DAVOS, Switzerland - PepsiCo (PEP) CEO Ramon Laguarta hopes to change the minds of food industry critics within the new Trump administration.
"It's nothing to worry about," Laguarta told the World Economic Forum in Davos, Switzerland.
Laguarta continued, "We've been a leader in reducing sodium, we've been a leader in reducing sugar. We've been a leader in eliminating fat in our products. We've been a leader in artificial color."
Sentiment around packaged food stocks changes with new administration. Trump's running Health and Human Services (HHS), Robert Kennedy Jr., is a longtime critic of the packaged food industry.
Meanwhile, the outgoing surgeon general warned this month that alcohol should carry a cancer risk label. The U.S. Food and Drug Administration (FDA) bans the use of red dye No. 3 in food, beverages, and ingested medications. PepsiCo does not have dyes in its U.S. portfolio, LaGuerta said.
The health news hurdles have investors worried that packaged food players may have to reformulate their products at huge cost. Bad media is not great for business either.
PepsiCo stock has fallen about 14% over the past three months, underperforming the S&P 500 Index (^GSPC), which has gained 5%. Shares of rival Coca-Cola (KO) fell 9% in the same range, while shares of spam maker Hormel (HRL) fell 3%.
"In the United States, I hope we also work with the new administration on how to remove artificial colors from food in the United States. I think it should be science-based. It should be very pragmatic," Laguarta said PepsiCo aims to be part of the solution.
"As an industry we should aspire to be free of artificial colors in food within three to four years. That's ambitious. I think it's doable and it should be a private, private collaboration that can drive that outcome ”
For PepsiCo investors, the pressured share price also reflects its latest performance in its snacks and beverages business. Both have slowed cautious spending by low-income households. A growing dollar bill (emphasis on international sales) doesn't help.
Sales and revenue fell 0.6% and 5% year over year, respectively, in the third quarter.
The Street's results were mixed when the company reported on February 4, along with a 2025 outlook.
"After a tumultuous year in 2024 that saw the company start at the top of the long-term algo with PepsiCo and ultimately end with below-algorithm organic sales after the highest three downside revisions, we believe PepsiCo management understands the situation and understands the situation, PepsiCo management understands the reality of the situation and the need for improvement.
Modi rates PepsiCo's stock performance in the industry.
"While the numbers are already lower than the algo (and think the buy sidebar is below the downside.), we still see potential for underlying 2025 revenue as we think PepsiCo will be biased to reinvest to support some of the weaker parts of the business Partly until there are signs of greater stability," Modi said.
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