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Pepsi beats, but beverage sales in North America disappoint

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Pepsi

(Reuters) - PepsiCo Inc reported quarterly revenue above Wall Street estimates on Tuesday, as investments in marketing and developing new products for Latin America paid off.

However, the company missed sales estimates for North America beverages, as well as for its Frito-Lay branded snacks.

Sales in its North America beverages unit, which houses Gatorade, Mountain Dew and its trademark cola brand, rose 2 percent to $5.46 billion in the third quarter, but fell short of analysts' average estimate of $5.6 billion, according to Thomson Reuters I/B/E/S.

"We continued to see very strong operating performance from our international divisions, propelled by developing and emerging markets," Indra Nooyi said on her last day as Pepsi's chief executive officer. Nooyi will remain chairman until early 2019.

Net income attributable to the company rose to $2.50 billion, or $1.75 per share, in the third quarter ended Sept. 8, from $2.14 billion, or $1.49 per share, a year earlier.

Net revenue rose 1.5 percent to $16.49 billion.

Analysts on average had expected revenue of $16.36 billion, according to Thomson Reuters I/B/E/S.

Shares were down marginally in low volumes in early trading on Tuesday.

 

(Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila)

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Pepsi shoots down rumors that it is considering cannabis following a report that Coca-Cola is eyeing CBD-infused beverages (PEP)

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Diet Pepsi

Insiders have been buzzing about PepsiCo considering a move into the cannabis business, following a report that Coca-Cola is eyeing a deal with marijuana producer Aurora Cannabis.

However, on Tuesday, the snack-and-beverage giant shot down the rumors during a call with investors. Hugh Johnson, PepsiCo's CFO, said in response to a question on cannabis-infused products that the company looks at everything, but has no plans at this point to enter into the market, due in part to regulatory issues. 

In late September, analysts said that they saw Coca-Cola's reported interest in CBD as not too surprising, as CBD-infused drinks could be a boon for the beverage giant.

CBD is already a booming, $1 billion business, and it is being used as an ingredient in salves, oils, balms, and beverages, despite continuing legal questions. Beverage giants investing in CBD-infused drinks could result in the creation of a new mainstream category of beverage.

A deal between Coca-Cola and Aurora Cannabis could "broaden the reach of cannabis-­infused beverages into functional wellness categories, enabling KO to potentially one day 'own' the non­recreational cannabis-­infused beverage category," Wells Fargo analyst Bonnie Herzog wrote in a note to investors.

With the potential of a new category looming, news of PepsiCo's interest in the industry seemed likely to follow.

Vivien Azer, an analyst at Cowen, said in a note to clients in late September that she "would not be surprised" to hear of a deal between PepsiCo and a cannabis company, proposing that a CBD brand could serve as a "good complement" to PepsiCo's Gatorade franchise. 

However, it seems PepsiCo isn't ready to officially signal interest in CBD or cannabis — at least, not yet. Cannabis stocks have been booming, to a degree that has raised concerns among certain investors. Regulation remains murky, and CBD's actual impact is still unknown.

"The question is: Is it going to be something akin to energy drinks — a new category that is trendy at first, that actually grows into a meaningful long-term business? Or is it going to be sort of a fad?"Duane Stanford, the executive editor of industry publication Beverage Digest, told Business Insider.

SEE ALSO: Rumors are flying about soda giants eyeing cannabis companies — and the reason could be rooted in a fear of being 'left behind on the next big thing'

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The White House is reportedly considering former Pepsi CEO Indra Nooyi to head the World Bank (PEP)

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Indra Nooyi

  • The White House is reportedly considering Indra Nooyi, the former CEO of PepsiCo, to become the next president of the World Bank, The New York Times reported on Tuesday.
  • Nooyi, who stepped down from Pepsi in August after a 12-year stint, has been "courted as an administration ally by Ivanka Trump," The Times wrote.
  • Trump described Nooyi as a "mentor" and "inspiration" to many in a tweet when Nooyi stepped down from Pepsi.  

The White House is reportedly considering Indra Nooyi, the former CEO of PepsiCo, to be the next president of the World Bank, The New York Times reported on Tuesday.

Nooyi, who stepped down from Pepsi in August after a 12-year stint, has been "courted as an administration ally by Ivanka Trump," The Times wrote.

Trump is working with treasury secretary Steven Mnuchin and acting chief of staff Mick Mulvaney to lead the process of selecting the new president of the World Bank.

Read more:How Ivanka Trump and Jared Kushner built their $1.1 billion fortune and how they spend it

She described Nooyi as a "mentor" and "inspiration" to many in a tweet when Nooyi stepped down from Pepsi.  

It is not yet clear whether Nooyi would accept the nomination, according to The Times. 

After Donald Trump became president, Nooyi said that the news was terrifying some of her employees.

"I had to answer a lot of questions from my daughters, from our employees. They were all in mourning," she told Andrew Ross Sorkin at The New York Times' DealBook conference in November 2016.

"Our employees were all crying," she said. "And the question that they're asking, especially those who are not white, 'Are we safe?' Women are asking, 'Are we safe?' LGBT people are asking, 'Are we safe?' I never thought I would have to answer those questions."

A PepsiCo spokesperson later told Fortune that Nooyi misspoke. In a statement to Fortune the spokesperson said:

 

"She was referring to the reaction of a group of employees she spoke to who were apprehensive about the outcome of the election. She never intended to imply that all employees feel the same way. We are incredibly proud of the diverse views and backgrounds across our workforce, and we are united in our desire for a brighter future."

 

The DC-based World Bank, founded after World War II to finance economic-development projects in emerging economies, has traditionally been led by an American. However, this is not a given. 

The Trump administration, which has been wary of and even hostile toward Western-led international institutions like the World Bank, will now be tasked with submitting a recommendation to the bank's board.

Correction: An earlier version of this story stated that Indra Nooyi endorsed Hillary Clinton in the 2016 presidential election.

SEE ALSO: Pepsi is making a $3.2 billion bet on an unconventional sparkling-water brand as Americans ditch soda

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PepsiCo is laying off corporate employees as the company commits to millions of dollars in severance pay, restructuring, and 'relentlessly automating' (PEP)

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  • PepsiCo has kicked off a round of layoffs impacting employees in multiple offices, two people who were laid off by the company told Business Insider. 
  • The company announced in a quarterly earnings call last week that it expects to incur $2.5 billion in restructuring costs through 2023, with 70% of charges linked to severance and other employee costs.
  • Roughly $800 million of the $2.5 billion is expected to impact 2019 results. 
  • PepsiCo also recently announced plans to restructure the organization and "relentlessly" invest in automation. 

PepsiCo has kicked off a round of layoffs as it begins a four-year restructuring plan that is expected to cost the company hundreds of millions of dollars in severance pay.

This week, PepsiCo employees in offices including Plano, Texas, and the company's headquarters in Purchase, New York, were alerted that they are being laid off, according to two people who were directly impacted by the layoffs. These two workers were granted anonymity in order to speak frankly without risking professional ramifications. 

At least some of the workers who were alerted of layoffs will continue to work at PepsiCo until late April as they train their replacements in the coming weeks, the two workers told Business Insider. 

Due to the secrecy surrounding the layoffs, these workers said that it was unclear how many teams or individuals had been impacted. PepsiCo declined to comment on the layoffs. 

By PepsiCo's own estimates, the company's layoffs are expected to be a multimillion-dollar project in 2019. 

Last Friday, PepsiCo announced in a filing with the Securities and Exchange Commission that it is expected to incur $2.5 billion in pretax restructuring costs through 2023, with 70% of charges linked to severance and other employee costs. The company is also planning to close factories, with an additional 15% tied to plant closures and "related actions."

Roughly $800 million of the $2.5 billion is expected to impact 2019 results, in addition to the $138 million that was included in 2018 results, the company said in the SEC filing. In February 2018, PepsiCo announced plans to lay off less than 1% of its more than 110,000 corporate employees, including 200 employees at its Purchase, New York, headquarters. 

PepsiCo also announced a commitment to save $1 billion annually through 2023. Efficiency and restructuring were major themes in PepsiCo's quarterly earnings call with investors on Friday. 

"Our second set of priorities ... involves becoming more capable, leaner, more agile and less bureaucratic," CEO Ramon Laguarta said. "In doing so, we will drive down cost and that enables us to plow the savings back into the business to develop scale and sharpen core capabilities that drive even greater efficiency and effectiveness creating a virtuous cycle."

Being leaner and more agile seems to be linked to cutting jobs, with CFO Hugh Johnston confirming to CNBC that the company plans to lay off workers in positions that can be automated. Laguarta said on Friday that PepsiCo is "relentlessly automating and merging the best of our optimized business models with the best new thinking and technologies." 

Last week, PepsiCo announced it would reorganize its beverage business into four US regional divisions and a single Canadian division, according to an internal memo obtained by trade publication Beverage Digest. According to Beverage Digest, the memo states the restructure will "simplify the way we work, remove red tape and push decision-making and resources into the market." 

If you were impacted by the PepsiCo layoffs and have a story to share, contact ktaylor@businessinsider.com.

SEE ALSO: Some fast-food CEOs make hundreds of times as much as the average worker. Here's how the biggest names stack up.

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12 facts that show why bottled water is one of the biggest scams of the century

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hiker drinking bottled water in desert

  • Nearly 780 million people worldwide do not have access to a source of clean water (water that flows through a household connection, borehole, well, or protected spring).
  • In the US, 99.2% of the country has access to clean tap water, but many Americans chose to drink bottled water instead due to concerns about poor taste and contamination
  • Bottled water and clean tap water are virtually identical in terms of purity and taste. In a 2011 study, only one-third of blind taste-testers could correctly identify tap versus bottled water.
  • Unlike tap water, however, producing bottled water is an expensive, resource-heavy process that requires crude oil and extra water. 

There's nothing quite like the feeling of a pure, ice-cold drink of water.

While some Americans get water from the tap, the rest pay for the bottled variety — at a cost of $100 billion a year.

The average cost of a gallon’s worth of single-serve bottled water in the US is nearly $9.50, according to FoodandWaterWatch. That's nearly three times more expensive than the average price for a gallon of milk, and almost four times the average price for a gallon of regular gasoline. Bottled water costs nearly 2,000 times more than tap water, which costs less than a cent per gallon.

Many people assume that the higher price tag is justified by the health benefits of bottled water, but in most cases, that's not true.

This year's World Water Day falls on March 22 — the day is meant to draw attention to disparities in clean-water access around the globe. Worldwide; 780 million people don't have access to a source of clean water.

But for the vast majority of Americans, tap water and bottled water are comparable in terms of healthiness and quality. In some cases, publicly sourced tap water may actually be safer, since it is usually tested more frequently, Plus, bottled water is more likely to be contaminated by microplastic particles than tap water.

"It is wrong to assume that bottled water is somehow cleaner, healthier, or safer than tap water in the US," Peter Gleick, an environmental scientist and the co-founder of the Pacific Institute, told Business Insider.

There are exceptions, however: Water that comes from people's private wells do not see the same rigorous testing as those whose water comes from public sources. And, as was the case Flint, Michigan, some public sources are not properly screened.

Nonetheless, there are plenty of reasons for most people to stop shelling out for bottled water. Here's what to know.

SEE ALSO: Bottled water is a scam for most Americans, but a new report reveals some surprising places where it's dangerous to drink the tap

The first documented case of bottled water being sold was in Boston, Massachusetts in the 1760s. A company called Jackson's Spa bottled and sold mineral water for "therapeutic" uses.

Companies in Saratoga Springs and Albany also packaged and sold water.



Americans consume more packaged water overall than people in any other country in the world except China.

Across the globe, people drink roughly 10% more bottled water every year. On a per-capita basis, the US ranks number six in bottled water consumption.



Today, Americans today drink more bottled water than milk or beer. Each person consumes roughly 39 gallons of bottled water annually.

Source: Beverage Marketing Corp.



See the rest of the story at Business Insider

The $177 billion owner of Lay's chips sued small-time Indian farmers for growing a type of potato it claims exclusive rights over

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india potato gujarat lawsuit pepsico lays

  • PepsiCo, the owner of Lay's potato chips, sued a small group of Indian farmers for growing a potato variety it says belongs to it alone.
  • The food and drink giant says it has had exclusive rights to the FL-2027 potato in India since 2016, and it wants four farmers to pay $143,000 each for growing it without permission.
  • Dozens of activists and farmers' unions have written to India's Ministry of Agriculture condemning the suit and accusing PepsiCo of intimidation.
  • After a hearing on Friday, PepsiCo told Business Insider it would "amicably settle" with the farmers and only took legal action "as a last resort."
  • Visit Business Insider's homepage for more stories.

PepsiCo, the $177 billion owner of the potato-chip brand Lay's, sued a group of farmers in India for growing a variety of potato to which it says it owns the exclusive rights.

The company sought reparations of $143,000 each from four farmers accused of growing the FL-2027 potato, which PepsiCo says it has had exclusive rights to in India since 2016, according to legal documents submitted to a district court in Ahmedabad, in the western Indian state of Gujarat, on April 11 and seen by CNN.

After a hearing in Ahmedabad District Court on Friday, PepsiCo said it had only taken legal action "as a last resort," adding that it will now seek to "amicably settle" with the farmers involved in the case.

A spokesman for PepsiCo India told Business Insider after the hearing:

"PepsiCo India has proposed to amicably settle with people who were unlawfully using seeds of its registered variety."

"The company was compelled to take the judicial recourse as a last resort to safeguard the larger interest of thousands of farmers that are engaged with its collaborative potato farming program.

"PepsiCo India remains deeply committed to resolving the matter and ensuring adoption of best farming practices."

Ramon Laguarta, Elected Chief Executive Officer of PepsiCo.

"PepsiCo is India's largest process grade potato buyer and amongst the first companies to work with thousands of local farmers to grow a specific protected variety of potatoes for it," a representative told CNN prior to the hearing.

"In this instance, we took judicial recourse against people who were illegally dealing in our registered variety."

PepsiCo said it has given permission to several hundred Indian farmers to grow the special potato but not to the farmers in the lawsuit.

Two of the farmers involved in the case were named as Fulchand Kachchhawa and Suresh Kachchhawa, both from near the city of Deesa, north of Ahmedabad in Gujarat.

Lays chips 2

PepsiCo said the growing of FL-2027 without permission is a rights infringement under Section 64 of the Protection of Plant Varieties and Farmers' Rights Act 2001.

Read more:A giant potato in Idaho has been turned into an Airbnb, and you can rent it for $200 a night

Lawyers, activists, and farmers unions have rallied to the farmers' defense.

More than 190 activists wrote a joint letter to the Indian Ministry of Agriculture opposing what they called the "false and untenable" lawsuit from the food and drink behemoth, India Today wrote. PepsiCo also owns brands such as Gatorade, Quaker Oats, and of course, Pepsi.

Activists are also raising legal aid to help the farmers fight the case.

One of the signatories, Kapil Shah of the advocacy group Jatan, told CNN that PepsiCo's actions were "against food sovereignty" and the "sovereignty of the nation."

"We will fight it out, no matter how big the company," Shah said. "Pepsi has made a huge mistake."

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Americans are ditching fizzy, sugary sodas more than ever before. Pepsi's marketing head is adopting a challenger mindset to survive. (PEP)

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  • Pepsi is navigating soda's image problem by diversifying its portfolio to products like Bubly and adopting a challenger mindset, according to its vice president of marketing, Todd Kaplan.
  • Kaplan told Business Insider that the brand was taking a page from the playbooks of Burger King and Domino's in being disruptive.
  • He also said Pepsi learned from its Kendall Jenner ad fiasco of 2017 by working more closely with its agencies.
  • Visit Business Insider's homepage for more stories.

As people seek out healthier drinks, sugary soda is battling an image problem.

Pepsi is fighting back by diversifying its product portfolio, adopting a challenger mindset, and doing more consumer-led marketing, according to its vice president of marketing, Todd Kaplan. Pepsi's North American beverage unit grew sales 2% in the first quarter of 2019.

Business Insider caught up with Kaplan as Pepsi prepared to launch its latest summer-themed campaign. Here's an edited version of the conversation.

Tanya Dua: You've had various roles during your career at PepsiCo, from leading incubation brands to global innovation and insights. How has that prepared you for your current role?

Todd Kaplan: Starting new brands like Lifewtr and Bubly has its own challenges. But going on to an established brand like Pepsi is a very different conundrum. When you look at Pepsi, it's not that it has an awareness issue, or a penetration issue, or a trial issue. It's really about brand relevance and how people connect with the brands and interact with it. And so that's where I've put my focus: on being consumer-led and making sure that we have our finger on the pulse of culture.

Dua: How are you doing that?

Kaplan: We're trying to take a bit of a challenger mindset to the Pepsi brand and rethink some of the conventions. So whether it's innovation and things like Nitro Pepsi or having a splash of real fruit juice in Pepsi, or in culture like really addressing the question "Is Pepsi OK?" head-on in the Super Bowl and doing it in a fun and culturally relevant way with Cardi B. No matter what brand or product, the key is being consumer-led and paying attention to what's happening in culture and letting that be a guide.

Being a challenger is more of a mindset than anything else. It all starts with really truly understanding who you are as a brand and what's your point of view and outlook on the world. We're maniacally focused on connecting with consumers in culture and doing it in a way that is always true to who we are. There are a bunch of brands that have adopted this mindset and are constantly disrupting the space while continuing to scale their businesses, like Burger King and Domino's.

Dua: Your category is struggling, with people not drinking soda beverages like before. How do you deliver on the challenger brand mindset?

Kaplan: You have got to question category norms and think about where the pockets of growth are. Brand Pepsi is back in growth. We're growing 4% — the fastest we've had in the past seven years. And we're seeing growth across all our core sublines. There's definitely growth — it's just the question of how you get it and where do you get it, subject to kind of the strategies that you employ. You can go after share, but then there's also opportunities to go after new occasions and rethink what soda is and what cola means to the next generation of consumers with new propositions. You don't have to accept the norms as they've been handed to you.

Dua: There are reports that you are looking to invest in an in-house data, media-planning, and analytics team. What is the importance of having data and analytics close?

Kaplan: It is critically important. Between mobile devices, and everything's tracked and stored everything in between, there's a lot of rich insights that can come from that. As marketing strategies get more fragmented and custom-tailored, data and analytics are a great conduit to help marketers become more effective in that journey.

Dua: How does that focus on data and analytics help as you look to ramp up e-commerce?

Kaplan: E-commerce is a critical growth opportunity for Pepsi and just the broader beverage space. It is an area that has been obviously exploding in recent years. We need to look at all the different channels of business and where we sell our products.

Dua: You're rolling out a new summer campaign with AR lenses, QR codes, and Instagram. What's the strategy there?

Kaplan: Summer is obviously a critical time for cola, and social-media usage tends to spike around the summertime, which also makes sense as people are out and about with their phones. Instagram was a great platform for us for our big summer program, given it is where this user behavior already exists. "Pepsi Summergrams" has hundreds of custom AR filters that you can activate by scanning QR codes you can find across 200 million bottles and 30 million fountain cups. We think it's a really fun way to connect with fans during key summer moments.

Dua: The Kendall Jenner ad happened before your time, but how has that affected how closely you work with agencies now?

Kaplan: Creativity is at a premium today, and we need to make sure we're getting the most creative, consumer-minded, and really culturally relevant ideas out there. And so we're constantly working with our agency partners as critical pieces of our teams across all disciplines. It's important, given how omni-channel marketing has become across all different mediums and different formats. There's people internally we work with on a variety of different things. But on our core creative capabilities and model, we're working with a variety of different agencies.

Dua: Why is it important for marketing and innovation to go hand and hand? And how do they influence each other?

Kaplan: You have to evolve not only how you market, how you talk to people, and what kind of creative you use, but also know how consumer preferences and the channels of commerce are changing. You need to constantly make sure that the product that you're selling and offering is going to be relevant to the consumers that you're trying to talk to. At the same time, you need to make sure that your messaging is contextually relevant to the right people, the right place in the right time.

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JetBlue is switching Coke for Pepsi on board its flights, and people have a lot of feelings

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When it comes to cola, most people tend to fall into one of two camps: Coke or Pepsi.

And by the looks of things, most of JetBlue's customers are Coca-Cola lovers.

The airline announced it would be switching the Coca-Cola served on board for Pepsi — and customers weren't happy.

"We're refreshing our core complimentary beverage line-up to offer customers exciting new product options they've asked for, while also bringing sustainability benefits, and controlling growing costs," an internal JetBlue communication seen by USA Today read.

"Most notably, this includes the introduction of Pepsi products to our offering beginning June 3." 

A spokesperson for the budget airline confirmed the news to INSIDER, saying: "JetBlue is always looking for ways to refresh our onboard experience.

"Starting June 3, we will offer a new selection of complimentary beverages on all JetBlue flights. Additional details will be shared in the coming weeks."

Read more: How Emirates makes 225,000 region-specific meals a day for its passengers

Coca-Cola fans have been expressing their dismay at the change on social media.

"Please please don't switch to Pepsi. Coke is the real brand, while Pepsi is like hot garbage juice after morning pickup,"wrote one person on Twitter.

Another traveller revealed she was "devastated."

"Pepsi? What are we monsters? Bring back the Coke," implored a further Coca-Cola lover.

 

"We want Coke!" agreed another.

However, some Pepsi preferrers have been expressing their joy at the news.

American singer Clay Aiken, for example, is thrilled.

"Now they are offering better products," added another fan.

One traveller implied the soda brand change might even make her specifically choose to travel with the airline.

 

Further changes to the JetBlue on-board service include pouring water from larger bottles, and the serving of snacks and drinks at the same time on short-haul flights.

This isn't the first time an airline has caused a stir by changing its in-flight menu — earlier this month, British Airways was widely ridiculed for the introduction of "afternoon tea" on board, which, curiously, did not include any tea.

INSIDER has contacted PepsiCo, and Coca-Cola for comment.

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LaCroix faces a crippling 'free fall' as it turns 'from bad, to worse, to disastrous,' analyst says

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LaCroix

  • LaCroix is "effectively in a free fall," with sales declining 9.4% over the past 12 weeks, according to the Guggenheim Securities analyst Laurent Grandet.
  • "The LaCroix brand has gone from bad, to worse, to disastrous in a relatively short period of time," Grandet wrote.
  • A lawsuit last year alleged that LaCroix beverages contain artificial ingredients, contrary to the company's "all-natural" marketing claims. LaCroix has denied the claims in the suit.
  • Visit Business Insider's homepage for more stories.

LaCroix is "effectively in a free fall" amid declining sales and rising competition, according to a new research note from Guggenheim Securities.

"The LaCroix brand has gone from bad, to worse, to disastrous in a relatively short period of time following negative media attention regarding the 'natural' claim of the brand's flavoring ingredients that surfaced in October of last year," the analyst Laurent Grandet wrote.

A lawsuit last year alleged that LaCroix contains artificial ingredients, contrary to the company's "all-natural" marketing claims. LaCroix has denied the claims in the suit.

Read more:'Please stand with us': LaCroix slams 'misleading' lawsuit that links the sparkling water to insecticides

Following the lawsuit, sales of the seltzer, which had enjoyed years of explosive growth, suddenly dropped off a cliff, according to Nielsen data cited by Grandet.

In the past 12 weeks, LaCroix sales have declined 9.4%, according to the Nielsen data. The data also suggests LaCroix is losing customers to other sparkling-water brands, with its market share dropping to 23% from 28% in October.

Data on LaCroix

LaCroix is "unlikely to rebound" as some customers have discovered that "LaCroix doesn't have much that distinguishes it from the competition in terms of intellectual property or added value," Grandet wrote.

LaCroix's parent company, National Beverage Corp., did not immediately respond to a request for comment.

The company reported in March that profits declined nearly 40%, to $24.8 million, in the most recent quarter, and that revenue fell 2.9%, to $220.9 million.

Read more:CEO of LaCroix maker blames 'injustice' for plummeting sales and promises that customers will remain loyal to the 'LaLa feeling' the drink provides

While the lawsuit appeared to kick off LaCroix's downturn, several other factors are hindering its recovery, Grandet wrote.

"While we think it's true that this event likely catalyzed the brand's deceleration, we also think it's only part of the story — and ultimately not the reason the brand hasn't been able to subsequently recover," Grandet wrote.

LaCroix is facing growing competition from PepsiCo, Nestle, and Coca-Cola, as well as from private-label seltzers that tend to have an edge over LaCroix on pricing, he said.

Other barriers to LaCroix's recovery, he said, include "the lack of meaningful innovation to offset core declines and bring new news to consumers, and inexperience managing a rapidly growing brand, made worse by ongoing missteps in public messaging and crisis resolution."

He continued: "As a result, we think it's unlikely that LaCroix can recover to any meaningful degree while in the hands of National Beverage (or in the absence of a strong distribution partner)."

SEE ALSO: LaCroix is facing a lawsuit over the mysterious ingredient that has made it a huge hit — here's what we know about it

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$14 billion Okta adds a former PepsiCo exec to its board so its leadership can hear the 'voice of the customer' (OKTA)

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Robert Dixon

Robert L. Dixon, Jr. says he grew up in corporate America, working at the household products company Procter & Gamble and the beverage company PepsiCo. Now, he's joining the board of $14.57 billion identity management company Okta, where he hopes to bring the "voice of the customer."

"The more I researched about Okta, the more excited I got about it, and the more conversations I had with [Okta CEO Todd McKinnon] and the management team, the more excited I got as well," Dixon told Business Insider.

At Procter & Gamble, Dixon held various executive positions, while at PepsiCo, he was Global Chief Information Officer and Senior Vice President. Although these are consumer companies, he says they had a "very significant technology emphasis." Nowadays, Dixon is the owner of The RD Factor, Inc., a consulting business.

"We needed someone who has been a CIO who can bring the perspective of a buyer," McKinnon told Business Insider. "More importantly, the challenge they have is taking a large company that formerly was not a technology company to move them to do technology."

McKinnon says Okta is transitioning its board from having mostly venture capitalists to having more business leaders, and Dixon is another step in that direction. To that end,  McKinnon says Okta was looking for someone who can give guidance on its strategy on working with consumer companies, and Dixon was "by far the best candidate."

"If you look at the board, we have a lot of experts in a lot of things, we didn't have someone who has been a customer, someone who would buy Okta at a big company, especially someone who looked at technology from the lens of 'I'm a big traditional company,'" McKinnon said. "That's an important role."

Dixon first heard about Okta through a colleague. In the process, he also reached out to Shellye Archambeau, the former MetricStream CEO who joined Okta's board last December. She suggested that he take a look at the opportunity to join Okta's board.

Read more: She helped one company define a new market. Now, former MetricStream CEO Shellye Archambeau is joining $7.4 billion Okta to do it again

Since he previously worked at consumer companies that sold household or beverage products, Okta has a different business as its product is the technology, Dixon says that he brings insight on going to market and engaging with IT leaders.

"Technology for the most part was a critical enabler to how do you do R&D around the product and take it through the business model value chain all the way to the consumer," Dixon said. "The technology was an enabler. In a tech company like Okta, the product is technology."

Dixon says he looks forward to helping Okta navigate its growth.

"The way they grow right now is astronomical," Dixon said. "I'm looking forward to being able to grow their business and work with management to channel the growth."

Got a tip? Contact this reporter via email at rmchan@businessinsider.com, Telegram at @rosaliechan, or Twitter DM at @rosaliechan17. (PR pitches by email only, please.) Other types of secure messaging available upon request. You can also contact Business Insider securely via SecureDrop.

SEE ALSO: Everything you need to know about React, a project started at Facebook that now helps Twitter, Pinterest, and Asana keep their apps looking good and working great

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NOW WATCH: This stunning visualization breaks down all the ingredients in your favorite processed foods

Eating insects will soon go mainstream as bug protein is set to explode into an $8 billion business

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French Insect Restaurant

  • Edible insects are set to become an $8 billion business by 2030, according to a new report from Barclays.
  • Eating bugs is becoming increasingly common as the global population swells and Gen Z seeks more sustainable alternatives to traditional meat. 
  • Restaurants and supermarkets around the world are already serving up edible insects, making the category increasingly attractive to food industry giants such as Nestle, PepsiCo, and Tyson. 
  • Visit Business Insider's homepage for more stories.

As plant-based "meat" takes off, Barclays looks to bugs as a major part of the future of alternative proteins. 

The insect protein market could be worth $8 billion by 2030, up from less than $1 billion in 2019, according to Meticulous Research data cited in a Barclays report published Monday.

According to Barclays analysts, eating bugs is set to become increasingly popular as the global population swells, making it an attractive investment for grocery chains, food makers like Nestle and PepsiCo, and — perhaps one day — massive chains like McDonald's.

Read more: As fast-food rivals pen deals with Beyond Meat and Impossible Foods, long-time vegetarian favorites like Panera and Taco Bell refuse to jump on the bandwagon

French Insect Restaurant 7

Roughly 2 billion people in 130 countries already regularly eat insects. Eating bugs is far more sustainable than traditional meat products, with the United Nation's Food and Agriculture Organization encouraging the consumption of insects since 2003. And, Barclays notes, as the "most health-aware and environmentally conscious" generation, Gen Z is less likely to dismiss the idea of eating insects because of the "yuck factor." 

The explosive rise of plant-based "meat" highlights a growing appetite for alternatives to traditional meat products. 

"We see plant-based meat alternatives as the current source of disruption within protein and in the longer term also see cultured meat as an option," Barclay's report reads. "However, we see future potential for insect protein to also be added to the menu — another alternative that has received less attention thus far." 

A number of smaller edible insect companies are already on the market, such as American cricket snack company Six Foods, Shark Tank-backed cricket protein company Chapul, and Finnish insect snack and meat substitute company Entis.

Insect Bruschetta

Grocery chains including Sainsbury in the UK, Loblaw in Canada, and Amazon-owned Whole Foods stock bug-based items. Independent restaurants have insects on the menu, helping push the notion of eating bugs into the mainstream, similar to how sushi restaurants were able to convince Western diners to eat raw fish. 

"[O]nce considered a weird and whacky food, part of sushi's transformation into the mainstream was helped by it trickling down from top-end restaurants through to the supermarket shelves," the report states. "We are starting to see this with insects as well, with insect-based restaurants such as Grub Kitchen in the UK and The Black Ant in New York." 

As restaurants and supermarkets normalize edible insects, food manufacturers acquiring smaller brands and developing their own bug-based products seem to be likely next steps in edible bug boom. 

Tyson has invested in plant-based meat and cultured meat, and highlighted the demand for cricket protein in its 2019 list of food trends. Nestle told Barclays it is conducting research and development into various insect species and launched a pet food product made with crickets earlier this year. And, while PepsiCo said that it is too early to determine its long-term plan for insects, the company has selected insect snack brands to take part in its accelerator program for emerging brands. 

SEE ALSO: 3 surprising reasons you should add bugs to your diet

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NOW WATCH: What makes mānuka honey 100 times more expensive than regular honey

PepsiCo rises after beating Wall Street earnings forecasts (PEP)

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FILE PHOTO: Bottles of Pepsi are pictured at a grocery store in Pasadena, California, U.S., July 11, 2017.   REUTERS/Mario Anzuoni/File Photo

  • PepsiCo rose as much as 1.6% ahead of trading Tuesday after outperforming analyst expectations.
  • The food and beverage company's stock is up 20% so far this year, double the performance of its competitor Coca-Cola.
  • PepsiCo attributed its second-quarter success to its popular water brands and higher snack prices.
  • Watch PepsiCo trade live here.

PepsiCo rose as much as 1.6% in early trading Tuesday after beating analyst predictions for its second-quarter earnings.

The food and beverage company generated $1.54 per share, narrowly outperforming Wall Street's estimate of $1.50. PepsiCo's $16.45 billion in quarterly revenue came in slightly above the $16.43 billion target.

The stock is up 20% so far this year with a total market value of $184.7 billion. Its main competitor, Coca-Cola, has risen 9.8% over the same period.

The company attributed its positive report to the popularity of its water brands, including its LaCroix competitor Bubly. Sales of the sparkling drink helped offset declines in Gatorade and soda sales. Higher prices for its US-sold chips and snacks helped boost revenue for its Frito-Lay business.

PepsiCo also noted cutting its employee count helped increase profits despite higher commodity costs and strain from foreign currencies.

Screen Shot 2019 07 09 at 9.06.54 AM

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The 18 biggest failures in soda history, from New Coke to Orbitz

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You've probably tried Coca-Cola or Pepsi at some point in your life, but what about Slice, Jolt, or OK Soda?

PepsiCo, the Coca-Cola Company, and other soda makers have tampered with best-selling formulas and introduced brand-new drinks that turn out to be failures. Some soda brands just don't resonate with consumers, so they get taken off supermarket shelves, never to return.

The most memorable ones have worked their way into soda lore, refusing to be forgotten. Some have lingering fans desperately trying to bring them back. And when those fans get soda executives' attention, drinks like Crystal Pepsi and New Coke make their comebacks, even if for a limited time. Most, however, don't.

Here are 18 of the biggest flops in soda history.

Kim Bhasin and Will Heilpern contributed to an earlier version of this post.

SEE ALSO: Coca-Cola is sold in all but 2 countries on Earth. Here's what their ads look like around the world.

Crystal Pepsi

To get in on the clear-soda fad in the early 1990s, Pepsi unveiled its own version in 1992, Crystal Pepsi. The drink was caffeine-free, and the idea was that consumers would equate a clear soda with thoughts of purity and health.

It worked well out of the gate, and even prompted a response from Coca-Cola, Tab Clear. But soon after, consumers shied away from it, and Pepsi was forced to discontinue it in 1993.

Yum Brands chairman David Novak explained in a 2007 interview with Fast Company, "I still think it's the best idea I ever had, and the worst executed. A lot of times as a leader you think, 'They don't get it; they don't see my vision.' People were saying we should stop and address some issues along the way, and they were right."



Orbitz

Orbitz is the only drink on this list that contained floating lumps of solid food. It was made by the Clearly Canadian Beverage Corporation, which called it a "texturally enhanced alternative beverage"when it was released in 1997.

Not enough consumers went for the gimmick and the lava-lamp-resembling drink was discontinued within one year, according to Time magazine.



New Coke

The infamous New Coke remains a cautionary tale about why you shouldn't tamper with strong brands.

The reformulated version of Coca-Cola's classic recipe launched in 1985 to help fight off the hard-charging Pepsi. It prompted outrage among hardcore Coca-Cola fans, and less than three months later, Coca-Cola went back on its decision.

People are still seeking out New Coke, which was later sold in foreign markets under the name Coke II until it was permanently shut down in 2002.

Perhaps because of its colossal failure — and the nostalgia factor — consumers wanted a taste of New Coke in the 21st century. So, to tie in with the hit Netflix show "Stranger Things,"New Coke was released again in June 2019 for a limited time.



Josta

Josta became one of the first energy drinks to make its way into the Coke/Pepsi cola wars when Pepsi introduced it in 1995. Josta contained guarana — along with caffeine — to provide an energy boost. The brand was shut down in 1999, never to return.



Sprite Remix

Coca-Cola's Sprite Remix popped up in 2003, and it quickly developed a passionate fan base. Coke would expand its Sprite Remix flavors twice in the next two years, adding Berryclear and Aruba Jam to its portfolio following the original Tropical.

However, in 2005, Coca-Cola decided it wasn't performing well enough and killed the brand — at least in the American market.

In April 2016, however, Sprite Remix Tropical was brought back for a limited time thanks to popular demand.

In a press release, Coke's Sparkling Brands vice president, Kimberly Paige, said, "Fans have thirsted for the return of this popular Sprite tropical flavor for years, and it's great to finally bring it back to reward their enthusiasm."



Pepsi Blue

Pepsi Blue was introduced in 2002 to compete with Coca-Cola's Vanilla Coke brand. It was known for being berry-flavored, sugary, and very blue. The brand drew fire for being colored with Blue 1, a controversial food-coloring agent banned in some countries.

Years after it was discontinued in 2004, the infamous drink is still being searched for by some, but it's extremely difficult to find.



Slice

PepsiCo introduced lemon-lime Slice in 1984, and it did well enough to get the company to produce more than 12 variations of the brand.

Slice's brand began to lose its luster over time, until it was finally replaced in the early 2000s by the similar Sierra Mist. Now the flagship and most of the other flavors have all but disappeared, but you can still get some variations, like Diet Slice Orange at Walmart. But be warned: The new Slice brand, which was introduced in December 2018, is not the old soda. It's a new brand with a licensed name, with all new flavors using organic ingredients. 

 



Hubba Bubba

Hubba Bubba Original Bubble Gum Soda began life in 1987 after film producer Steve Roeder created it, using a snow-cone flavoring. However, the drink was discontinued before the '90s.

The company that produced the drink, Novelty Beverage, acquired license rights from the Wrigley company and it was sold worldwide.



Coca-Cola BlāK

Coca-Cola BlāK, a coffee-flavored cola, was first introduced in France before making its way to the US market in 2006.

The American version was sweetened much differently from its international counterparts. The French version used sugar, while the American one replaced it with high-fructose corn syrup, aspartame, and acesulfame potassium.

Consumers didn't go for it, and Coke stopped selling the drink in the US in 2008.

But coffee and soda isn't dead yet. The company announced it may start selling one of its international drinks, Coke With Coffee, in the US sometime in 2019.

"That was a trend before its time," Nancy Quan, chief technical officer at Coca-Cola, told CNN Business.



Vault

Coca-Cola's Vault brand was promoted as a hybrid energy-drink soda when it was brought to market in 2005 to compete with Pepsi's Mountain Dew.

It was directly paired up with Pepsi's citrus brand, and Coke even responded to the development of Mountain Dew: Code Red by coming out with a drink called Vault Red Blitz in 2007.

Vault survived for six years and developed a significant fan base before getting cut by Coke.



Tab Clear

Tab Clear was Coca-Cola's response to Crystal Pepsi during the clear-soda fad of the late '80s and early '90s. Unlike Pepsi's offering, Tab Clear contained caffeine.

Hitting stores in 1992, the brand went international just two weeks after its launch, but it was doomed from the start. Once consumers got sick of the fad, it would tank like the rest of the clear sodas.

Coke shut down Tab Clear by 1994.



OK Soda

OK Soda launched in 1993 and was completely gone by 1995. In fact, the drink failed so quickly that it never went completely national, and Coca-Cola decided to cancel the whole project just seven months after its release.

It was backed by an unconventional marketing campaign that tried to be wholly transparent, ignoring the taste of the drink, and purely promoted the "feeling."

Fans stayed with OK Soda after it was discontinued. Various internet communities kept OK Soda going, and people collected a lot of the brand's advertising and other assorted paraphernalia associated with it.



Mr. Green

Mr. Green's 2002 release was Pepsi subsidiary SoBe's only foray into the soda business, and it failed in a hurry. The Dr. Pepper-like drink was colored green, infused with ginseng, and bore the SoBe lizard mascot on the bottle.

The drink just didn't work with consumers, and SoBe halted production in 2003. SoBe's other beverage lines have taken off since then.



Jolt Cola

Jolt Cola, created in 1985, was an outsider to the eternal battle between Coke and Pepsi. The flagship drink of Wet Planet Beverage gained serious traction by marketing itself as a "maximum caffeine" alternative, and its appearance in "Jurassic Park" added to its mystique.

In 2011, the company filed for Chapter 11 bankruptcy protection following a dispute about its bottles. After restructuring, the company relaunched the soda in September 2017.



Citra

Coca-Cola started up the Citra brand — a caffeine-free grapefruit soda— in 1996. It's similar to Fresca and Squirt, and managed to get itself a decent following. But it became evident, due to lagging sales, that the Citrus brand wasn't going to work out, so it went on hiatus.

Coke eventually decided to rebrand it into its stronger Fanta stable, morphing the drink into Fanta Citrus.



7-Up Gold

The formula for 7-Up Gold was developed by Dr. Pepper, and brought out by 7-Up in 1987, soon after the two soda giants merged.

Unfortunately, the drink was a complete disaster, and it failed to last more than one year. This could have had to do with the taste, which was described as "cinnamon-spicy" and had a "reddish caramel hue."

According to the New York Times, 7-Up's chief executive at the time, John R. Albers said: ''I'll be honest. It's a failure."



dnL

Introduced in 2002, 7-Up's short-lived dnL brand was an attempt to pull consumers away from Pepsi's ever-dominant Mountain Dew beverage. 

The dnL concept — 7-Up upside down — failed to gain traction with Mountain Dew drinkers, and the brand was killed in 2005



Red Fusion

In 2002, Dr. Pepper Red Fusion became the first new flavor Dr. Pepper ever added in its 120-year history. The drink was predominantly cherry-flavored but was also combined with a bunch of other fruit flavors, and it failed spectacularly. 

Despite the marketing power behind it, Dr. Pepper ceased producing Red Fusion nationally less than a year after launch, though it lingered until 2004.

 



A top Frito-Lay exec lays out the biggest trends shaping the snacks industry — and how the CPG giant is recalibrating to keep up

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too much flavorrumor has it that back in the 90s frito lay reduced the amount of garlic power in the chip because people were complaining about doritos breath doritos breath is still a problem

  • Speaking at Groceryshop this past week, Mike Del Pozzo, the senior vice president of sales and chief customer officer at Frito-Lay North America, laid out the big consumer changes that are challenging the company.
  • Frequent snacking and a demand for healthier foods and personalization is pressuring traditional CPG giants to evolve, he said.
  • To that end, Frito-Lay is focusing on loyalty, packaging, and e-commerce, and trying to encourage impulse buys.
  • Click here for more BI Prime stories.

The rise of plant-based food companies like Impossible Foods, Beyond Meat, and Oatly show consumer tastes and preferences are rapidly changing, forcing traditional packaged-goods makers like PepsiCo's Frito-Lay to adapt.

Read more:'It's nonpareil': How Swedish oat-milk brand Oatly became the undisputed king of a burgeoning $29 million market through its quirky grassroots approach to marketing

Speaking at Groceryshop, a conference for consumer-packaged-goods brands, grocers, mass retailers, and startups this past week, Mike Del Pozzo, the senior vice president of sales and chief customer officer at Frito-Lay North America, laid out how the company was tackling the challenge head-on.

The company used to rely on its in-store presence to make sure its products were seen by consumers, but today it's focused on making sure people can get them the way they want them and at the price they want, he said.

That's because snacks are replacing regular meals, and people want more flavors and healthier options and serving sizes, like single-size packages.

"You'd say, 'Well, that's great for a company like Frito-Lay,'" Del Pozzo said. "But it also puts a lot of pressure on us to make sure we have the right relevant offerings."

Frito-Lay is focusing on loyalty, packaging, and e-commerce

To that end, Frito-Lay started a loyalty program called PepCoin this month that refunds people up to 10% on the PepsiCo and Frito-Lay products they buy with their PayPal or Venmo accounts. The idea is not just to drum up repeat business but to get people to buy both products together. 

"That's really helped us think more about the macro," Del Pozzo said. "Think about what we can do together now — the ability to leverage digital to drive that snack and beverage occasion as one company has really been a huge benefit."

Frito-Lay has also created e-commerce snack packages for people to send care packages to loved ones in the military or college. Boxed CEO Chieh Huang talked about how the wholesale retailer tested e-commerce packs from PepsiCo's Quaker Oats on its platform.

Read more:Amazon competitor Boxed's CEO Chieh Huang takes a thinly veiled swipe at Amazon and reveals how the wholesale retailer is cozying up to CPG giants like Coca-Cola and PepsiCo

The company is also pushing people to subscribe to products they buy repeatedly, like Gatorade in the case of parents with student athletes.

"Leveraging subscription to drive impulse is a huge opportunity for us," Del Pozzo said. 

Taking advantage of impulse buys has become a bigger priority for the company overall. The company ran ads for Tostitos that popped up on people's browsers when they searched for guacamole ingredients, for example.

Frito-Lay has also become better at using data to target people. Instead of blanketing a geographical area with a single flavor profile, it's personalizing its product selection based on store, ZIP code, and household data.

"We think personalization in general is really where folks can differentiate," he said. "So we're using data to help inform the right product on the right shelf. The reality is that Walgreens in Atlanta may be serving a number of different consumers."

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Pepsi is desperately trying to prevent Mountain Dew from becoming the latest victim of people's growing hatred of sugary sodas (PEP)

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  • PepsiCo is working to improve Mountain Dew sales, as customers ditch sugary sodas.
  • "Mountain Dew is improving, but it's not to the levels that we would like to see," CEO Ramon Laguarta said in a call with investors on Thursday.
  • Pepsi is trying to boost sales by tapping into the energy drink market with drinks like Mountain Dew Game Fuel — an energy drink aimed at gamers — and other variations, such as Mountain Dew Zero Sugar. 
  • Visit BusinessInsider.com for more stories.

As America ditches sugary sodas, PepsiCo is trying to prevent Mountain Dew from becoming a victim of changing tastes. 

"Mountain Dew is improving, but it's not to the levels that we would like to see," CEO Ramon Laguarta said in a call with investors on Thursday.

Laguarta said Mountain Dew sales are flat, describing the brand as a "pending subject" and a "focus of the organization." More generally, PepsiCo's North American beverage category saw organic revenue growth of 3% in the most recent quarter. 

"I think the brand is well resourced," Laguarta said on Thursday. "It's going to be down to having the right ideas and executing the ideas with quality." 

Laguarta said that Mountain Dew is at the intersection of carbonated soft drinks and energy drinks. And, while soda sales have been slipping, energy drinks are booming.

On Monday, Coca-Cola announced it is rolling out Coca-Cola Energy, the first energy drink under the Coca-Cola brand, in the US in January 2020. Dollar sales of energy drinks increased 11.2% in the 52 weeks ending September 24, growing from $11 billion to $12.2 billion, according to Nielsen data. 

Read more:For the first time ever, Coca-Cola will launch a Coke drink that isn't a soda across America

PepsiCo is attempting to tap into this growing category with new types of Mountain Dew that might shake the drink's sugary, soda-centric reputation. 

In July, Laguarta told investors that sales of Mountain Dew Kickstart — a brand that combines juice, caffeine, and soda meant to be drunk in the morning — were starting to grow again. Earlier this year, PepsiCo launched Mountain Dew Game Fuel, an energy drink aimed at gamers. The company had previously sold limited runs of a soda called Mountain Dew Game Fuel, but this latest version of the drink will be a permanent addition to the lineup.

"We're investing in the core Dew consumer, very loyal, giving them their preferred product in non-sugar and sugar options, innovating in flavors in Dew and then moving Dew slowly into other spaces where we think the brand has a role to play," Laguarta said in July. 

SEE ALSO: 5 reasons why Impossible Foods and Beyond Meat are taking over fast food while veggie burgers failed

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2 millennial women just won $100,000 to scale their vegan ice cream business. Here’s how they perfected their ‘scoopable’ banana-based recipe and landed their pints on Whole Foods shelves.

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Stacy's Rise Project Winner Lunch Event 3

  • Stacy's Rise Project awarded $100,000 in funding to Hannah Hong, cofounder of Hakuna Brands
  • Hong and her cofounder Mollie Cha became lactose intolerant in their early 20s and out of their love for indulgent desserts, launched Hakuna Brands to make oat-milk and banana-based ice cream.
  • Hakuna's leadership is entirely women and three of the four used to be coworkers at Bolthouse Farms. 
  • Hong talked to Business Insider about building a team she loves and how she's overcome imposter syndrome.
  • Click here for more BI Prime content.

When Hannah Hong and Mollie Cha started their "nice-cream" business, they knew they were taking their friendship to higher stakes. 

They were already maids of honor at each other's weddings and now they were about to be business partners. In 2016, the University of California, Berkeley, grads quit their jobs and went all-in on dairy-free ice cream to launch Hakuna Brands

"We both agreed that the minute our business gets in the way of our friendship and there's any sort of resentment or any negative feeling where we feel like we can't be on this with each other, the business is over," Hong said.

She and Cha have disagreements and different points of view, but Hong said they always come to an understanding. "It's just like a marriage, you know, you can fight but you can still be married," Hong said. 

Now, the pair has an exciting new opportunity to agree upon: how to invest $100,000 for their business. 

On November 4, Padma Lakshmi, host of "Top Chef," awarded Hakuna Brands the grand prize for Stacy's Rise Project, a funding and mentorship program designed to help close the funding gap for women business owners.

Hakuna sells vegan ice cream made with oat milk and bananas, making a beloved dessert easier on lactose-intolerant stomachs — and a lighter option for any ice cream lover. The brand is capitalizing on major food trends like the paleo diet and the recent explosion of oat milk

Hakuna's banana ice creams come in six flavors and three frozen bars, including cashew cookie dough, banilla, and strawberry. The oat-milk based ice creams, which launched in early 2019, come in peanut butter, vanilla, and chocolate. 

Business Insider spoke with Hong after her win. She was proud to be wearing a pink, banana-covered t-shirt as she posed for press photos with Lakshmi and a giant check. "I know it's not the coolest thing to wear in front of Padma, but I'm not giving up the opportunity to wear my branded t-shirt in this photo," said Hong. 

She'll do whatever it takes to advance her business. "This is my first born, this is my baby, and there is nothing I won't do for it," Hong said. 

Hakuna Brands is based in Los Angeles and led by four women — three of whom were former colleagues at Bolthouse Farms, a producer of green smoothies and carrot juice. Hong and Cha were best friends in undergrad and later worked together at Bolthouse in strategy and innovation, developing new product ideas. 

They both became lactose intolerant in their early 20s and launched their banana-based ice-cream brand out of their love for indulgent desserts. Hong left her job at Bolthouse at the beginning of 2016 and Cha left hers about a month before they established the company on Halloween of 2016.

Hannah Mollie Hakuna Brands

Nailing down the recipe and finding a factory

It took a while for Hong and Cha to perfect their first recipe, which was inspired by paleo "nice-creams" that use frozen bananas instead of dairy. "You can't just put that in a pint and then sell it. It literally turns into a block of banana ice," Hong said.

The women tested several iterations in their home kitchens until they found the right, "scoopable" texture. Learning how to make the ice cream was one of their biggest obstacles, since it uses ingredients most dairy-based manufacturers aren't as familiar with. "Most ice cream that's sold commercially, it's made one way and all factories are built to make it that way," Hong said.

They moved their operations to a small, commercial kitchen and sold their pints (which were labeless deli containers at first) from a freezer in a van they named "Fran," driving down the southern California coast from Thousand Oaks to San Diego several times a week. 

But eventually, they needed to scale. Their next major obstacle was finding a factory that could replicate their recipe — they tried three facilities before landing the right one. "Moving from our tiny hundred-foot square kitchen to a factory was one of the hardest things I've ever done," Hong said.

The trial-runs required a lot of money, Hong said, which included paying for ingredients and the time spent on the manufacturing line. Each batch had to freeze for 24 hours before they could taste it, so they could see how the ice cream hardened. 

"We had to go through so much to even figure out how to build a frozen business," Hong said. 

Hakuna Banana ice cream

Best friends and business partners

Both Hong and Cha come from families who started their own businesses, so they learned second-hand that it can be difficult to run a business with friends or family. 

The founders are best friends first and foremost. Before making their business official and signing the LLC papers, they talked about their priorities for both the business and their relationship. 

In 2018, they added to their full-time team. Grace Robbin became director of product development, and Margie Clark became director of sales and marketing. Hong worked with Clark for four years when they were at Bolthouse. 

Hong said she's learned how important is it to choose her team wisely, especially as a small business. "One person can have a huge impact on your company, and so picking that person has to be done very thoughtfully," said Hong. 

Hakuna Brands Team - Margie, Mollie, Hannah, and Grace

Getting over imposter syndrome

At one point during the factory-trial process, Hong said she felt imposter syndrome setting in. The factories were primarily owned and operated by men, and Hong said that intimidated her. She knew how her recipe was supposed to turn out, but the manufactured product wasn't right. "I knew it was different. It wasn't just in my head," Hong said.

After three factories didn't work out, she realized she needed to be more confident in her product. When the next factory told her "this is just how your ice cream is," she overnight-shipped a pint from Hakuna's kitchen. Once the factory workers tasted it, she said they realized it was different. "I think that really helped me build my confidence," Hong said.

In January 2017, Hakuna started selling in grocery stores — its first retailer was an independent grocer in Los Angeles. Today, the brand is sold in 430 California locations, including Whole Foods and Sprouts Farmers Market. 

Hakuna was bootstrapped until January 2019, when it held a friends and family funding round. Now with its funding from Stacy's, Hong said the brand plans to boost in-store efforts to gain new customers, buy social media ads, and expand production to a factory on the East Coast.

SEE ALSO: Women founders and CEOs share 9 hard truths about raising capital all small businesses need to know

SEE ALSO: Women entrepreneurs talk about the frustrations they face when starting a business, and how they've handled challenges like limited access to funds

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Rockstar Energy's extravagant billionaire founder Russ Weiner just sold his company to PepsiCo for nearly $4 billion. Here's how the son of a far-right talk show host built a multibillion-dollar energy drink empire.

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Russ Weiner, the extravagant billionaire behind Rockstar Energy Beverages, just sold his business to PepsiCo for $3.85 billion.

For Weiner, who reportedly owned 85% of Rockstar, the deal was the culmination of an "American dream" that began in 2001 when he took a job at a vodka maker after losing a bid for California's State Senate. Weiner mortgaged his condo in the suburbs of San Francisco and relied on help from his family to launch the company and has since built a $4 billion fortune.

A representative for Weiner at PepsiCo did not immediately respond to Business Insider's request for comment on the sale to Pepsi, Michael Savage's connection to the company, Weiner's net worth, disposition, or career at the company.

Keep reading to learn more about Russ Weiner.

SEE ALSO: Mike Bloomberg's failed presidential campaign cost him over $500 million. Here are some of the things the billionaire spent money on, from free booze and NYC apartments for staff to catered events for supporters.

DON'T MISS: A pharmaceutical company just announced a rapid-result coronavirus test — and its billionaire owner made $100 million

Russell Goldencloud Weiner, 49, is the son of controversial talk radio host Michael Savage.

Weiner is one of two children of far-right talk radio host Michael Weiner, who goes by Michael Savage online, according to The New York Times. In 2009, Savage called the Koran as "book of hate," and was subsequently banned from entering Britain. Savage brags about the incident in his biography on his personal website, saying that it "made him the 'poster child' for free speech, not only for Americans concerned about the cultural shift towards totalitarianism and their rights to freedom of expression, but for people around the globe."

Both of Weiner's parents helped him found Rockstar, according to The Times. Weiner's connection to Savage has kept some store owners from carrying Rockstar, The Times reported in 2006. The then-CEO of Oregon based grocery chain New Seasons told The Times that its stores did not carry Rockstar because of Savage's views.

Weiner's mother Janet is Rockstar's CFO and owns 15% of the company, according to Forbes. Janet Weiner plans to use her portion of the windfall from the PepsiCo sale to "devote her life to helping animals through animal rescues," Weiner told Forbes.



Weiner had an entrepreneurial spirit from a young age.

Weiner founded his own yard service company when he was 8 years old, Forbes reported. As a teenager, Weiner also worked at a Wendy's drive-thru window, according to Forbes.

He later attended San Diego State University and graduated with a Bachelor's degree in political science, according to Forbes. After graduation, Weiner planned and sold spring break trips to Cancun and Hawaii geared toward high school students, Forbes reported.



Weiner shares his father's interest in politics.

Weiner ran for a seat in the California State Assembly in 1998, according to Forbes. Then 28 years old, Weiner ran on a conservative platform and only garnered 30.5% of the vote, Forbes reported.



The campaign wasn't a complete waste, however.

Skyy Vodka founder Maurice Kanbar was impressed with Weiner's performance on the campaign trail and gave the future billionaire a job at his company, according to Forbes. Kanbar was also a friend of Weiner's father, Forbes reported. 

"He saw I had the guts to stand up with the American flag — and people cursing my name," Weiner told Forbes in 2014.

Weiner had the idea to create a new energy drink while working at Skyy after seeing the success of Red Bull, but Kanbar did not approve the project, according to Forbes. Weiner quit his job at Skyy to start Rockstar, founding his new company in 2001 by taking out a $50,000 mortgage on the condo he owned in the upscale San Francisco suburb of Sausalito, California, according to Forbes. He also rented a computer at a then-Kinko's location to design his new company's logo and reach out to manufacturers, Forbes reported.



Rockstar was a near-instant success, making Weiner extremely wealthy.

Rockstar found initial success as a cheaper alternative to Red Bull, thanks to its wide variety of flavors, Forbes reported in 2014. The drink was set apart by its unusually large size for an energy drink. Rockstar was first in the category to be sold in 16 oz cans, PepsiCo said in a statement.

Weiner drove around San Francisco in an old limousine with Rockstar's logo painted on the side to promote the drink when it first launched, according to Forbes.

Forbes added Weiner to its Billionaires List in 2015, when he had a net worth of $2.1 billion. The magazine currently estimates that Weiner is worth $4 billion, and placed him as No. 195 on the Forbes 400.



Weiner is known to have a "short temper."

After interviewing the billionaire in 2014, Forbes' Abram Brown wrote that Weiner could also be combative and short-sighted. According to Brown, Weiner's disposition caused numerous Rockstar executives to leave the company and Coca-Cola to renege on a deal to handle Rockstar's distribution.



Rockstar first went into business with Pepsi after its relationship with Coca-Cola ended in 2009.

The two companies signed a distribution deal in 2009, Forbes reported.

Pepsi announced Wednesday that it would acquire Rockstar for $3.85 billion.

"We have had a strong partnership with PepsiCo for the last decade, and I'm happy to take that to the next level and join forces as one company," Weiner said in a statement released by PepsiCo. "PepsiCo shares our competitive spirit and will invest in growing our brand even further. I'm proud of what we built and how we've changed the game in the energy space." 



Weiner told Forbes that the deal "shows the American dream is still alive and well."

"It's perfect timing in my life right now," Weiner told Forbes. "I'll have enough money to pretty much do whatever I want in life and not put my nose to the grindstone. I was running this business 24 hours a day for the past 20 years. I was never not working."

Weiner reportedly owned 85% of Rockstar, according to CNBC.



Weiner has purchased at least six beachfront mansions in California and Florida — and several of them are currently for sale.

Weiner purchased a waterfront mansion on Miami Beach's Biscayne Bay for $20 million in 2016, but put the property back on the market for $35 million in September 2019, according to the Los Angeles Times. The 10,000-square-foot house sits on an acre of land and has a pool, a spa, and a private dock with space for four jet skis.

Also in September 2019, Weiner also purchased a $16.5 million home in Los Angeles' Hollywood Hills and put it back on the market for $28 million just two weeks later, the LA Times reported. That house was built in an "ultra-modern" style and has views of the LA skyline, according to the LA Times.



Weiner also owns a 161-foot yacht named "Rockstar" that is as extravagant as his pricey mansions.

The yacht's amenities include a Jacuzzi and gym on the top deck and sleeping accommodations for 12, according to Curbed.

A bridge collapsed on the boat in Miami in 2014, according to Curbed. The boat was able to be repaired and was spotted on the waters again in Miami in 2017, Curbed reported.



Frito-Lay stops making snacks at its California plant after several employees show coronavirus symptoms

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  • Frito-Lay shut down its factory in Modesto, California after several employees showed signs and symptoms of the coronavirus. 
  • The coronavirus is not known to to be spread through food or food packaging, but the plant shut down as a precaution.
  • Employees will be paid for up to 12 weeks during the closure. 
  • Visit Business Insider's homepage for more stories.

The popular snack, Frito-lays, shut its factory doors in Modesto, California after some of the PepsiCo employees showed signs of the coronavirus, Fox40 reported Tuesday.

PepsiCo did not release the number of workers who showed symptoms but nearly 620 full-time workers are employed at the site in Modesto.

The employees who showed symptoms are under a 14-day quarantine, but the factory decided to shut its doors as a precaution even though COVID-19 is not known to be spread through food or food packaging.

The facility will be deep-cleaned in coordination with the Centers for Disease Control and Prevention requirements while it's shuttered.

The employees under quarantine will continue to receive full pay. PepsiCo will also continue to pay the other workers from the factory in full for up to 12 weeks.

Other companies, including BMW, shut down their US factory production lines in South Carolina because of the coronavirus pandemic. Boeing's manufacturing plant in Washington shut down after one of its employees died from COVID-19.

SEE ALSO: Tito's Handmade Vodka plans to make its own hand sanitizer and will give it away for free

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Pepsi CEO predicts a second wave of coronavirus cases, warning against forecasts of linear recovery as states and countries reopen

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  • PepsiCo is preparing for "ups and downs" as states and countries reopen in the coronavirus pandemic, with CEO Ramon Laguarta highlighting the potential for second waves of COVID-19 cases.
  • "The chances of every country opening up and every state opening up and not having second waves, I think, are low. ... Until we have treatments and we have vaccines, we should be very cautious," Laguarta said on Tuesday. 
  • While fewer people are buying Pepsi beverages in gas stations and convenience stores during the pandemic, Laguarta said shoppers are stocking up on breakfast foods and snacks as they search for "moments of enjoyment during this confinement." 
  • Visit Business Insider's homepage for more stories.

As states and countries allow businesses to reopen after coronavirus closures, PepsiCo is warning against assumptions that economic recovery will be linear. 

PepsiCo CEO Ramon Laguarta said on a call with investors on Tuesday that the company expects "ups and downs," with the potential for second waves of COVID-19 cases and new decisions about lockdowns. 

"We don't think it's going to be a straight line once people go back to moving around … with potential second waves in some particular markets," Laguarta said. 

PepsiCo reported on Tuesday that organic revenue grew 7.9% in the first quarter, as shoppers stocked up on breakfast and snacks during the coronavirus pandemic. According to Laguarta, sales of multi-packs and variety packs of snacks are soaring as people seek "moments of enjoyment during this confinement." 

At the same time, the pandemic is cutting into PepsiCo's beverage sales in gas stations and convenience stores, as well as business at restaurants that serve Pepsi products. PepsiCo announced on Tuesday it would withdraw its outlook for fiscal 2020 due to the continuing uncertainty. 

"The chances of every country opening up and every state opening up and not having second waves, I think, are low," Laguarta said in Tuesday's call. 

"We don't have treatments and we don't have vaccines," Laguarta added. "So until we have treatments and we have vaccines, we should be very cautious." 

Laguarta said that individuals' actions will determine if areas are contaminated or not, as states and countries' ease shelter in place orders. The CEO said that PepsiCo needs to be extremely agile and prepared for various scenarios. 

"We need to be careful we don't project straight lines when states open," instead anticipating non-linear recovery, Laguarta said. 

Concerns about second waves of the coronavirus does not mean that PepsiCo is playing it safe. Laguarta said that the company plans to be "extremely aggressive" as regions reopen for business. 

 "We want to be first knocking on the door" when stores open, stocking shelves with snacks and filling coolers with beverages, Laguarta said. 

SEE ALSO: 'Traumatized' McDonald's franchisees face coronavirus sales slump, as some slam the company over 'anemic' response

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Pepsi's CMO reveals how the company is shaking up its advertising, demanding more flexibility from its agencies, and prioritizing e-commerce and data amid the pandemic

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  • Business Insider is launching a regular series where we talk to chief marketing officers about how they are confronting challenges from data-driven marketing to in-housing.
  • For the first installment, we talked to PepsiCo's Greg Lyons about how the company was adapting to the new reality of marketing through a pandemic. 
  • He said that Pepsi was investing in data and e-commerce in the long-term and moving marketing budgets toward operations in the short-term.
  • Click here for more BI Prime stories.

The ad industry is going through a massive transformation, which has been accelerated by the coronavirus pandemic. 

To chart out how companies are navigating through these challenges, Business Insider is launching a regular series where chief marketing officers take us through how they are using data, taking work in-house, creating new models with their agencies and tweaking their campaigns

In the first installment, Greg Lyons, CMO at PepsiCo Beverages North America, discussed how Pepsi was investing in data and e-commerce in the long-term and shifting marketing budgets to operations in the short-term.

The following interview has been edited and condensed for clarity.

Tanya Dua: How has the pandemic changed the way you operate?

Greg Lyons: We're making more end-to-end decisions as a business, and less decisions as a marketing department in a silo. Decisions that was sometimes take weeks or months to make, we're making much more quickly now. The business is changing so fast, we've created some special projects to make us stronger coming out of this, and we're moving people around more than before to make sure that everyone's working on something that's valuable to the organization.

E-commerce is a big long-term focus for Pepsi

Dua: Can you share some of these projects?

Lyons: We saw that more people were buying food and beverages online than before so we shifted some of our marketing investment into e-commerce. E-commerce is a big growth platform for us, and [the pandemic] has probably accelerated that shift by three to five years. I'm talking the pure plays, like Amazon and Instacart, but also the click-and-collects like Walmart.com and Kroger. 

Dua: Is Frito-Lay's e-commerce website Snacks.com that just launched part of that investment?

Lyons: We're trying to learn if product bundles make sense. And if they do, then do morning bundles, which have got a whole bunch of different PepsiCo products in them, make sense? I view it mostly as something small as opposed to a big new business opportunity for us.

Dua: How has your use of data changed?

Lyons: We've got first-party data for well over 25 million households, and we're trying to use that to make informed decisions in our marketing. Earlier, we'd have a code under the cap, and you could register your name to win a cool prize, and we'd have a database where we'd capture that data for the Pepsi brand. We'd do a different promotion on Doritos around gaming and capture that, and have data there. We weren't sharing that data across all the brands.

Over the last five years, we've become much more proactive in trying to get consumers' data in one usable data set. We're asking them if they want to hear from us and honoring that, making sure that it's robust enough so we understand how often people want to hear from us, what's important to them, and which brands they interact with the most. We're overlaying on top this idea of really understanding consumers not just as a data point but as humans.

Pepsi has changed its marketing and the scope of work for its agencies in the face of the pandemic

Dua: In a survey called "The Empathy Imperative," Pepsi found 80% of customers say it's important that brands revise the tone or style of their advertising and communications during this time. How are you doing that?

Lyons: We had an ongoing summer campaign planned called "#Summergram," which was about people going outside and enjoying summer with their friends and family. It would be tone-deaf right now if you got a bottle of Pepsi that said "Suns out, Buns out." So we've culled that. We also had some advertising that showed people enjoying themselves at basketball games, and that wasn't the right thing to show either. Instead, we're doing other types of marketing.

Dua: Like what? 

Lyons: We partnered with the Global Citizen Festival on their "One World Together" event with Lady Gaga, and tried to help them however we could, whether it was designing the logo for the event or artist outreach, production or generating awareness. We partnered with John Krasinski on his show "Some Good News," helping Guy Fieri help restaurant workers. We donated $3 million and became part of that show, and gave some people something to feel good about — in an authentic way — because Pepsi is part of a lot of restaurant experiences and we want to help those restaurants and those employees.

Dua: How has that impacted your marketing budget?

Lyons: It's very important to not go dark during this time. We made the decision to pause a fair amount of our media in the second quarter to help make sure that our business operations, our employees on our frontline, were safe. We took some of our marketing money and invested a little bit more in our operations. We've also increased their [operations staff] pay a little bit. We're still marketing our brands, but we've simplified our calendar. We think the ROI is going to be higher when the country reopens, so we're trying to keep as much flexibility with our marketing money as we possibly can in the third and fourth quarters.

Dua: How has that flexibility impacted your relationship with your agencies? 

Lyons:
It's very difficult to be an agency right now, as a lot of clients are cutting their spend. We're trying to be understanding of what they're going through. We're trying to be as transparent with them as possible as to where we're going to need their help. Depending on the agency, what they are working on, and how our plans have changed, we've changed scopes of work. We have not changed our payment terms. We need flexibility because things could change. If we have a big second wave [of the pandemic], our plans will probably be different than if we have a balanced recovery.

Dua: Do you think in-housing will accelerate as a result of the coronavirus?

Lyons: We've had some in-house creative capabilities for a while, and we used that team to create some of the awareness-building tactics that we did for the Global Citizen partnership. That being said, I do not think it accelerates in-housing. We need both agency partners that bring fresh thinking, real expertise in creative, and broad perspective across lots of brands and the industry, as well as in-house creative that can do things very quickly and be a creative resource for us.

Dua: What's your stance on blacklisting news during the crisis?

Lyons: During this pandemic, we have decided not to advertise on hard news, because we feel that it's depressing right now. But I would not call that blacklisting — we've just chosen not to do that for the time being.

SEE ALSO: How Frito-Lay built its new, direct-to-consumer website Snacks.com in just 30 days amid the coronavirus pandemic

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