PURCHASE, NEW YORK
Soft drink sales are sagging with medical research now linking soft drinks to, among other things, kidney stones and gout, and local governments seeking ways to cap consumption. But despite it all, PepsiCo has performed strongly and consistently. Founded in 1898 to sell a drink formulated by pharmacist Caleb Bradham, and expanding into the snack food business with the 1965 Frito-Lay merger, the company’s current survival is widely attributed to Indra Nooyi, who has been CEO for ten years. She diversified the company’s offerings to include over 20 brands, some of which offer healthier choices. As a result, the company does over $1 billion in retail sales a year, and in 2016, it disbursed over $7 billion to shareholders via stock repurchases and dividends. Its 7.23% year-to-date earnings growth is well below the Standard and Poor’s 500 average of 14.32% and competitor Coca-Cola’s 12.19%. Even so, the company remains a solid bet on the stock market, with a net 60.15% return on investment over the last five years, compared to Coke’s 21.67%.