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Higher prices, premium products bolster Pepsi sales: CFO

  • Some 8.5 percent of the company's revenue came from products that were released over the last three years.
  • LIFEWTR has made more than $70 million in retail sales since its launch five months ago.
Pepsi bottles PepsiCo
Susana Gonzalez | Bloomberg | Getty Images

Higher prices and more premium products were a boon for snack and beverage giant Pepsi in the second quarter.

Pepsi CFO Hugh Johnston pointed to new items like LIFEWTR, the company's answer to Coca-Cola's Smart Water, and Lay's Popables, a puffed up potato snack, as items that helped buoy up company sales.

"They are typically more premium oriented," he said on CNBC's "Squawk on the Street" Tuesday. "As a result, we're getting higher dollars per ounce or higher dollars per pound."

Some 8.5 percent of the company's revenue came from products that were released over the last three years, Johnston said.

LIFEWTR, in particular, preformed well for the company, having reached $70 million in retail sales since its launch five months ago, CEO Indra Nooyi said during the company's conference call Tuesday.

Across the board, sales in Pepsi's North America beverage unit, which includes brands like Gatorade, Aquafina and Diet Pepsi, rose 2 percent to $5.24 billion in the quarter. While volume sales were flat, net pricing was up 1 percent.

Similarly, Pepsi's Frito-Lay brand in North America saw sales rise 3 percent, helped by a 1 percent bump in volume and a 3 percent jump in net pricing.

While the company posted earnings that were better than analyst expectations, Pepsi shares were down almost a percent.

Pepsi reported earnings of $1.44 per share excluding items on revenue of $15.7 billion. Analysts had expected EPS of $1.40 on revenues of $15.6 billion.

In addition, the company raised its forecast for 2017 to $5.13 per share from $5.09, citing lower impact from unfavorable foreign exchange.

When asked about potential pressures from the Amazon deal with Whole Foods Market Johnston said he sees the move by customers to digital platforms as being "very favorable to Pepsi."

"As we learn more about consumers, both through our digital customers as well as learning from consumers independently, we have the ability to target consumers more effectively with the things they really want to buy and deliver the right messages and the right promotions and the right price points to individual consumers," he said.

In addition, he noted that Pepsi products are selling well at retail, with many customers picking up items as an impulse buy. Johnston said that retailers think "favorably" of the brand and often sell Pepsi products on the perimeter of the store, where customers can scoop them up easily.

As for the potential impact of soda taxes, like the one established in Philadelphia, Johnston said that the company is "willing to pay our share of the tax burden."

"Generally speaking, we're not in favor of these beverage taxes," Johnston said.