Bottler Adjusts to Covid-Related Staff Shortages.
There has been a changing of the guard at PepsiCo’s largest independently owned US franchise bottler, Pepsi Bottling Ventures. Paul Finney has retired as president and CEO, a post he had held since 2012. Succeeding Finney is Derek Hill, a 30-year veteran of the Pepsi system. Hill has served as CFO of PBV since 2008. He joined PBV in 2000 as VP of corporate planning. Before that he held accounting and business analyst roles at PepsiCo. PBV handles about 4.2% of Pepsi’s US bottle and can volume in the US. The bottler is a joint venture between Japan-based beverage conglomerate Suntory and PepsiCo, which holds a 35% stake. Given the leadership change, BD took the opportunity to talk to Hill about how PBV is addressing market conditions, the consumer landscape, pricing, and cost inflation.
ALUMINUM CANS. Hill said that PBV, like most companies, continues to deal with high inflation and supply chain disruptions. Aluminum shortages led to bottlers cutting back on flavor assortments at retail during the pandemic to focus on core brands as consumer demand soared. “We certainly don’t have the can issues we had in 2020, and things continue to trend in the right direction,” Hill said. “The pandemic remains a wildcard in getting back to 100%.”
LABOR SHORTAGE. Hill said PBV has “definitely felt the impact” of labor shortages and the company has made adjustments on production, warehouse loading, and distribution routes to keep up with demand. “Since the onset of the pandemic, we’ve put in place increased safety protocols to minimize exposure at the workplace -- even going as far as manufacturing our own sanitizer for facility cleanings,” he said. “There are a lot of heroics going on and our employees are to be credited with adjusting to the challenges and making us go every day.”
COST INFLATION. PBV has plans in place to deal with higher costs, including pricing to cover inflation, Hill said. “A major challenge we’re facing as an industry is the increased cost of raw materials,” he said, adding that even the paper used to print customer receipts from hand- held devices rose more than +20%. Interest rate increases by the US Federal Reserve could also have an impact, Hill said.
DEMAND OUTLOOK. Overall, PBV continues to see high demand for the company’s products, Hill said. Growth is coming from retail and foodservice. “We’re hopeful that some of the higher demand sticks,” Hill said. “We saw momentum in our foodservice business as we exited the year.” PBV surpassed 2019 revenue levels in most foodservice channels, Hill said, adding that he expects the growth to continue in 2022. That will help offset any tapering of revenue at retail, he said.
GATORADE. “We continue to manage through the market volatility that COVID has brought to our business and are hopeful that we see some of it subside as the year progresses,” Hill said when asked about Gatorade supply shortages. “We have a great team in place and are able to be very nimble to deal with whatever comes our way and get our customers and consumers what they want.”
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