The tea leaves are difficult to read, but the latest comments from PEP management are below.
"However, the cola category continues to be a challenge. We took pricing in this declining category and continued to invest in R&D to break some of the compromises that caused consumers to leave the cola category. While this work progresses, we are managing the business responsibly and profitably.
Having said that I think that mature low growth businesses especially if they are big and have consumer appeal and also right to reinvention and I think it's very important that established players reinvent their categories as opposed to allowing others to reinvent it and push them out and there are examples, many, many examples of big companies especially companies based here in the U.S. that did not reinvent their categories. So I think we adopt today behave responsibly, generate the cash in the North American business, grow responsibly and wait for international growth but reinvent North America simultaneously, which is why we have stepped up all our R&D investments in sweeteners, flavoring agents, new processing technologies. Unfortunately, the timing is a bit off, because R&D projects don’t result in major breakthroughs in the same timeframe with which you can manage responsibly. So, you got to give it little bit more time to yield results."
PEP Annual Meeting of Shareholders (quote c/o SeekingAlpha)
"We are the number one liquid refreshment beverage player in measured channels in North America and we’re dialing up our beverage innovation in support of zero calorie products, and we’ve also stepped up our initiatives behind offering reduced calorie beverages like Pepsi Next, which surpassed $100 million in retail sales in less than 12 months from the markets."
Sanford Bernstein Conference (except via SeekingAlpha)
"three years ago I’m sitting with investors and a lot of the sales side people who told me that I was wrong in saying the CSD market was going to decline; that was actually going to grow. We anticipated the decline of the carbonated soft drink market and we started to invest in technology to break all of the compromises that people didn’t want to make. So for example, when we go and talk to consumers especially the United States, they love carbonated soft drinks, the love the bubbles, they love the caffeine, they love the taste of cola. What do they not like? They don’t like the sugar levels. And recently they don’t like artificial sweeteners. So we knew we had to address both these barriers. When they said they didn’t like the sugar levels, they didn’t like the extent of sugar in the business they want it at a lower sugar level, and they wanted it without any artificials. So the investments we started to make in R&D was natural sweeteners that work in colas, Stevia unfortunately does not work well in colas and we started to play around mid-calorie drinks to see how does the taste actually work. And Pepsi Next actually is holding its own and it's a great tasting mid-calorie product, so we know there’s a consumer for mid-calorie product. So now with the work we’re doing on natural sweeteners that and the work we’re doing on flavoring agents coming through the pipelines, we actually believe that if you let this go too long in another three or five years the consumer will walk away from CSDs but while the consumer still remains in love with CSD, if we can address the barriers to consumption we can actually bring back the lapsed users. It may never be the high levels of consumption that we had when we were young. The new consumer has too many choices that they’re playing around with, but I actually think there is a once in a lifetime opportunity to bring the consumer back to CSD.
So, you’re placing a lot of weight on this Stevia based Reb D, it seems like innovation, let’s say?
I didn’t say Stevia or Reb D. Good try...
By february 2014 "We’re going to tell us what our plans are for North American Beverage business."