Pepsico chips away at success



Sometimes nothing else will do but a salty, crunchy bag of Doritos, if one wants to get out of a bad mood.

Doritos put that yin-and-yang taste in your mouth that cravers crave. No eating just one chip.

In these tough economic times, it turns out that Doritos, Cheetos, Fritos and other snack foods are helping boost profitability, one chip at a time, for Pepsico, which owns Frito-Lay. Investment analysts say Pepsico’s stock is poised to move higher. That’s important because Clark County has two big connections to the company — a regional Frito-Lay snack factory in west Vancouver and Corwin Beverage Co. in Ridgefield, a regional Pepsi bottler and distributor.

Barron’s analysts made the case last week that despite a 34 percent increase in its stock price since March, Pepsico shares could move higher from the current $63. In fact, they said, “shares at $63 look cheap.”

Even in a challenging economy, snack food sales tend to do well because families eat at home and chips just naturally go on the plate with a hamburgers, hot dogs or chili.

Last year, Pepsico earned $5.9 million on $43.3 billion in sales for a return of $3.68 per share. This year, earnings are expected to increase to $3.76 a share, going to $4.22 in 2010 and maybe to $5 by 2012.

By the way, Pepsico is not a beverage company. Carbonated beverage sales account for just 45 percent of total sales. It’s the snack business that makes the Pepsico business model a powerhouse.

Auction disappoints

Exercise equipment at the now-defunct Princeton Athletic Club in downtown Vancouver was auctioned off Wednesday. But many bidders who attended, hoping to buy an exercise machine for personal use, walked away disappointed. That’s because an aggregate bidder stepped in and bought the entire inventory, outbidding the collective group of individual bidders. It’s common practice in the auction industry, said a spokeswoman for The Bendis Co., which handled the auction. Aggregate bidders are allowed to come back with a bid 10 percent or more than any prior bids. That’s what happened. But it didn’t sit well with Vancouver’s Perri Stevens. “We were all very upset because we wasted three hours of our time,” Stevens said.

New-car sales

Sales of new passenger cars in Clark County cooled in November after a frenzy of “cash for clunkers” buying that peaked in August. County residents registered just 474 new car purchases last month, down from 530 in October and 714 in September.

Local auto dealers have been suffering along with the rest of the nation’s industry since late 2008, when the economy turned sour. The only month this year when sales exceeded last year was in August, when 1,125 new car purchases were registered in the county.

Quote of the week

“We should have required (banks to hold) more capital, more liquidity … we should have required more risk-management controls,” Ben Bernanke, Fed chief, told Congress.

Julia Anderson is The Columbian’s business editor. Reach her at 360-735-4509 or