This is How Gatorade Was to Blame for PepsiCo’s Beverage Sales Drop in North America

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Shares of PepsiCo tumbled in Wednesday trading after the company released its latest earnings report for the third quarter.

According to Chief Executive Indra Nooyi, it was a weak demand for Gatorade that played a part in the company’s beverage sales drop.

Gatorade accounted for a fifth of total sales volume in the region and due to a mild summer, there wasn’t a big demand for the drink.

Nooyi stated, “This summer, we directed too much of our media spending and shelf space to low-calorie, much smaller brands at the expense of our Pepsi and Mountain Dew trademarks.”

It was the first time in two years that Pepsi saw a beverage sales drop in North America.

PepsiCo reported that revenue from its North America beverage unit experienced a 3.4% drop to $5.33 billion.

Despite this, the company still had an impressive third quarter, with net income rising 7.6% to 2.14 billion or $1.49 per share. Adjusted EPS was $1.48, compared to the $1.43 that analysts expected.

Net revenue at $16.24 billion was a 1.3% increase but failed to hit Wall Street’s expectations of $16.31 billion.

Disclaimer: We have no position in PepsiCo, Inc. (NYSE: PEP) and have not been compensated for this article.