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

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.