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Zacks Industry Outlook Highlights: PepsiCo, General Mills and Philip Morris International

Zacks Equity Research

For Immediate Release

Chicago, IL – October 23, 2013 – Today, Zacks Equity Research discusses the U.S. Consumer Staples, including PepsiCo ( PEP- Free Report), General Mills, Inc ( GIS- Free Report) and Philip Morris International Inc ( PM- Free Report).
Industry: Consumer Staples
Link:   http://www.zacks.com/commentary/29554/Consumer-Staples-Stock-Outlook---Oct-2013
Besides costs saving initiatives, many consumer staples companies are shifting their focus to emerging markets to boost sales. With market saturation, low disposable income of consumers, uncertain macroeconomic conditions and increased competitive activity in developed markets, these companies are diverting their resources to explore emerging markets.

Relative to the mature North American and European markets, emerging markets such as Brazil, India, China, Mexico, Russia and Southeast Asia are to a large untapped opportunities where consumer spending is still growing. Additionally, demand for convenient and branded packaged food tends to grow as middle-class consumers shift to urban living. Thus the rising pool of middle class consumers in emerging markets represents a huge opportunity for the companies.

However, increased exposure to emerging markets also brings along the negative impact of currency fluctuations for many consumer staples companies. A stronger dollar reduces the value of outside-U.S. sales and in turn limits growth. But with improving standards of living in developing countries, the companies are now focusing on increasing pricing to derive profits, which was difficult earlier.

PepsiCo ( PEP- Free Report) is expanding in nations like Russia, Mexico, Canada and the United Kingdom and also in the emerging markets of China, India, Brazil and Africa by offering locally relevant innovation and value-added products. The company has tripled its revenues from the emerging and developing markets in the past five years. Going forward, management expects two-third of its revenues to come from the emerging markets.

Cereal maker General Mills, Inc ( GIS- Free Report) is also focusing on expansion in China, Brazil, India and Russia, where consumer spending is on the rise.

Tobacco company Philip Morris International Inc ( PM- Free Report) has a significant presence in a large number of markets. Asia remains a growth engine for the company. It also enjoys robust growth in Indonesia, Pakistan, China, Philippines, Mexico and Korea.
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