We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is PepsiCo (PEP) Acquiring Brazilian Diary Company Vigor?
Read MoreHide Full Article
PepsiCo Inc. (PEP - Free Report) has bid to take over Brazil-based dairy company Fábrica de Produtos Alimentícios Vigor SA or “Vigor”, as per reports by the two Brazilian newspapers on Mar 8.
Valor Econômico, one of the country’s largest financial newspapers, reported that PepsiCo has made two bids for Vigor. The value of the bids could be as high as BRL 6 billion ($1.91 billion).,
Valor Econômico also stated that no deal has been reached so far as the present owner of Vigor - J&F Investimentos Ltda - did not agree on the value of a deal.
However, PepsiCo spokesperson reportedly refused to comment, as it “does not comment on rumors or speculation”. On the other hand, representatives of J&F, Lactalis and Lala did not immediately respond to requests for comment.
J&F, the investment holding company of Brazil’s Bautista family, reportedly has plans of shedding Vigor operation, as claimed by Valor Econômico. So, the company has also held discussions with other potential buyers apart from the U.S. base beverage giant PepsiCo.
Vigor, one of Brazil's largest dairy processors, produces a wide range of products that includes yogurts, yogurt drinks, spreads and cream cheese. Based in São Paulo (State), Vigor operates seven manufacturing units across four Brazilian states: São Paulo, Minas Gerais, Paraná and Goiás.
Is Diversification the Right Strategy for Cola Companies?
Growing health and wellness consciousness is hurting carbonated soft drinks or CSD category growth as consumers are particularly vigilant about the use of artificial sweeteners, high-sugar content and related obesity concerns. Among CSDs, the cola segment particularly has been facing challenges as consumers are opting for alternatives. Also, potential new taxes on sugar-sweetened beverages and growing regulatory pressures are affecting CSD sales.
The challenges in the CSD category have been felt by all major soft drink makers – The Coca-Cola Company (KO - Free Report) , Pepsi and Dr Pepper Snapple Group Inc. – leading to lower volumes and weak sales. Pepsi’s CSD volumes declined 2% each in 2014 and 2015 and 1% in 2016.
Successful signing of the latest Vigor-PepsiCo deal will boost the latter’s portfolio in the Brazilian dairy sector, apart from its Toddy chocolate milkshake line. In 2013, Vigor bought 50% stake in dairy cooperative Itambé and invested $130 million in expanding the company’s production capacity.
Apart from PepsiCo, Coca-Cola’s Brazilian partner, Leão Alimentos e Bebidas, reached an agreement to acquire dairy company Verde Campo back in Dec 2015.
Product innovation plays a huge role in PepsiCo’s success. Currently, 45% of PepsiCo’s total net revenue comes from “Guilt-Free” products, more than half of which comes from the “Everyday Nutrition” category. This percentage is likely to increase given the company’s stepped up innovation and focus on adapting to changing consumer preferences.
We believe, the company’s effort toward offering more products with less sodium, sugar and saturated fat, to reap benefits from a shifting consumer preference towards good-for-you and health and wellness products will bode well in the years to come.
Investors can also consider Coca-Cola Amatil Limited , a Zacks Rank #2 (Buy) stock. Full-year 2017 earnings are expected to increase 7.3% for Coca-Cola Amatil.
PepsiCo’s shares gained around 8.5% in the last one year, as against a 2.1% decline of the Zacks categorized Beverages-Soft Drinks industry. PepsiCo beat earnings estimates in all of the past four quarters, with an average beat ratio being 6.22%. Notably, the stock has a long-term expected earnings growth projection of 7.2%.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is PepsiCo (PEP) Acquiring Brazilian Diary Company Vigor?
PepsiCo Inc. (PEP - Free Report) has bid to take over Brazil-based dairy company Fábrica de Produtos Alimentícios Vigor SA or “Vigor”, as per reports by the two Brazilian newspapers on Mar 8.
Valor Econômico, one of the country’s largest financial newspapers, reported that PepsiCo has made two bids for Vigor. The value of the bids could be as high as BRL 6 billion ($1.91 billion).,
Valor Econômico also stated that no deal has been reached so far as the present owner of Vigor - J&F Investimentos Ltda - did not agree on the value of a deal.
However, PepsiCo spokesperson reportedly refused to comment, as it “does not comment on rumors or speculation”. On the other hand, representatives of J&F, Lactalis and Lala did not immediately respond to requests for comment.
J&F, the investment holding company of Brazil’s Bautista family, reportedly has plans of shedding Vigor operation, as claimed by Valor Econômico. So, the company has also held discussions with other potential buyers apart from the U.S. base beverage giant PepsiCo.
Vigor, one of Brazil's largest dairy processors, produces a wide range of products that includes yogurts, yogurt drinks, spreads and cream cheese. Based in São Paulo (State), Vigor operates seven manufacturing units across four Brazilian states: São Paulo, Minas Gerais, Paraná and Goiás.
Is Diversification the Right Strategy for Cola Companies?
Growing health and wellness consciousness is hurting carbonated soft drinks or CSD category growth as consumers are particularly vigilant about the use of artificial sweeteners, high-sugar content and related obesity concerns. Among CSDs, the cola segment particularly has been facing challenges as consumers are opting for alternatives. Also, potential new taxes on sugar-sweetened beverages and growing regulatory pressures are affecting CSD sales.
The challenges in the CSD category have been felt by all major soft drink makers – The Coca-Cola Company (KO - Free Report) , Pepsi and Dr Pepper Snapple Group Inc. – leading to lower volumes and weak sales. Pepsi’s CSD volumes declined 2% each in 2014 and 2015 and 1% in 2016.
Successful signing of the latest Vigor-PepsiCo deal will boost the latter’s portfolio in the Brazilian dairy sector, apart from its Toddy chocolate milkshake line. In 2013, Vigor bought 50% stake in dairy cooperative Itambé and invested $130 million in expanding the company’s production capacity.
Apart from PepsiCo, Coca-Cola’s Brazilian partner, Leão Alimentos e Bebidas, reached an agreement to acquire dairy company Verde Campo back in Dec 2015.
Product innovation plays a huge role in PepsiCo’s success. Currently, 45% of PepsiCo’s total net revenue comes from “Guilt-Free” products, more than half of which comes from the “Everyday Nutrition” category. This percentage is likely to increase given the company’s stepped up innovation and focus on adapting to changing consumer preferences.
We believe, the company’s effort toward offering more products with less sodium, sugar and saturated fat, to reap benefits from a shifting consumer preference towards good-for-you and health and wellness products will bode well in the years to come.
Zacks Rank & Stock Performance
PepsiCo holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors can also consider Coca-Cola Amatil Limited , a Zacks Rank #2 (Buy) stock. Full-year 2017 earnings are expected to increase 7.3% for Coca-Cola Amatil.
PepsiCo’s shares gained around 8.5% in the last one year, as against a 2.1% decline of the Zacks categorized Beverages-Soft Drinks industry. PepsiCo beat earnings estimates in all of the past four quarters, with an average beat ratio being 6.22%. Notably, the stock has a long-term expected earnings growth projection of 7.2%.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>