The positive Q3 results help to secure a lasting legacy for outgoing PepsiCo CEO Indra Nooyi. Credit: PepsiCo

Growth for PepsiCo’s beverage business shows that its diversification strategy has been paying off, securing a lasting legacy for outgoing CEO Indra Nooyi.

The North American Beverage section of the company, which was down 1.5% in its second-quarter, managed an impressive 2.5% organic growth in the three months prior to 8 September.

These results will be particularly welcomed by Nooyi, who will be stepping down after 12 years at the helm and handing the reins to Ramon Laguarta. Having resisted calls to spin off the beverage section of the business, Nooyi has overseen cost cuts and diversified the company’s portfolio to introduce a range of healthier options, helping PepsiCo to maintain its relevance in the wake of changing consumer tastes.

As part of this strategy, PepsiCo launched innovation group The Hive to act as a business within a business, focusing on the development of new, innovative products that might remain too niche to exist within the larger PepsiCo DSD model. The Hive was only announced in this year’s second quarter and therefore its full impact remains uncertain, but it is clear that one of Nooyi’s final acts as CEO has put the company in a good position to sustain recent gains.

This year has also seen the company expand its portfolio with sparkling water Bubly, joining healthy offerings such as Tropicana, Naked Juice and Izze, which PepsiCo offers as part of its ‘Good for You’ portfolio. Moreover, August saw the company announce its intention to buy SodaStream for $3.2bn, giving PepsiCo another way to connect with health-conscious consumers.

However, the company also invested heavily in the marketing of its key brands, Pepsi, Gatorade, and Mountain Dew, which gave it an additional boost in the third quarter. This multi-layered approach to its beverage business improves its chances of growth in the coming years, as it seeks to establish brands for the future while simultaneously supporting its key sales drivers.

Frito-Lay, PepsiCo’s snack business, was also a driving force for the company at large, comprising popular snacks such as Doritos, Tortitos, Cheetos and Lay’s.

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