• by Nina Lentini , February 8, 2008

On Thursday, PepsiCo reported that its revenue in the fourth quarter was up 17%, to $12.3 billion from $10.6 billion a year ago. But due to a tax benefit from a settlement with the IRS a year ago, the company's profit was down 31%.

Net income dropped to $1.26 billion, or 77 cents per share, in the last three months of 2007 from $1.83 billion, or $1.09 per share, a year ago.

"Our brands are some of the best loved trademarks in the world, and we're continually adding to their vitality through exceptional innovation and unmatched go-to-market execution," said CEO Indra Nooyi in a statement.

During a conference call with analysts, Nooyi said the company planned to continue its strategy of the past two years of seeking only acquisitions that fill geographic and portfolio gaps intermittently. This stands in stark contrast to rival Coca-Cola, which has been on an acquisition tear and most recently purchased an interest in an organic tea brand.

The stance caught the interest of the editors at Beverage Marketer's Insights. "This is interesting because the company has come under some pressure from Wall Street to start showing the kind of aggressiveness seen over the past year at [Coke], which of course just this week disclosed an investment in Honest Tea at a valuation that seems to come in somewhere north of five times sales--outdoing even the multiple Coke paid for Glaceau," Executive Editor Gerry Khermouch tells Marketing Daily.

"This suggests that while Coke is willing to be a riverboat gambler on acquisitions, PepsiCo feels it can prosper by doing more modestly scaled deals and relying more on internal growth and innovation. PepsiCo said that it expected 3% to 5% volume growth, mid- to high-single-digit revenue growth and full-year earnings per share of $3.72 in 2008. That reflects a 10% growth rate from last year.

"We still believe that if its efforts to rev up its moribund energy drink portfolio with the blitz behind Mountain Dew Amp doesn't pan out, then PepsiCo's next move could be to make a run at Monster marketer Hansen Natural, which would be quite expensive," says Khermouch. "But short of that, Pepsi seems to be willing for now to play the tortoise to Coke's hare, and thinks it can still come out in front that way."

Most recently, the No. 2 soft drink marketer began selling Starbucks Frappucino drinks in China.