The Pepsi PEP earnings call for 3q-2013 was held October 16, 2013. Find below key excerpts related to Senomyx SNMX and their efforts to develop novel flavor ingredients for soda and other beverages.
Transcript excerpts from the Q&A session c/o SeekingAlpha.
So looking at the U.S. beverage business, how concerned are you about the volume pressures specifically on the diet CSD side of the business with the health and wellness concerns and what are the strategies to combat those issues going forward? You sounded optimistic that innovation could help earlier this year, but we haven’t heard much since.
Couple of years ago, we started to see the decline in full sugar CSDs, no question about that, especially in colas, we started to see the decline in full sugar colas and diets were holding up. Recently especially in the last, I would say, six months to nine months, there has been an accelerated decline in diet drinks as people say they don’t even want artificial sweeteners, they want more natural sweeteners, they don’t mind some calories, but they want natural sweeteners, they want to go back to sugar in some cases. So we are seeing a fundamental shift in consumer habits and behaviors. We anticipated some of these the diet slowdown has been a little more rapid than we expected. The good news is that our overall portfolio as Hugh mentioned is very balanced. And our diet – I am sorry our Dew consumer likes regular Dew, likes Diet Dew, likes Kickstart. So our Dew consumer is very different than the consumer for colas and consumer for lemon lime. We are staying on the path of innovating along natural sweeteners and thinking about flavoring agents to make sugar taste more sugary and so that’s all we are focused on. We talked about our products coming to market in 2014. That’s really the track we are on and we are not talking about it now, because we haven’t yet got a launch date. Once we have a launch date, you will hear a lot more about it. And our goal is to bring to the market a product that tastes great. We don’t want to rush a product to the market and then have to wonder why we launched something that wasn’t that great tasting. So that’s our focus.
So looking at the U.S. beverage business, how concerned are you about the volume pressures specifically on the diet CSD side of the business with the health and wellness concerns and what are the strategies to combat those issues going forward? You sounded optimistic that innovation could help earlier this year, but we haven’t heard much since.
Couple of years ago, we started to see the decline in full sugar CSDs, no question about that, especially in colas, we started to see the decline in full sugar colas and diets were holding up. Recently especially in the last, I would say, six months to nine months, there has been an accelerated decline in diet drinks as people say they don’t even want artificial sweeteners, they want more natural sweeteners, they don’t mind some calories, but they want natural sweeteners, they want to go back to sugar in some cases. So we are seeing a fundamental shift in consumer habits and behaviors. We anticipated some of these the diet slowdown has been a little more rapid than we expected. The good news is that our overall portfolio as Hugh mentioned is very balanced. And our diet – I am sorry our Dew consumer likes regular Dew, likes Diet Dew, likes Kickstart. So our Dew consumer is very different than the consumer for colas and consumer for lemon lime. We are staying on the path of innovating along natural sweeteners and thinking about flavoring agents to make sugar taste more sugary and so that’s all we are focused on. We talked about our products coming to market in 2014. That’s really the track we are on and we are not talking about it now, because we haven’t yet got a launch date. Once we have a launch date, you will hear a lot more about it. And our goal is to bring to the market a product that tastes great. We don’t want to rush a product to the market and then have to wonder why we launched something that wasn’t that great tasting. So that’s our focus.
secondly in your U.S. CSD business, do you think the innovation you’re working on is such that it could actually stock declines or do you think it just sort of slows declines is this something you think will come with some premium pricing, will it be truly differentiated, is really the question
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