PepsiCo Inc.

Compared to other large multinational consumer products firms, PepsiCo is relatively well positioned geographically to withstand demand and supply chain headwinds from coronavirus, considering that it generated over 70% of 2019 net sales in developed economies (including 58% in the U.S, 4% in Canada, and 3% in the U.K), which have higher wealth and more advanced logistics infrastructures than developing and emerging markets, which could see demand and currency weakness. We believe the incremental profits from solid snacks growth should offset much if not all of the coronavirus-related earnings pressure in 2020. While pro forma fiscal 2020 adjusted leverage could weaken to slightly above 3x (compared to around 2.9x fiscal 2019 pro forma for recently announced and closed acquisitions), we

...PepsiCo's product and geographic mix position it relatively well to withstand the coronavirus pandemic with only moderate profit deterioration The company indicates that 54% of 2019 net revenue is generated from snacks, which were in favor even before the pandemic, and have seen an upsurge in sales due to increased demand for comfort foods following shelter-at-home requirements. We believe since the pandemic commenced, sales of snack products are up by a double-digit rate and assume a deceleration in the second half of 2020, though still solidly positive. We expect this solid growth in 2020 will only partially be offset by weakness in the beverage portfolio, which accounted for 46% of 2019 net sales. The majority of beverage weakness will occur in on-premise carbonated soft drinks, which we believe represents less than 15% of total sales excluding convenience stores--a format that has also declined due to weak traffic. PepsiCo handles the majority of bottling operations in the U.S., including...

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