• by Thom Forbes  @tforbes, July 25, 2013

PepsiCo’s surprisingly strong results yesterday would seem to add up to a healthy portion of vindication for PepsiCo chairman and CEO Indra Nooyi, who reiterated “that she doesn't see the need for any large-scale acquisitions” such as Mondelez, as activist investor Nelson Peltz is agitating for, while “[leaving] the door open for potentially significant changes at PepsiCo's North American beverage unit,” Mike Esterl reports in the Wall Street Journal.

“Refranchising regional bottling operations or spinning off the business entirely,” are among the possibilities it is “exploring,” she said in the earnings calls transcribed at Seeking Alpha. A strategic review of the struggling soda business will be completed early next year.

“Every part of the business is functioning well, and we do not need large-scale M&A to deliver on our financial goals,” Nooyi said. “I would look beyond the noise, and let’s just focus on PepsiCo and the performance of the company,” she said during the call, according to MarketWatch’s Andria Cheng.

With good reason, apparently.

“Nooyi’s long-term strategy is coming to fruition. The company is on track to deliver $900 million in savings by year-end and an overall targeted $3 billion in productivity savings by 2015, and its stock is trading near all-time highs,” Nicole Seghetti writes in Motley Fool. “It appears the company's hard work is starting to pay off.”

The company reported second-quarter earnings of $1.28 per share while analysts polled by Thompson Reuters I/B/E/S were anticipating $1.19 per share, Emily Bryson York reports in the Chicago Tribune.

JP Morgan analyst John Faucher is more cautious about the results. He feels “the headline is much better than the net result,” pointing out that the company cited a lower tax rate and a $137 million gain related to refranchising its bottling operations in Vietnam as contributing to the performance, reports Reuters’ Martinne Geller.

PepsiCo gets about 50% of its revenue from snacks and foods nowadays and 50% from drinks. CFO Hugh Johnston said in an interview on CNBC’s “Squawk Box” yesterday that “the company's variety of products helped it deliver strong results despite” the cold, wet weather in the quarter that was cited by Coca-Cola last week, the AP’s Candice Choi reports. “The portfolio is what enables you to power through these things,” Johnston said.

“When it's hot out, Gatorade sells. When it's cold out, Quaker sells better. When it's a great summer, there's a lot of parties, Frito-Lay tends to do really well. When it's cold and flu season, Tropicana does well,” he said, according to CNBC's Matthew J. Belvedere. 

“The Mountain Dew owner,” as the U.K.’s Marketing Weekputs it, also “credited a 13% increase in marketing in the quarter as a key reason for its better than expected performance.” And, writes Sebastian Joseph, “it vowed to invest further ‘in advertising and marketing, innovation, and other marketplace initiatives’ to maintain growth, despite admitting that activity such as its global campaign for Doritos and promotions around its Pepsi tie-up with Beyonce had weakened profits.”

Sugary –- and artificially sweetened -- soft drinks face a troubling forecast for reasons other than the weather.

In an article about Dr Pepper Snapple’s results –- its overall sodas sales volume dropped 3% -- the WSJ’s Paul Ziobro writes that “sugar isn't the only thing turning some consumers off of soda. Fake sugar is bubbling up as a worry, too,” as the company’s CEO, Larry Young, indicated on his earnings call. Everybody’s looking for “an all-natural, zero-calorie sweetener that tastes better than current options,” Ziobro observes, with stevia holding the most promise.

Similarly, Stephanie Strom had a piece in the New York Times yesterday that took a look at how PepsiCo’s various divisions are consulting with popular chefs to find novel ways of retaining the alluring taste of processed and fast-food products while making them healthier.

“The challenge facing us and other big food companies today is not easy: to have a great-tasting product without as much salt, fat and sugar,” Greg Yep, SVP for long-term research and development at PepsiCo, tells Strom. “Chefs have ways of tricking the taste buds that we can use in our products.”

And so, one chef at a workshop at a Culinary Institute of America in St. Helena, Calif., whipped up cauliflower soup using chestnuts instead of cream. Another speculated about smoking potatoes instead of adding scads of salt. The resulting experiments will be further tested and analyzed in a PepsiCo lab in Illinois.

“We’re not only thinking about making great-tasting foods but about the nutrition guidelines we need to deliver on,” Taco Bell CEO Greg Creed tells Strom. “This is a huge change in mind-set.”