] - Earnings estimates indicate a year-over-year decline of 3.6% for 2025, followed by a projected increase of 5.3% in 2026, with recent estimates remaining unchanged [10]

Core Insights - Mondelez International (MDLZ) is facing significant challenges due to record cocoa inflation, impacting gross profit despite a 3.1% increase in organic revenues in Q1 2025 driven by strong pricing in its chocolate portfolio [1][8] - The company has implemented a multipronged mitigation strategy focusing on pricing, revenue growth management, and strategic pack architecture, which has shown minimal disruption and maintained consumer loyalty to core brands [2][5] - There are concerns regarding Mondelez's ability to sustain profitability amid prolonged commodity inflation, with a 3.5% decline in volume mix attributed to pricing elasticity and planned pack downsizing [3][4] Financial Performance - In Q1 2025, Mondelez reported a 3.1% organic revenue growth, primarily from pricing gains in its chocolate segment, but experienced a decline in gross profit and adjusted earnings per share due to soaring cocoa prices [1][8] - Operating income in developed markets, particularly North America, was negatively affected by cocoa cost pressures and soft consumer demand, while Europe saw pricing success but still faced operating income erosion [3][4] Future Outlook - Mondelez is positioned to manage cocoa volatility effectively, with strong pricing strategies, cost controls, and resilient brands supporting its margin strategy [5] - The company anticipates benefiting from improved leverage as cocoa markets stabilize, allowing for reinvestment in long-term growth [5] Stock Performance - Mondelez shares have increased by 13.4% over the past six months, outperforming the industry and broader Consumer Staples sector [6] - The stock is currently trading at a forward P/E ratio of 20.95, above the industry average of 15.72, indicating market expectations of business stability [13] Earnings Estimates - The Zacks Consensus Estimate for Mondelez's earnings has been revised upward, with current fiscal year estimates at $3.02 per share and next fiscal year at $3.33 per share, reflecting positive sentiment [16]

Core Strategies - Mondelez International is focused on creating memorable consumer experiences through smart brand investments and innovation driven by customer preferences [1][3] - The company is well-positioned for steady growth and long-term value for shareholders by continuously evolving its product lineup to match changing tastes [1] Financial Performance - In the first quarter of fiscal 2025, Mondelez reported a 3.1% increase in organic net revenues, with a 6.6 percentage point gain attributed to favorable pricing strategies [3] - The chocolate category experienced a 10.1% increase in revenue, driven by strong performance in both developed and emerging markets [4] Product Portfolio and Innovation - Mondelez's biscuits and baked snacks portfolio also saw growth, supported by brands like LU and 7DAYS, with revenue growth management strategies playing a key role [5] - Innovation is a cornerstone of Mondelez's strategy, exemplified by the successful launch of the Cadbury Dairy Milk Biscoff bar, which became the best-selling SKU in the UK [7] Market Expansion - The company expanded its distribution network into over 100,000 stores in emerging markets during the first quarter of fiscal 2025, enhancing market penetration [8] Competitive Positioning - Mondelez is effectively positioning itself for sustainable success by focusing on core snacking categories, investing in consumer-centric product development, and emphasizing health-conscious offerings [9] - The stock has gained 1.4% over the past three months, outperforming the industry's 3.7% decline [9]

Group 1: Passive Income and Investment Opportunities - Generating passive income can lead to financial freedom and increased independence [1] - Investing in high-yield dividend stocks, particularly in the food and beverage industry, is a viable strategy for passive income [2] Group 2: Mondelez - Mondelez has a current dividend yield of 2.9%, which is more than double the S&P 500's yield of 1.4% [3] - The company owns iconic brands like Oreo and Cadbury, generating billions in revenue and free cash flow, supporting a 10.5% compound annual growth rate in dividends over the past five years [4] - Mondelez aims for organic revenue growth of 3% to 5% annually, supporting high-single-digit EPS growth, and has a strong balance sheet for acquisitions [5] Group 3: PepsiCo - PepsiCo offers a dividend payout of 4.1% and plans to increase it by 5% starting in June, marking 53 consecutive years of dividend growth [6] - The company has a diverse portfolio of brands, many generating over $1 billion in annual sales, with durable demand [7] - PepsiCo invests in product innovation and productivity, expecting 4% to 6% annual organic revenue growth and high-single-digit EPS growth, with a strong balance sheet for acquisitions [8] Group 4: Starbucks - Starbucks has a dividend yield of 2.9% and has increased its dividend for 14 consecutive years, with a 20% compound annual growth rate during that period [9] - The company sees potential to double its U.S. store footprint and expand internationally, with over 40,000 stores currently [9] - Starbucks aims to enhance sales growth and profitability by focusing on coffee and improving customer experience [10] Group 5: Industry Overview - The food and beverage sector is characterized by steadily rising revenue and cash flow, enabling companies to pay growing dividends [12] - Companies like Mondelez, PepsiCo, and Starbucks are highlighted as strong candidates for passive income due to their enticing and steadily increasing dividends [12]